Harley-Davidson is taking a big risk by launching new motorcycles by 2020 to grow its business — but it could pay off

  • Harley-Davidson has announced a new strategy to take on global markets and push forward with electric motorcycles.
  • The iconic company has been reeling from attacks by President Donald Trump and a structurally declining US market.
  • Growth will be in Asia, and Harley-Davidson intends to pursue it with smaller motorcycles and new business partners.

The news just keeps on coming from the embattled – yet still iconic – American motorcycle maker Harley-Davidson.

On Monday, the Milwaukee-based company announced a substantial overhaul of its global strategy. Notably, the move wasn’t in response to President Donald Trump’s recent attacks on the brand. Trump complained when Harley announced in June that it would shift production to non-US markets to build bikes for Europe, dodging potential tariffs.

Rather, Harley – which recently said it would close a factory in Missouri to concentrate manufacturing in the US – is up against three distinct challenges.

First, the motorcycle market in the US has been in decline for years. Harley retains an advantage in that it sells big, expensive cruisers, and these bikes tend to have good profit margins. But they’re typically bought by older riders.

Second, growth in motorcycles is going to happen outside the US, mostly in Asia, where two-wheelers are cheaper and more practical transportation in congested cities, where populations are affluent enough to afford cars. For this market, Harley intends to develop a much smaller bike, in the range of 250 to 500 cubic centimeters. But it won’t go it alone, the company said in a statement; it will seek to partner with an Asian manufacturer.

“This new product and broader distribution is intended to fuel Harley-Davidson’s customer access and growth in India, one of the largest, fastest-growing markets in the world, and other Asia markets,” Harley said.

The small stuff won’t stop there.

Get ready for smaller hogs

Trump harley davidsonDrew Angerer/Getty ImagesPresident Donald Trump and Harley, in better times.

Harley said it would bring to market three new bikes – based in a smaller, “modular” architecture – in 2020. They will be what the company called its first Adventure Touring motorcycle, the Harley-Davidson Pan America 1250, as well as a 1250cc custom model and a 975cc Streetfighter model.

The much-anticipated all-electric Harley, the LiveWire, was announced in third place. Old news, to be sure, and couched in the terminology of ongoing market leadership for Harley. But electric motorcycles are a very niche area, so it’s unclear whether Harley will be able to use the technology to reverse its fortunes. (The stock has slid 15% in the year to date.)

The LiveWire is still on schedule for a 2019 launch and could bring some new riders into the fold, as it will be simpler to operate than a gas-powered bike.

“The bold actions we are announcing today leverage Harley-Davidson’s vast capabilities and competitive firepower – our excellence in product development and manufacturing, the global appeal of the brand and of course, our great dealer network,” CEO Matt Levatich said in a statement.

Harley isn’t raising a white flag of surrender when it comes to its stalwart, massive V-twin-engined cruisers. There will always be riders who want those bikes, but they’re likely to be a dwindling cadre in the US. If anything, rolling out smaller bikes in Asia will give the brand the chance to upgrade riders to something heftier down the road.

The company is getting aggressively realistic about its future, however, and taking some risks, not least of which is that production outside the declining US market is likely to decrease. Trump doesn’t want to hear that, so Levatich’s battles with the White House aren’t going to go away.

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