Harley-Davidson doesn’t want to become another Sears, a once-dominant American corporation that people think will be around forever yet somehow slips into irrelevance.
Harley leadership has known for a long time that the company needs to evolve, that the easy-money days of selling expensive motorcycles to middle-aged Baby Boomers flush with HELOC cash will never return. As I wrote last summer, Harley-Davidson knows it needs to make big changes and is vowing to do so. Its core customers are aging out of motorcycling and despite its significant efforts to attract women and minority customers, those gains haven’t offset the losses. Young people, to the extent they are riding (or even getting a driver’s license), tend to look toward lighter, smaller, less expensive motorcycles.
While the new streetfighter and adventure bike Harley-Davidson has planned will be key models in proving whether the company can pull off this pivot, our first clues came just days ago when Harley provided some details about its electric motorcycle, the production version of the LiveWire. Not by chance, the LiveWire was first shown not at a motorcycle show, but at the Consumer Electronics Show in Las Vegas, and the big publicity push was aimed not at the motorcycle media, but at tech and mainstream media.
Not all the pertinent details were revealed (we still don’t know how heavy it will be — probably awfully), but we did get some key facts: acceleration (we knew it would be quick, so no surprise there), range (110 miles of urban use) and price ($29,799). When we posted the news over at RevZilla, most of the reactions were negative, noting that the LiveWire does not advance key metrics of electric motorcycle performance but it does advance pricing (per performance) to a new and higher level.
Were the negative reactions warranted? I think so. Here are three things I think we learned from the unveiling of the LiveWire that are bad omens, in my opinion, for the turnaround the company must make to avoid slowly drifting toward eventual irrelevance.
The Harley-Davidson LiveWire is going to cost nearly $30,000. Harley-Davidson photo.
The LiveWire shows Harley-Davidson is still not focusing on competing on measurable performance metrics, not brand appeal. Right now you can buy a Zero S with similar performance (better range, maybe a little slower) for about half the price of the LiveWire. Will the LiveWire have superior fit and finish? Almost certainly. If the difference were a few thousand dollars, it would be a decision. If the difference is more than $15,000, only the most wealthy, committed, “I have to have an electric motorcycle and it has to be a LiveWire” enthusiast will choose to spend twice as much. All 25 of them.
The really important point here is not that few LiveWires will be sold. It’s that Harley-Davidson still hasn’t changed its way of thinking. This is going to be far more important when they come out with new models like the adventure bike. Harley-Davidson cannot walk into market niches where other companies have been producing good products and building loyalty for years and easily steal market share. In new market niches, a motorcycle with less performance and a higher price will not succeed just because it has a Harley-Davidson badge on the tank. Which leads to my second point.
The LiveWire doesn’t suggest that Harley-Davidson knows how to sell to people who aren’t fans of the brand. Across huge swaths of this country, both geographically and culturally, people for many years have bought Harleys because they were Harleys. I’ve run into plenty of people who think Harley-Davidson and “motorcycle” are interchangeable terms. They know or care nothing about other brands. Those people are, for the most part, the motorcycle industry’s past.
Young people today may have positive or negative feelings about the brand. For many young people, the image associated with Harley-Davidson is that infamous South Park episode. Harley’s approach has long been to avoid discounting and to position its motorcycles as premium products, and much of the premium was due to the name on the tank. That’s less universally true every day. Young people may see the Harley “culture” as a deterrent, not something they want in on. The adventure rider who thinks of a BMW R 1250 GS as the epitome of motorcycling is not going to be converted to a Harley-Davidson customer by a motorcycle that offers less or equal performance for an equal or greater price. If anything, for those and other customers, the Harley name is a negative, or at least the source of skepticism that must be overcome, and not justification for a premium price.
Will Harley riders switch to plugging in instead of filling up? Will riders who want to plug in instead of filling up consider a Harley? Harley-Davidson photo.
The LiveWire can’t succeed as a halo bike, attracting people to the brand, if that halo light ends up being like a bug zapper attracting mosquitoes. Among the minority who defended the LiveWire, one of the common arguments was that the LiveWire is just a halo bike. As one reader put it, Ford is coming out with a 700-horsepower Mustang not because many people will buy it, but because it will generate buzz and perhaps traffic in dealerships — which the LiveWire could do for Harley-Davidson. (“Buzz” aside, I personally think the LiveWire produces too much whine.) Another argument is that it doesn’t matter that the Motor Company won’t sell many LiveWires because it is just the first step and the bigger volumes of sales will come from later, less expensive models, such as the two concept electric motorcycles Harley-Davidson also showed at CES.
The problem is that Harley-Davidson will be relying on dealers to sell all these new and different machines, and these were the same dealers who reacted with everything from indifference to outright antagonism toward Buells — even when those motorcycles were powered by a H-D Sportster engine.
