American Motorcycle Dealer AMD 234 January 2019 | Page 4

2018 - How Was It For You? ell, so much for the January optimism! I started 2018 with the fervent hope that we would see something other than the continued market decline that has haunted us for the past four or five years, but it wasn’t to be. While there are businesses in the Harley aftermarket and wider custom motorcycle parts and accessory industry that have been doing well, those with the right ideas, the right people and the right products in the right place at the right time, I am aware (who couldn’t be!) that for the ‘silent majority’ of parts and accessories vendors, the traditional ‘hardcore market’ vendors, and the independent custom shops that buy from them, the multiple pressures on their businesses continue to weigh heavily. Growth? That’s for plants, right? It feels like a long time since many in the market had very much of that – to the point where, eying 2019 from pre-deadline December - I almost dare not mention the “G” word at all. This month’s cover feature points to the complex matrix of issues that Harley- Davidson (and the motorcycle manufacturing sector in general) is having to grapple with - there is likely to be more difficulty ahead before there is any real, sustainable “G”. Indeed “flat” would be “the new black” for 2019 where custom parts and accessories sales are concerned. Even seeing Harley report sales declining less quickly than market registrations, just seeing them performing ahead of trend would be a step in the right direction. As Harley allows its dealer network consolidation to continue, in terms of ownership profiles (indeed, encourage it), with ever more buying horsepower in the hands of ever fewer dealership owners, and with ever diminishing local market brand and corporate memory to inform its hinterland, the worry has to be whether or not they will be able to deliver on its stated aim of taking the traditional customer base with them. f course, Harley is doing the right thing to try to “meet its customers where they are”. Speaking about the implications of “More Roads” at the end of September, Matt Levatich told investors that “it’s true that this plan will redefine the existing boundaries of our brand and will reach more customers through new types of products and channels,” but that he believes that Harley will “secure the legacy of Harley-Davidson freedom for generations to come by executing our plan in a way that honors and rewards our extraordinarily loyal and passionate customer base and reinforces all we stand for as a brand and as a company.” Well, if it succeeds in nothing else than guaranteeing survival, then that will be its own reward. If the rules of that game change, which they clearly have, then you have to adapt your playbook. I will forever maintain that they were some two, three or possibly even four years late with “More Roads”, and that braking cover with some of the essentials at least 24 months earlier would have been a more assured way of securing “competitive advantage”. However, even if there are yet some blind alleys in what has been game-planned so far (personally the jury is still out for me where E-bikes are concerned), momentum will be Harley’s friend. The most important reason to ensure that “delivering a multi-channel retail experience” includes taking traditionalists with them, is that the “New Genners” W will have something to turn to with the brand in their later riding lives. Brand values should be “forever” values, but riding needs, tastes and requirements do change, so it does indeed behove a corporation in Harley’s position to ensure that they can become “more things to more people” and don’t simply replace its old style mono- culture with a new style of equally one-dimensional culture. Levatich’s three core essentials of “new products, broader access and stronger dealers” have within them the scope and potential for a diverse range of riding solutions to speak successfully to a diverse range of customers. In the past two decades several other manufacturers, most notably Ducati, have avowedly stated that they have been seeking to follow the Harley playbook. However, others, most notably BMW, have done the same, but while also refusing to be locked into brand constraints. ven some five months on, I have seen nothing about “More Roads” that suggests Harley isn’t in fact giving itself its own big fat dose of freedom. Rather than thinking outside its traditional box, they are simply moving forward and getting set to “think in many boxes”, and any brand that has the power to become body art certainly has the power to do that successfully. Levatich is on record as recognizing that “lock step progress in all these areas matters both in the near term and in the achievement of our objectives over time”. He’s right. He points to the “linkage between the three growth catalysts” and that “new products will require broader access and stronger dealers to realize the full potential for the business.” Absolutely. He references “bold actions” being “needed to assure our future” and that it is not a plan for a “short-term fix to what is a fundamental issue in the U.S. industry. It is a way to optimize in the near term and create domestic and international opportunities to provide sustainable growth over time.” He gets it! He and his team just need to make sure that the investor community can raise their gaze from the unit numbers for long enough to give the company the time it needs. I have often decried the company’s dividend policy, but that was at a time when it appeared that they were feeding the sharks in a strategic vacuum. Now they are moving to take ownership of their own destiny rather relying on some magical, mythical turn in the wider motorcycle industry to help them out, the dividend is a strategy whose time has come. It not only makes sense but is one of the few tubs of fish food they have in their grasp. It is a sad irony that as I write this, the share price is tanking, reaching seven-year lows, before the investors have even been asked to digest what is sure to have been a dire final quarter to cap an equally awful year. Let’s hope Levatich and CFO Olin have plenty of good old-fashioned Pepto-Bismol to hand out when they are trying to talk up January’s 2018 annuals release. E ‘you can’t win without being in the game’ O 4 AMERICAN MOTORCYCLE DEALER - JANUARY 2019 Robin Bradley Co-owner/Editor-in-Chief [email protected] www.AMDchampionship.com