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Harley-Davidson earnings: US

motorcycle sales continue to plunge, but


profit jumps
Given a lift from improved international sales, and its 115th anniversary rallies, Harley-
Davidson on Tuesday reported higher quarterly earnings.

But Harley's U.S. motorcycle sales continued to plunge, illustrating the company's long-
running challenges.

As the company has set its sights on growing internationally, it’s also faced other hurdles,
including a 25-percent tariff imposed by the European Union on U.S. motorcycles in
retaliation for President Donald Trump slapping tariffs on foreign steel and aluminum.

In the U.S., the company has struggled to attract younger customers who haven’t shown
interest in motorcycling like past generations. U.S. motorcycle sales were down 13.3
percent for the quarter, compared with a year earlier.

Baby boomers (1946-1964 around 50-64 y.o), earlier a boost to Harley's sales as they hit
some of their best income-earning years, are now aging out of riding.

“For years, the North American heavyweight motorcycle industry grew at double-digit rates
due to low interest rates, a strong economy, a rising stock market, and the aging of the
baby boomers. However, in recent years and going forward, we expect a much slower
growth pattern for the U.S. motorcycle industry,” said industry analyst Robin Diedrich of
Edward Jones Co.

Still, Harley's profit increase was a positive sign. The world’s largest manufacturer of
heavyweight motorcycles said it earned $113.9 million in the three-month period ended
Sept. 30, up 67 percent from $68.2 million in the same period a year earlier.

On a per-share basis, the Milwaukee company earned 68 cents, compared with 40 cents a
year earlier.

More: Harley-Davidson to move some motorcycle production out of US after EU tariffs

More: Harley-Davidson partners with Asian manufacturer to build smaller motorcycles

More: Secret Service buying Harley-Davidson motorcycles despite Donald Trump feud
Harley reported $1.32 billion in revenue in the recent quarter, up nearly 15 percent from
the year-ago period.

Some of the gain was attributed to a 2.6 percent increase in the company's international
sales.

Harley said its 115th anniversary celebrations, in the U.S. and the Czech Republic, also
helped boost sales this summer and fall, with a combined 260,000 visitors.

And the company added international dealerships, apparel stores in Asia, and an
Amazon.com storefront in the quarter.

Harley maintained its full-year shipments forecast range of between 231,000 and 236,000
motorcycles.

"Third quarter progress tracked to our plans with numerous highlights including another
quarter of international retail sales growth and increased year-over-year earnings per
share," Harley president and CEO Matt Levatich said in a statement.

Harley said its worldwide motorcycle sales fell 7.8 percent in the recent quarter.

The company has a goal of growing its international business to 50 percent of its sales. A
key step was announced in July when Harley said it would partner with an Asian
manufacturer, yet unnamed, to build smaller, less expensive bikes for India.

It’s one way to attract younger people in a promising market and, over time, move those
riders up to bigger, more expensive motorcycles.

"Success in (international) markets would help address our key long-term concern: an
aging core customer base in the U.S.," Diedrich said.

Given slowing demand for its bikes in the U.S., the company is closing its assembly plant
in Kansas City, Mo., and moving the work into its largest plant in York, Pa.

Harley has reduced the costs it expects to come from making that move and now says it
expects to incur restructuring and other consolidation costs of between $155 million and
$185 million compared with a previous estimate of $170 million to $200 million, through
2019.

Harley also is opening a plant in Thailand this year(2018), an announcement criticized by


Trump who complained that Harleys should be built in the U.S., not overseas.
The company will incur extra costs this year as it shifts some U.S. production overseas in
response to higher tariffs from the European Union, the company's second-largest market.

"While tariffs will affect short-term financial results, we believe the company can
successfully shift production to avoid the tariff burden," Diedrich said.

Previously, Harley completed a major restructuring of the York plant, and the company
reached new labor agreements with its Wisconsin unions.

"We believe Harley is generally managing its brand well by scaling back production and
focusing on new product innovation to attract new customers in this slowing market,"
Diedrich said.

