Harley-Davidson CEO Matt Levatich told me in August 2015: "We are trying to erase the perception that Harley is just for old white guys."
Roughly four years later — accompanied by a 38% decline in the iconic motorcycle maker’s stock price — Harley-Davidson (HOG) is still trying to reverse that perception among U.S. consumers. To be sure, I have watched Levatich and his executive team toss the book at trying to reverse sluggish sales trends in its core domestic market.
Harley-Davidson has made lighter, cheaper motorcycles to better compete with imports from Honda. The company has sponsored the X-Games to ramp up its cool factor among millennials. It has invested in driver academies in a bid to attract female riders and other first-timers.
At the same time, it has cut costs when these undertakings have failed to live up to their mark. Not making matters any easier for Harley-Davidson is being constantly dragged through the Twitter mud by President Donald Trump due to his outrage on Harley-Davidson moving some production overseas.
And yet, Harley-Davidson’s sales and profit challenges persisted into 2018 and the first quarter of this year. So has the tepid interest among people to own a motorcycle.
Interest among consumers to buy a new bike remains below peak, according to research earlier this year from UBS. The investment bank surveyed 2,100 U.S. adults who are at least 21-years-old.
“As Harley's average buyer age moves further into their 50s, that view that they are too old to ride may become more of a headwind for HOG. Interestingly, looking at the data, 'unlikely' motorcycle buyers are almost entirely 'extremely unlikely' to purchase a motorcycle in the next 12 months,” said Robin Farley, a managing director and research analyst at UBS.
Harley bets big on its first-ever e-bike
All of this makes the August debut of Harley-Davidson's first-ever electric bike called LiveWire critical to its future. It’s unlikely to help Harley-Davidson deliver material earnings beats in the second half of this year. Given its high price tag of $30,000 and limited production, mass ownership of LiveWire bikes simply shouldn’t be expected.
But make no mistake, LiveWire marks the first step in Harley-Davidson trying to reverse its fortunes after years of waning sales. LiveWire is a bet that Harley-Davidson can make greater inroads with millennials moving to cities, after all a bike is much easier to ride (no clutch, for example).
The bike is damn cool to look at — it’s Harley-Davidson through and through, a testament to something that has been in development for more than five years. And the specs are off the charts: 145 miles on a full charge; full charge only takes up to an hour; 110 mph top speed. Early reviews by the motorcycle reporter faithful are coming in positive.
This electric masterpiece must trigger a halo over the Harley-Davidson brand, one that says to folks the icon of the road gets it and understands the future of transportation. Because if not, Harley-Davidson’s investments in new electric bikes to debut sometime in 2022 will fall flat. And so will the hundreds of millions of extra dollars Harley-Davidson is pouring into R&D to freshen up its product line more broadly in coming years.
One electric bike. One chance to make it happen. No doubt about it, Harley-Davidson is hoping for a big August.