Harley-Davidson's new CEO has refocused the company on its core mission. See what that means for the iconic motorcycle maker.
Matthew DeBord
- In early 2020, with the company under stress from Wall Street and with a demographic challenge looming as it struggled to attract new riders, Harley-Davidson CEO Matt Levatich stepped down, replaced on an acting basis by board member Jochen Zeitz, who eventually was named CEO.
- Zeitz swiftly moved to replace Harley's growth strategy with a retrenchment around core products.
- Harley has been here before, and Zeitz's strategy — "Rewire," as he calls it — could work, but it isn't without risk.
- Visit Business Insider's homepage for more stories.
Former Harley-Davidson CEO Matt Levatich had an impossible job — and now no longer does, replaced earlier this year by Jochen Zeitz, onetime CEO of Puma and longtime Harley board member.
He wasted no time first as interim CEO, when on a first-quarter earnings conference call with analysts, he abruptly reversed course on Levatich's "More Roads" transformation plan.
"We've continued to move forward with the highest potential elements of More Roads, but our strategy must be reassessed," Zeitz said.
"As a result of my observations and assessment, I've concluded that we need to take significant actions and rewire the company now in terms of priorities, execution, operating model and strategy to drive sustained profit and long term growth. We're calling it The Rewire and it is our playbook for the next few months, leading to a new five-year strategic plan which we'll share when visibility to the future returns."
Soon after, the Harley board made Zeitz's appointment permanent.
Here's what Harley's new direction means for the American icon:
Read the original article on Business InsiderIronically, Harley's best shot at a revival might not be to focus exclusively on its legacy customer but rather to build ridership in new markets and graduate those customers from small bikes to big ones. But that's an untested playbook. It remains to be seen if Zeitz can pull it off.
It's a distinct possibility. Younger people, at least before the coronavirus pandemic, were embracing urban lifestyles that didn't have room for large, loud motorcycles intended for the wide-open roads of the USA.
The toughest question for Zeitz is whether Harley's iconic, all-American image is in terminal decline.
Harley has also been battling a resurgent Indian manufacturer for the throwback, big-bike market.
And the Japanese haven't gone away. They've been selling Harley alternatives for decades.
Ducati has developed an entire sub-brand around its Scrambler line of fun, outdoorsy, adventurous two-wheelers.
On its home turf, the brand is under assault from upstarts such as India's Royal Enfield, which is going after the small-displacement market with low-cost bikes that appeal to city-dwellers.
Wall Street has been skeptical. Harley's share price has been in decline for years.
That's the new CEO's biggest challenge: avoid offending the reliable customer while simultaneously protecting the business from future rivalries.
But those loyal customers are aging. And they aren't being replaced by new riders in large enough numbers to sustain Harley long-term.
They represent the entire Harley live-to-ride lifestyle.
But meanwhile, expensive, hulking freeway cruisers remain at the core of Harley's business.
Harley also wants to grow in new markets, mainly in Asia, where motorcycles are everyday transportation, rather than costly weekend toys. That means small bikes, such as this sub-400cc model.
The electric-motorcycle market is tricky. It's currently quite small, with limited competition. LiveWire goes up against bikes from Zero, for example.
LiveWire was front-and-center at the company's booth for the 2019 New York Motorcycle Show, however.
But Harley's ambitious electric future also seemed in doubt. The company's highly-touted LiveWire bike launched with a hefty price tag — $30,000 — and wasn't an instant success.
Harley has been here before. The company almost always seems to be up against balancing a growth mindset with a preserve-the-core attitude. The 2008-09 financial crisis meant that Harley shed the Buell sport bike sub-brand.
In early 2020, the Harley board made a change. Levatich resigned, replaced by board member Jochen Zeitz, who had served as CEO of Puma. Zeitz immediately abandoned Levatich's strategy.
"I will strongly believe we need to tie the focus on our core markets and as I had mentioned, you know there are some markets that our biggest profit-drivers," Zeitz told Wall Street analysts.
"[For] some of the international markets, not just from a profitability point of view, but from a potential point of view ... I think there will certainly be some de-emphasizing in order to create increased focus."
It was a good example of dynamic leadership, and initially Harley, Levatich, and a newly elected President Donald Trump found common ground. But that relationship later soured.
Levatich wanted to build Harleys where there were sold, especially in Asia, and that strategy ran afoul of Trump's "build it here" bias. Harley also found itself a victim of Trump's trade wars, as the highly symbolic motorcycle maker was retaliated against when the Trump administration started to level tariffs on imports.
Former CEO Matt Levatich hoped to ensure that heritage for another 100 years, so he undertook a transformational plan that would increase ridership, expand to new markets, and attack new opportunities.
Harley-Davidson has been building motorcycles in the USA for 117 years. In many ways, it's the definitive American company, with a product that combines both its own values and America's.
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