The agreements create “significant savings and flexibility for Harley going forward,” she
added.

Harley has said it plans to spend hundreds of millions of dollars to stimulate growth in
motorcycle sales.

The company has tested programs aimed at attracting new motorcyclists, including one
that allows recent Harley-Davidson Riding Academy graduates to lease a bike.

It also has eyed a program in which experienced motorcyclists would mentor new riders.

Harley-Davidson to move some


motorcycle production out of US after
EU tariffs
Harley-Davidson plans to shift a portion of its U.S. motorcycle manufacturing capacity to
foreign markets after a trade spat between President Donald Trump and the European
Union led to increased tariffs.

The Milwaukee-based motorcycle manufacturer said Monday in a public filing that the
move is necessary to preserve its second-biggest sales market.

The company did not specify whether it would close any U.S. plants or lay off any workers.
But when Harley recently mapped out plans to shift some production to a new factory in
Thailand, the company announced it would close its plant in Kansas City, Missouri, and
add some jobs at a facility in York, Pennsylvania.
"Harley-Davidson maintains a strong commitment to U.S.-based manufacturing, which is
valued by riders globally," the company said. "Increasing international production to
alleviate the EU tariff burden is not the company’s preference but represents the only
sustainable option to make its motorcycles accessible to customers in the EU and maintain
a viable business in Europe."

The European Union last week raised U.S. motorcycle tariffs from 6 percent to 31 percent
after Trump earlier imposed tariffs on European steel and aluminum.

More: European Union tariffs take effect in Trump fight: How they will hit American
products

More: Union: Harley-Davidson will ship work to Thailand from closing U.S. plant

More: Loud Harley-Davidsons: Is motorcycle noise sweet harmony or out-of-control din?

More: Harley-Davidson seeks 8 interns to ride motorcycles for the summer and document
experience

The move will cost Harley an average of about $2,200 per bike shipped from the U.S. to
the EU, according to the public filing.

Harley said it would absorb the costs instead of raising prices.

Raising prices "would have an immediate and lasting detrimental impact to its business in
the region, reducing customer access to Harley-Davidson products and negatively
impacting the sustainability of its dealers’ businesses," the company said.

Instead, absorbing the uptick will cost the company about $90 million to $100 million per
year. Harley sells about 40,000 bikes annually in Europe.

The trade dispute came at an inopportune time for Harley, which is struggling to sell
motorcycles to a generation of millennials that hasn't yet been as enthusiastic as previous
generations.

"Harley-Davidson’s purpose is to fulfill dreams of personal freedom for customers who live
in the European Union and across the world, and the company remains fully engaged with
government officials in both the U.S. and the EU helping to find sustainable solutions to
trade issues and rescind all tariffs that restrict free and fair trade," the company said.

The opportunities for Harley in Europe are significant, but so is the competition from
European and Japanese motorcycle makers that aren’t subject to the same tariffs.
“It is hard to run a business when the rules keep changing,” industry analyst Craig
Kennison with Robert W. Baird & Co. said.

Harley-Davidson partners with Asian


manufacturer to build smaller
motorcycles
Harley-Davidson Inc. said Monday it would make up to $275 million in capital investments
to stimulate growth through new motorcycles, including smaller bikes built through an
alliance with an Asian manufacturer.

The company said it would fund its plans by comprehensively cutting costs and
reallocating previously planned investments.

Harley said it plans to develop a small, lightweight motorcycle for Asia – with an engine
size between 250cc and 500cc – through an alliance with an Asian manufacturer.

In addition, the company said it will introduce new midsize bikes beginning in 2022,
including its first adventure touring model capable of off-highway use, and a 975cc
"Streetfighter" bike geared toward urban riders.

More: Harley-Davidson puts tariff loss at $150 million as sales slump

More: Trump continues criticism of Harley-Davidson, says administration will boost


competitors

More: Trump's battle with Harley-Davidson over foreign tariffs tests motorcycle riders'
loyalty

Harley reaffirmed its plan to launch its first electric motorcycle in 2019, followed by
additional models through 2022.

