Harley-Davidson ditches the pursuit of Millennials to rev up Boomer classics

Wednesday, October 28, 2020 by Snacks

Heard it from a mile away... Harley-Davidson stock surged 22% yesterday after the motorcycle legend reported expectation-beating earnings. Harley's quarterly sales fell 8% compared to a year ago, but profit spiked 39%. That's because Harley's new CEO Jochen Zeitz has been majorly streamlining:

  • Slash costs: Harley laid off ~10% of its employees. It's also closing underperforming dealerships and some international operations to zero in on core markets.
  • Optimize sales: Zeitz is cutting ~30% of Harley's least profitable models (hardcore). And he wants customers to pay full price for recently discounted two-wheelers.

Bring back the bicep tats... and the head bandannas. Before Zeitz took over in February, Harley was chasing a new customer base: Millennials. It tried to win young love with cheaper, smaller rides like electric motorcycles and bikes. The old CEO wanted to launch up to 100 of these models. The new CEO doesn't care if a 25-year-old from Williamsburg likes it:

  • Harley's going back to its OG strategy of making big, expensive motorcycles for diehard fans.
  • 10 popular models made up more than two-thirds of Harley's sales. Harley's now honing in on those Baby Boomer favorites instead of its other 27.

Harley's choosing short-term gain over long-term growth... Harley's cost-slashing, Boomer-focused plan means higher profits now. But its US bike sales have fallen for five years straight through 2019. Meanwhile: cuter, youth-friendly motorcycles have lifted sales for rivals like Polaris and Eicher. Harley needs to take Millennials along for the ride to notch long-term growth.

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