We still remain focused on the health crisis and its consequences on our ability to emerge from the confinement it imposes on us. But this pandemic will impact the economic and social environment. To be convinced of this, you just need to look at the first quarter results published by Harley-Davidson. Corrective actions will be felt…
Harley-Davidson presented its results for the first quarter of 2020, and announced measures to address the impact of Covid-19 by presenting a new strategic plan for the company. On the figures side, we will note, among others, the sale of 40 439 motorcycles during the quarter, i.e. a 17,7% decrease compared to 49 models sold in the same quarter last year. International sales were up 151 percent, while U.S. sales, which make up the majority of Harley's market, were down 20,7 percent.
According to Harley-Davidson, U.S. retail sales actually grew 6,6% through mid-March, and then the pandemic crisis began to take its toll, especially on motorcycle production. Revenue declined across all segments, including motorcycle sales (-6,8%), resulting in first-quarter operating profit of $84,6 million (-22,0 %).
Faced with the pandemic, Harley-Davidson has taken steps to address its impact and prepare for recovery. These measures consist of reducing investment expenditure including a hiring freeze and bonuses, as well as temporary salary reductions and to reorganize the launch schedule of new products, maintain liquidity, support dealers and continue to take measures to protect the safety and health of employees. Harley-Davidson says it has restarted some manufacturing and will gradually ease work-from-home restrictions at the appropriate time.
More Harley-Davidson a également annoncé un nouveau plan stratégique de cinq ans qu’elle appelle “The Rewire“, soit la « reconnexion », qui modifiera son plan actuel “More Roads”. Le nouveau plan sera entièrement élaboré dans les mois à venir, mais les objectifs généraux semblent se recentrer sur les points forts de l’entreprise et donner la priorité à ses marchés les plus forts.
Back to the future ?
According to the site motorcycle.com, Harley-Davidson will fall back on its fundamentals, that is to say cruisers and large touring vehicles. The Milwaukee brand says it remains committed to entering the adventure segment, streetfighters and electric motorcycles. There Pan America and Bronx will therefore probably be released again this year, while the Livewire remains an essential part of the HD range. Practically speaking, Harley-Davidson has already invested enough development and marketing capital into these products, there is little choice but to continue, but with more modest and more achievable goals.
What is less obvious, however, is the fate of the next product line Harley-Davidson, which will include smaller electric models, e-bikes and the new liquid-cooled Custom models.
By focusing on its strongest and most profitable markets, Harley-Davidson could revise downwards its objectives for the European market. New models and platform Revolution Max liquid-cooled technology formed a large part of the company's European strategy, but Harley-Davidson still had a lot of work to do on its existing range, as most of its current models do not meet the Euro 5 standards which are supposed to be mandatory by the end of the year. Several manufacturers are requesting a postponement on this point, and Harley-Davidson will likely support these efforts.
The plan Rewire also provides for adjustments in the structure of the company so that it is more flexible and able to adapt to new market realities once the Covid-19 crisis has passed. This will include moving the launch schedule of its products, traditionally at the end of August and the beginning of September, to better adapt it to the start of the racing season. Further details on the Rewire plan will be released during the second quarter.