"Harley-Davidson plans to offer its most comprehensive lineup of motorcycles, competing


in many of the largest and fastest growing segments with a full portfolio of motorcycles
across a broad spectrum of price points, power sources, displacements, riding styles and
global markets," the company said in a statement.

Adventure-touring motorcycles are one of the fastest-growing segments of motorcycling


that takes a Swiss Army-knife approach to the sport, with bikes that are legal to ride on the
highway and also can tackle dirt trails.
The bikes are popular in northern Wisconsin, where there are hundreds of miles of gravel
roads and trails through the woods. Some have even called the Town of Wabeno in Forest
County the adventure-sport motorcycle capital of the world.

Harley also said Monday it will introduce smaller, urban storefronts to reach a wider global
audience, partner with online retailers and strengthen its dealership network.

Monday’s announcements follow Harley’s earlier-announced 10-year plan of training 2


million new U.S. riders, growing international business to 50 percent of sales and
launching 100 new "high impact" motorcycles.

Through its new plan, called More Roads to Harley-Davidson, the company says it expects
to spend $675 million to $825 million over the next four years as it looks to generate more
than $1 billion of additional annual revenue in 2022.

Harley remains in the global spotlight after the European Union imposed a 31 percent tariff
on U.S.-made motorcycles.

The EU’s move prompted Harley to announce it will send some motorcycle production from
the U.S. to its overseas factories — located in India, Brazil and Thailand — where the
bikes can be built and shipped to Europe without steep tariffs.

That prompted a series of angry tweets from President Donald Trump, who chastised the
Milwaukee-based company for manufacturing motorcycles outside of the U.S. as he
attempts to negotiate trade deals.

Harley said its U.S. motorcycle sales fell in the recent quarter that ended July 1, and it
reported a 6.4 percent drop in profit.

The company said it had significant sales growth in emerging markets in the quarter,
including China, Brazil and Mexico, offset by a sales decline in India. Sales growth in
western Europe was offset by weakness in Japan and Australia.

The European Union, which raised its tariff on U.S.-built motorcycles to 31 percent from 6
percent, is Harley's second-largest market behind the United States.

Harley said its Monday announcement was aimed at growth worldwide.

"In a fast-changing world with new consumer demands, these accelerated actions support
Harley-Davidson's 2027 objectives with increased focus and strategic investment to
reinvigorate the U.S. business while accelerating the pace of international growth," the
company said.
Harley-Davidson assembles most of its bike lineup in Kansas City, Mo., and York, Pa. Its
V-Twin engines are made in Milwaukee, and there's a small factory in Tomahawk that
makes fiberglass and plastic components for some of the company's most expensive
touring bikes.

Harley has been selling motorcycles abroad practically since it was founded in a shed in
Milwaukee in 1903, and it assembles its least expensive bikes, the Street 500 and Street
750, in India and Brazil for overseas markets.

The company is no stranger to working with manufacturing partners, but that’s been for
wheels, suspension and other components rather than complete motorcycles.

Still, an Asian-made Harley might be a hit in countries such as India and China that have a
growing middle-class seeking premium American brands but that isn't able to afford a
motorcycle made in the United States.

A Harley-Davidson would stand out in a crowded field of basic, inexpensive Asian bikes,
said Robert Pandya, a veteran of the industry who has worked for Polaris Industries, the
maker of Indian Motorcycles.

“Something like a Street 500 is arguably not the flashiest motorcycle out there, but against
the backdrop of a bunch of utilitarian motorcycles, that’s a pretty cool bike,” Pandya said.

Over the past several decades, the auto industry has gone global, with U.S. car
manufacturers locating plants overseas and foreign car companies building vehicles in the
United States.

"Years ago there was a bumper sticker that said 'I would rather push my Harley than ride a
Honda' motorcycle. Now I see Harley-Davidson stickers on the back of Honda SUVs,"
Pandya said.

