Harley’s new CEO bets on linear operations to restore hogs’ shine


        Harley Davidson<span class="company-name-type"> Inc.</span>


    Hog <span>1.93%</span>


  Going back to the basics of building large, expensive motorcycles for its most dedicated customers, abandoning a decadong quest to reach new types of ridership.

New chief executive Jochen Zitz, a German-born former chief of Pume SE Pum 1.91%

  And collectors of African art, returning overseas expansion, are reducing Harley supplies in the US and intend to delay or abandon new models that were meant to appeal to younger riders.</p><div> <p>This is a hairpin turn of strategy pursued by his predecessor, Matt Levatich, who tried to expand into new markets with new motorcycles.




  Mr. Zeitz has said that Harley should cut expenses and make its motorcycles more desirable.  He is cutting about 30% of the model in the lineup and is encouraging dealers to close some stores.









  Harley's workforce is also becoming smaller.  The Milwaukee-based company hired 500 employees, or about 10% of its workforce globally, and according to people familiar with the matter, that group included some of the product teams developing new motorcycle models.  Mr. Zeitz has also brought in outsiders to run the finance, digital, marketing and business divisions.




  According to analysts, with coronovirus-related growth as demand for motorcycles soars, the company expects year-on-year sales decline for its third quarter on Tuesday.




  Harley says the changes are not a reaction to the coronavirus epidemic.  The health crisis actually boosts the demand for mass motorcycles that are demanding people on the road for socially distant recreation, such as Harley venturing into the bike market with fewer than 37 of its models.




  Some traders say they are getting a third-third bike compared to last year due to Mr. Zitz's strategy shift and supply-chain bottlenecks.  Mr. Zeitz has said he wants customers to pay the full price — $ 40,000 or more for the feature-equipped model — for motorcycles that have sold and competed with a glare of Harleys used on the market in recent years Are exempted in response to.  He said he believes core customers can be counted on to buy more Harleys.




  “I have often heard by now that our consumer is getting old.  Well, I'm getting older, as they say, and I feel like I'm riding horse right now, "Mr Zitz, 57, told analysts earlier this year.




  Mr. Zeitz is a film crew documenting his work as CEO, according to people familiar with the project.  Harley said it regularly films internal and external communications as well as its leader for its newly launched video platform, Harley-Davidson TV.




  Harley refuses to make Mr. Zitz available for an interview, stating that he is still developing a new strategy.




  Texas owner Adam Smith, one of Harley's largest dealer groups, said Mr. Zitz's strategy allowed dealerships to focus on selling the most expensive and profitable bikes.




  "The brand is always becoming what we've always been," Mr. Smith said.  "We do not make cheap, cheap, small-displacement motorcycles."




  Mr. Smith, who said he discussed the strategy in a phone call with Mr. Zeitz earlier this year, said Harley is cutting its dealership footprint, after concluding that sales compared to luxury auto manufacturers There were more places towards




  Mr. Zeitz aims to reduce the number of Harley dealership locations in the U.S. to at least 100, out of about 700 currently, dealers and one Harley investor are familiar with those plans.  He said the company is paying thousands of dollars to dealers to close underperforming stores.




  "They are just liquidating the dealership," said Happy Craig, an independent sales representative for the Harley dealership.





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      Harley-Davidson just introduced the world's first full-size electric sport bike.  Auto columnist Dan Neil takes Portland, Ore. To take livewire for a spin.  Photo: Harley-Davidson
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  Mr.  Zitz is also ending some international operations in India, with the Harley factory opening in 2010.  Harley's sales efforts outside of North America will now focus mostly on more established markets such as Japan and Europe, which are familiar with Harley's plans.  Harley said it would focus its efforts on about 50 markets, mainly North America, Europe and parts of the Asia-Pacific region.




  Mr. Zeitz has a plan called Hardwire to guide development through 2025, a Harley spokesman said.  The company will unveil an upgrade to existing motorcycles early next year.  Mr. Zeitz has stated that he is committed to new electric motorcycles despite disappointing sales of the first model, Livewire.




  Mr. Lewatich, who had been in the top job for nearly five years, wanted to add 100 new and updated models by 2027, many of which are designed for foreign markets such as small, inexpensive bikes.  He aimed to add two million new riders with the help of dealer-sponsored learn-to-ride programs in the US.  Mr. Lewatich declined to comment.




  The company's introduction of new models over the years also failed to attract customers and left the current lineup full of slow-selling motorcycles.  According to research by KeyBank Capital Markets, eleven models combined accounted for about 6% of retail-sales volume last year, while 10 popular models generated more than two-thirds of sales. 





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What is it about Harley that attracts such a dedicated? Join the conversation below.

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  <p>Other motorcycle manufacturers have found new customers by selling smaller and alternative types of bikes.  In favor of shorter riders, smaller motorcycles have pulled off US sales in recent years to rival Harley's, including Polaris.<span class="company-name-type"> Inc.</span>




        Eicher Motor<span class="company-name-type"> Limited</span>


  The Royal Enfield brand, which specializes in small, inexpensive motorcycles, reported an increase of 81% in North American sales last year to 3,322 bikes.  Last year, the company's global sales volume in India was more than 800,000.




  Meanwhile, Harley's US bike sales fell for five straight years during 2019.  Expectations of growth in foreign sales fell short.




  Mr. Lewatich stepped down in February.  Mr. Zitz, a longtime director of the company, replaced Kovid-19 a few weeks before closing dealerships across the US and deactivated the company's US factories.




  The factories were kept closed for two months, a halt which dealers say Harley was barred from meeting the demand for motorcycles this summer.  Harley intentionally overtook production after a restart to have fewer bikes on the market.




  "It's quite painful where my demand is," said Brent Ledlaw, a dealer in Los Angeles, noting that his sales are up about 10% from last year.  "There will not be an overhang of motorcycles, however, as before."




  <strong>Write </strong>[email protected] and Bob Tita on Austen Hufford at [email protected]




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