I know, times have changed. I am sure that a lot of dealers have watched declining sales and realized that Harley-Davidson can’t just keep doing the same thing it has done for the past 30 years and expect to maintain its position at the top of the U.S. motorcycle market for the next 30 years. But I also strongly suspect that a lot of the frontline people at those Harley-Davidson dealerships have not accepted that new reality. Many of them don’t want Harley to change and don’t believe it has to.
This concept bike is not really a mountain bike, since you can’t pedal it. The more pertinent question for Harley-Davidson is whether existing dealers can successfully peddle it. Harley-Davidson photo.
If the LiveWire gets some younger non-motorcyclist excited and he or she takes the initiative to go into a Harley-Davidson dealership, the halo effect will wear off quickly if the message received is “That’s not a real motorcycle. You want one of these,” pointing to a 800-pound Softail styled to look like the 1950s, not a cutting-edge machine from the 21st century. Even worse, what does the typical Harley dealer know about selling a small electric scooter or something that looks like a mountain bike? It seems to me it would almost be easier to start a new brand and sell those products elsewhere. Is there any overlap at all between people who would shop for a funky looking little electric scooter and the people who think the Harley-Davidson name is the only one to have on your bike?
This electric scooter concept is not your typical Harley, by any means. Harley-Davidson photo.
All of this is speculation, of course, and it’s early. Harley-Davidson can still show it is capable of expanding its product line, entering new market segments, appealing to new customers and maintaining its position at the top of the U.S. motorcycle industry. Unfortunately, what I’ve seen so far from the LiveWire raises my suspicions that Harley-Davidson is instead going to make the same old mistake: relying on the brand to command a premium price for a product that does not provide greater performance.
Some believe Harley-Davidson is too big and too entrenched to fade away. Lots of people thought the Roman Empire would last forever, too. Many thought Sears, the dominant retailer in the country, a company that would sell you everything from underwear to an entire house (and a motorcycle) would never end up a bankrupt shell. Nothing in this world is forever.
I’m still a bit confused by Harley’s strategy here. It seems that they are saying all the right things, but the execution feels like it’s still being run from the old play-book, just as you said. Again, as you suggest, I think the pivotal moment will be when they drop the details on the Pan-America. I expect the revamped “Sportster” line will drop this fall with pricing we’d expect to see in that class, but that whole 1200cc class will be “interesting” with respect to features and price, if nothing else. I can see Harley clinging to is premium status, but I still think they’ll experience significant contraction if they’re hellbent on retaining that mantle.
The LiveWire is a glimpse into Harley-Davidson’s thinking, but I agree with you that the Pan America will be far more telling. ADV bikes is an area where the Harley badge will produce skepticism among many potential customers, not the kind of loyal admiration the company is used to.
Many forget the V-Rod was the first attempt to move beyond the core customers, and it didn’t really work. The Street line is the more recent attempt, and it hasn’t stopped sales declines. Now comes the Pan America and the other new models. They better get them right.
That scooter looks more like something the guys at my local Harley shop would throw into a bonfire for fun than something theyd sell.
The V-Rod was supposedly well received in Europe, but not so much in the U.S. During the launch I asked the Davidsons about a sport version of this bike (similar to my Sprint), father and son looked at each other and said, “Stay tuned.” Out came the V-Rod Street, which was heavy and cumbersome, and the core audience hated it.
Interestingly, it was supposed to go to Buell after development on the racetrack as the VR1000, but we all know how all that worked for poor Erik. That was during the battery CEO days when they jettisoned MV as well, deciding to concentrate on their “core” products–i.e. cruisers. I thought that was short sighted.
I rode the Livewire and totally thought it was going to be priced in the low 10k range, but was hoping they could beat that and really be competitive. Now, I just feel insulted by sticker shock.
Keep in mind, this bike as well as the other electric vehicles were supposed to be heavily marketed in, as of yet to be seen, urban boutique shops. With the right kind of sales people, and without the other V-twin distractions, it might work.
In my humble opinion the Motor Company hasn’t had a hit-it-out-of-the-ballpark moment since the Evo engine, which they needed just to survive.
You make a lot of valid points, Lance. As a Harley guy, I’m hoping for another Evo moment out of the company, but, I’m afraid at this point they’ve made too many mistakes. Still, they have a ton of cash available to, hopefully, work it out.
Good points, Bill. Looking back with the benefit of hindsight, the decision by MoCo management to focus on building cruisers and maintaining Harley-Davidson as a premium brand (no discounting, not competing on price) was perhaps exactly the wrong way to go. Looking at the history, maybe it seemed the safe choice at the time. But today, cruisers are the category losing ground in the U.S. market and it’s getting harder to charge more just because it says Harley-Davidson on the tank. I’d go further and say we’re near the tipping point where the brand and its associated mythology become a headwind instead of the tailwind to sales that the company has been riding the last few decades.
I expect to see a long slow slide to second rate status by Harley as they keep wasting resources on things like the Livewire that don’t work. The only thing that will work is building a better product for a lower price than the competition and thats something Harley has never done in my lifetime.