Secret Service buying Harley-Davidson


motorcycles despite Donald Trump feud
President Donald Trump may be calling for Americans to boycott Harley-Davidson Inc., but
U.S. Secret Service agents who protect him will continue to ride Harley's motorcycles.

This week, the Federal Business Opportunities website posted the Secret Service’s plans
to purchase a new Harley that could be paired with a sidecar. The website is a place where
federal agencies publish solicitations and requests for proposals from government
contractors and private businesses.
In its pitch for buying a Harley-Davidson, rather than another brand of motorcycle, the
Secret Service said it already had mechanics familiar with Harley, spare parts and sidecars
that fit the bikes.

“Any other motorcycles would require additional training of staff,” the agency said.

Trump’s feud with Harley-Davidson was triggered this summer when the company
announced it was moving production of motorcycles destined for the European Union to an
international factory. Harley said it was in response to the EU slapping a 31 percent tariff
on motorcycles made in the U.S., which in turn was a response to Trump’s tariffs on steel
and aluminum imports.

True grit: Harley rider hits cow, then mattress but is determined to complete ride

Feud: Trump says Harley-Davidson boycott would be 'great'

Sturgis: Harley-Davidson, Indian keep their rivalry alive at rally

Trump said Harley was using the tariffs as an excuse for moving production abroad. “Many
@harleydavidson owners plan to boycott the company if manufacturing moves overseas.
Great!” the president tweeted in August.

Harley-Davidsons are already built in other countries. The company has plants in India and
Brazil where bikes are assembled for foreign markets. It also is opening a plant in
Thailand, closing one in Kansas City, Mo., and expanding its plant in York, Pa.

But Harley says its motorcycles sold in the U.S. will continue to be made here.

And that’s a sticking point for the Secret Service and other federal agencies often bound by
made-in-America buying requirements.

The U.S. Parks Service, for example, also uses Harleys.

“It would be a little unseemly,” for the Secret Service to buy a foreign-made motorcycle,
said Victor Beecher, a former Milwaukee police officer and now associate director of police
training at Northwestern University’s Center for Public Safety.

“It’s kind of a no-brainer that they’re buying a Harley,” Beecher said.

Harley has competitors for police motorcycle sales, including Honda, BMW and Kawasaki.
The New York City Police Department uses BMWs, and Japanese motorcycle maker
Yamaha recently entered the field.
Yet BMW is still a “distant second” to Harley when it comes to police patrol bikes, Beecher
said, even if Harleys are more expensive to maintain and don’t run as well in hot weather.

Harley-Davidson builds specially made police bikes in its factory, while other brands are
modified for police use. Thousands of law enforcement agencies have Harleys, and the
company has been selling bikes to police departments since 1908.

“The reason Harley is so dominant (in police bikes) is because of the length of time they’ve
been in that market,” said Robert Pandya, a veteran of the motorcycle industry who has
worked for Polaris Industries, the maker of Indian Motorcycles.

“As a taxpayer, I am happy to hear the Secret Service doesn’t want to revamp everything
just for some bitter feud the president is having with Harley-Davison,” Pandya said.

Indian was founded in 1901, two years before Harley. For the next 50 years, the brands
fought to capture the hearts of American motorcyclists — until 1954 when Indian folded.

Numerous attempts to revive Indian failed, but the brand has made a comeback under
Polaris Industries, a $5.4 billion Medina, Minn.-based manufacturer of snowmobiles and
all-terrain vehicles.

Still, Indian hasn’t shown interest in making a police bike, according to Pandya, and that
could be because Indian has far fewer dealerships than Harley.

“A medium-size municipality would have a hard time justifying buying an Indian motorcycle
if there’s not a dealer in town to service it,” he said.

You can’t use just any motorcycle for police work, as the bikes have to meet special
requirements.

“If a police bike gets in a crash, you don’t want a gun flying out of the saddlebag,” Pandya
said.

This isn’t the first time Harley-Davidson has been caught up in politics.

