American Motorcycle Dealer AMD 240 July 2019 | Page 64

NEWS
BRIEFS
As at mid-June 2019, still some 17
months before the event, the 2020
AMD World Championship of
Custom Bike Building has received
25 confirmed entries for the 14th
'AMD' - well ahead of this time in
the cycle at any time since the event
moved to Europe from Sturgis and
became biennial. In total 31 bikes are
already entered, 22 of them for the
Avon Tyres FreeStyle Class, with
builders coming from 16 countries in
total.
Harley says that it made history
in May with the 5 millionth
motorcycle rolling
off their York,
PA. assembly
line. Having
initially been a
WWII ant-aircraft
gun factory of the U.S. Navy,
Harley moved Ironhead
Sportster and Shovelhead FL
model production there in 1973.
The July 5-7 Honda AMA Vintage
Motorcycle Days presented by Avon
Tyres will celebrate the 40th
anniversary of the 6-cyl. CBX, the
50th anniversary of Honda's
legendary 1969 CB750 and the 60th
anniversary of American Honda
Motor Co. Inc. Biltwell will take a
product display to the event and
sponsor three competition events -
The Biltwell Pit Bike Races, the
Biltwell Holeshot Challenge and the
Biltwell Off-Road Poker Run.
64
Charvat - "My work here is done"
In what might go down in
powersports industry history as
the ultimate 'mic drop,'
Motorsport Aftermarket Group
(MAG) CEO Hugh Charvat left the
company at the end of June 2019.
In May he announced delivery on his
plan to "unwind the errors of the past"
with the strategic decision to "unwind
the vertical" by "spinning out" MAG's
individual business units into stand
alone, independent operations.
His view is that decisions taken
following the LDI/Tucker Rocky
acquisition of MAG - to integrate
manufacturers, brands, distribution
and retail into a multifaceted channel
busting tall business model - were
'unwinding
the vertical'
mistakes that "compromised the
ability of the individual business units
to conduct their business in the ways
that had made them great companies
and brands in the first place."
Worse, Charvat believed that in a
relationship-based industry such as the
powersports market, one where
"people buy from people", this
'vertical' model alienated many of the
group's largest customers as it
positioned MAG and its constituent
parts as potential competition.
His solution, announced in May, was to
"unwind the vertical" and re-establish
the individual business units in smaller
groups of sympathetic manufacturing,
brand and sales management
operations and return to them the
freedom and flexibility to respond
individually to their own specific
market challenges and opportunities.
At the time Charvat announced what
he (rightly) described as a "new and
significant change to managing the
AMERICAN MOTORCYCLE DEALER - JULY 2019
multi-brand organization," he said
"we've asked each of our senior
leaders to focus 100% of their efforts
on creating value, delivering growth
and expanding the entrepreneurial
mindset within their business unit and
their brands," stating that "when we
do this, we will become nimbler, more
Hugh Charvat, now former CEO of
MAG told AMD "My work here is
done. The individual component
parts, the six business units will now
report independently and directly to
the MAG board and no longer be
integrated into a "vertical" business
model that restricted their freedom
to compete."
aggressive and have a greater focus on
the market and on our customers.
"We'd rather have a portfolio of
successful companies with complete
independence than force them to
integrate - which turned out to be
detrimental to several of our brands.
While our business units will continue
to collaborate where helpful, there will
be no corporate mandate to do so.
We’ll ensure complete independence
between Tucker Powersports, J&P
Cycles and our four other business
units.
"By making them stand-alone
businesses we are empowering each
of our talented management teams to
make the decisions that best suit their
business opportunities. The board and
I feel that this is the time to unleash
those individuals and all of our great
employees to return our brands to the
status they've enjoyed in the past,
without the operating restraints that
have been in place as MAG.
"There's no question that we
damaged a lot of carefully built
relationships. By recreating the
independence among the business
units, they will have the freedom
needed to be able to re-establish those
relationships."
Speaking with him again after he
announced his departure, he said that
he'd had various scenarios and
timescales on which the "unwind"
could be achieved, but "even I
'recreating the
independence'
underestimated just how quickly it
would 'snap to fit' - just how soon it
would become apparent that we'd be
unleashing the kind of dynamism and
entrepreneurial leadership we knew
we had at each of the businesses and
groups.
"The logic of the strategy is that I and
CFO Tony Vacchiano are now
redundant. Our role has been as
enablers, and if an executive level
remained between the talented
business unit managers and the board,
then we'd be getting in the way and
adding unnecessarily to exactly the
kind of complexity we are trying to
eliminate."
Charvat was eager to make sure that
the market understood that the
decision that his job should go away
was purely strategic and not, as some
have worried, as sign of further
financial trouble. "Far from it" he says.
"The decision has been entirely
strategic, not financial."
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