In 2008, then presidential candidate, Illinois Sen. Barack Obama, launched a radio ad in
Milwaukee, accusing his opponent, Arizona Sen. John McCain, of turning his back on
Harley by opposing “Buy American” rules for government purchases.

Obama’s ad said “when it comes to his record, American-made motorcycles like Harleys
don’t matter to John McCain.”
McCain was a critic of provisions that require the U.S. government to buy American
products, saying it was sometimes costly to taxpayers and antithetical to open trade.

“I firmly object to all ‘Buy American’ restrictions, as they represent gross examples of
protectionist trade policy,” McCain said on the Senate Floor.

In its justification to buy a Harley, the Secret Service said its goal was to replace older
bikes “of the same make and model that have excessive mileage and are outside a
standard replacement cycle.”

HARLEY-DAVIDSON
ACCELERATES STRATEGY
TO BUILD NEXT
GENERATION OF RIDERS
GLOBALLY
“More Roads to Harley-Davidson” Includes New Products in Additional Motorcycle Segments,
Broader Access and Commitment to Strengthen Dealers

MILWAUKEE (July 30, 2018) – To inspire even more people around the world to experience
the exhilaration of riding a motorcycle, Harley-Davidson today shared details of its “More
Roads to Harley-Davidson” growth plan through 2022.

In a fast-changing world with new consumer demands, these accelerated actions support Harley-
Davidson’s 2027 objectives with increased focus and strategic investment to reinvigorate the U.S.
business while accelerating the pace of international growth.

“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,” said Matt Levatich, president and chief executive officer, Harley-
Davidson, Inc. “Alongside our existing loyal riders, we will lead the next revolution of two-wheeled
freedom to inspire future riders who have yet to even think about the thrill of riding.”
The result of a comprehensive, top-to-bottom assessment incorporating a “customer first” perspective, the
More Roads to Harley-Davidson plan includes:

 New Products – keep current riders engaged and inspire new riders by extending heavyweight
leadership and unlocking new markets and segments
 Broader Access – meet customers where they are and how they want to engage with a multi-
channel retail experience
 Stronger Dealers – drive a performance framework to improve dealer financial strength and the
Harley-Davidson customer experience

“We expect this plan will result in an engaged, expanded Harley-Davidson community with a
more diverse rider base, along with industry-leading margins and cash flow,” said Levatich.

New Products
Leveraging its industry-leading design and strong manufacturing capabilities, Harley-Davidson
plans to offer its most comprehensive lineup of motorcycles, competing in many of the largest
and fastest growing segments with a full portfolio of motorcycles across a broad spectrum of
price points, power sources, displacements, riding styles and global markets. Highlights include:

 Extending the company’s leadership in heavyweight motorcycles by continuing to develop


improved, more technologically-advanced Touring and Cruiser motorcycles that will keep
existing Harley-Davidson riders engaged and riding longer.
 Introducing a new modular 500cc to 1250cc middleweight platform of motorcycles that spans
three distinct product spaces and four displacements, starting with the company’s first Adventure
Touring motorcycle, the Harley-Davidson™ Pan America™ 1250, a 1250cc Custom model and
a 975cc Streetfightermodel, all of which are planned to launch beginning in 2020. Additional
models to broaden coverage in these product spaces will follow through 2022.
 Developing a more accessible, small-displacement (250cc to 500cc) motorcycle for Asia
emerging markets through a planned strategic alliance with a manufacturer in Asia. 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.
 Leading the electric motorcycle market by launching Harley-Davidson’s first electric
motorcycle, LiveWire™, in 2019 -- the first in a broad, no-clutch “twist and go” portfolio of
electric two-wheelers designed to establish the company as the leader in the electrification of the
sport. LiveWire will be followed by additional models through 2022 to broaden the portfolio with
lighter, smaller and even more accessible product options to inspire new riders with new ways to
ride.

Broader Access
Harley-Davidson will advance its market delivery approach and meet today’s customer needs by:

 Creating high-engagement customer experiences across all retail channels – including improving
and expanding the company’s global digital capabilities by evolving the Harley-
Davidson.com experience to integrate with and enhance the dealership retail experience for
existing and new customers.
 Establishing strategic alliances with global leading e-commerce providers to extend access to
Harley-Davidson to a pool of millions of potential new customers.
 New retail formats -- including smaller, urban storefronts globally to expose the brand to urban
populations and drive sales of the expanded Harley-Davidson product portfolio and expand
international apparel distribution.

Stronger Dealers
Harley-Davidson’s world-class dealer network is an integral part of the company’s accelerated
strategy and critical to overall success. The company will implement a performance framework
to significantly enhance the strength of the dealer network and the customer experience, enabling
the best-performing and most entrepreneurial dealers to drive innovation and success for
themselves and Harley-Davidson -- while providing the premium customer experience the brand
is known for across an increasingly diverse product and customer base.

“Harley-Davidson is iconic because we’ve never been static,” said Levatich. “In moving
forward, we are tapping into the spirit that drove our founders back in 1903 and every one of the
employees and dealers who rose to the challenges faced along the way. Our plan will redefine
existing boundaries of our brand – reaching more customers in a way that reinforces all we stand
for as a brand and as a company and we can’t wait to kick it into gear.”

Watch a video highlighting key elements of Harley-Davidson’s More Roads to Harley-Davidson


plan here.

Funding & Financials


In addition to building riders, the company expects More Roads to Harley-Davidson to create
more value, stabilize and strengthen the existing business, improve Harley-Davidson Motor
Company Return on Invested Capital (ROIC), increase revenue and earnings, and allow the
company to return more cash to shareholders.

The accelerated strategy will require significant investment to change the trajectory of the
business globally, and the company plans to fund it entirely through comprehensive cost
reduction and reallocation of previously planned investment and resources including operating
investment through 2022 of $450 to $550 million and capital investment through 2022 of $225 to
$275 million. In total, the company plans More Roads to Harley-Davidson to generate more
than $1 billion of incremental annual revenue in 2022 as compared to 2017.

The company believes its accelerated strategy is in line with and reinforces its objectives to drive
revenue growth and expand operating margins. The company expects to fund strategic
opportunities while maintaining its current investment and return profile and capital allocation
strategy.

Harley-Davidson’s funding principles will focus on stabilizing and strengthening the existing
business, enhancing the premium brand, and investments in profitable, growth-oriented projects.
We expect these principles, along with a disciplined capital allocation focus, will allow Harley-
Davidson to execute with improved cost competitiveness and overhead efficiencies.
Company Background
Harley-Davidson, Inc. is the parent company of Harley-Davidson Motor Company and Harley-Davidson
Financial Services. Since 1903, Harley-Davidson Motor Company has fulfilled dreams of personal
freedom with custom, cruiser and touring motorcycles, riding experiences and events and a complete line
of Harley-Davidson motorcycle parts, accessories, general merchandise, riding gear and apparel. Harley-
Davidson Financial Services provides wholesale and retail financing, insurance, extended service and
other protection plans and credit card programs to Harley-Davidson dealers and riders in the
U.S., Canada and other select international markets.

Harley-Davidson will be playing


in 4 key markets in the future —
here they all are
 Harley-Davidson is making significant changes to its global strategy, but it’s
remaining committed to its core business.
 The company has been attacked by Donald Trump after shifting production
to avoid European tariffs.
 Harley is moving toward a multi-market strategy that will involve
partnerships and new motorcycle designs.

This week, Harley-Davidson announced a new global strategy.

The company affirmed its commitment to the large and profitable


motorcycles that have made it a worldwide icon. But it also revealed that it
will expand its business in Asia and roll out a new platform for smaller
motorcycles.

Contrary to the performance of its stock, Harley’s business is actually pretty


good. It’s cruiser bikes and other big cycles aren’t cheap, which means that
they can be quite profitable and enjoy a loyal customer base.

But the motorcycle market in the US has been declining for years. Young
people aren’t riding, and new bikers aren’t showing up as they did in the
past.

Harley has been dealing with this downturn, but also casting an eye toward
growth markets. India looks particularly attractive. But although
motorcycles are a favored form of transportation there, people prefer small
displacement bikes. Massive Harley v-twins aren’t practical.

It will be up to CEO Matt Levatich to oversee the difficult new strategy.

Here’s how it will shake down:


Harley-Davidson has long been known for its iconic
cruiser bikes — large, powerful motorcycles that
are designed to take on sprawling American
highways.

Harley isn’t giving up on big bikes — not by a long


shot, given that these expensive machines are
highly profitable. But over the past decade, it has
been diversifying its lineup.

The company is under pressure these days, despite


its core business performing well. So CEO Matt
Levatich will oversee a new strategy.
Over a multi-year period, Harley has held its own with the business, but
Wall Street has penalized the stock. Despite the motorcycles generating
good profits – the gross margin is above 30% – investors are nervous about
the customer base getting older and requiring serious money to buy the
bikes.

Younger people aren’t taking up motorcycles like they used to, and that’s
led to a long slide in the size of the market in the US, which is already quite
competitive. The Harley image of open-road freedom doesn’t necessarily
dovetail with the enthusiasm of millennials for city living.

Harley doesn’t want to get stuck in the past, so it’s taking steps now to
revamp its business without betraying the loyalist, who after all haven’t
stopped buying bikes.
Harley has also been attacked by President Donald
Trump, who objected to the company’s plans to
expand production for the European market
without increasing output in the US. The reason?
Tariffs.

To begin with, the strategy will see Harley will


expand its offerings in the all-important US market,
with three new motorcycles.
Harley has already been moving down on the displacement front, taking on
the likes of Ducati and the Japanese (of course, the battle with the Japanese
has been going on the since the 1970s). The Street 500, shown above, is a
good example.

In statement to accompany this week’s news the company said it now


intends to introduce a “modular 500cc-to-1250cc middleweight platform of
motorcycles that spans three distinct product spaces and four
displacements, starting with the company’s first Adventure Touring
motorcycle, the Harley-Davidson Pan America 1250, a 1250cc Custom
model and a 975cc Streetfighter model, all of which are planned to launch
beginning in 2020.”

This platform is all about the US and Europe, from the looks of it.
At the same time, Harley isn’t giving up on cruisers.
That classic hog experience will be nurtured, a
good thing for older, more experienced and —
importantly — more affluent riders.

Perhaps the biggest move, however, will focus on


Asia and especially India, where the motorcycle
market could experience considerable growth in
the coming years.
There’s just one issue: Harley’s big cruiser bikes and even its smaller
machines are the wrong fit for Asia.

That market wants smaller-displacement, cheaper motorcycles. Much


smaller displacement.

So Harley will develop 250-500cc bikes to sell there, and the company won’t
go it alone. It intends to partner with a regional company to better
capitalize on growth in Asia without undermining its core competency in
the US and Europe.

Then there’s the electric motorcycle: LiveWire!


In truth, this is a wildcard. Harley has been teasing an electric motorcycle
for years, but now the LiveWire project will become a reality, coming to
market in 2019.

Like electric cars, electric motorcycles haven’t experienced rapid growth in


key markets – the US and Europe. A few brands have gained traction, but
the overall market is small.

However, it isn’t declining like the gas-powered market. Additionally,


electric motorcycles are easier to deal with than their internal-combustion
counterparts; they have “twist and go” capability, so a new rider doesn’t
need to learn how to manage a clutch and shifting gears with a foot.
Ideally, motorcycle certification programs in US states will shift their rules
to allow new riders to qualify for extra licensing by learning on electric
bikes, taking down a major barrier to entry and at least mitigating the slide
in new riders that the industry is confronting.

Electric motorcycles should also be poised for growth in Asia, notably


China, where the government is backing electrification.