So I’ll talk more about it on the next episode of the podcast but… Harley-Davidson – What are you doing? As a brand focused on a culture it’s developed around itself, why do you keep picking CEOs from outside the culture? Pulling Jochen Zeitz from Puma wasn’t super reassuring, but one could argue that clothing brands know where they fit into specific cultures. While not directly motorcycle related, maybe it’d turn out ok. After all, the joke is that H-D is a tee shirt company that happens to make motorcycles. I think the issues were less directly with Mr. Zeitz and more with the knee-jerk reaction to Levatich’s plan that resulted in Zeitz appointment. And I know I’ve beaten this topic to death, but I really think the desire to do nearly the opposite of what Levatich planned is showing in the current downfall of HD.
Selling part of its headquarters to a distillery was one thing, but selling part of HDFS (Harley-Davidson Financial Services) seems like it should be considered the canary in the coal mine. Through ups and downs of the MoCo, the one leg of the business has always propped them up was HDFS. I mean selling bikes with 84+ month notes and, according to various internet posts, 20%+ interest rates is arguably a good business model when your customer heavily intertwines your product with their identity. No one wants to be the dude at bike night that goes from Road Glide to sneakers, and have to explain they missed a payment. When you take the selling of headquarter space, equity in HDFS, and a loan portfolio as the framing of the new of the new CEO selection, I don’t get the warm and fuzzies.
The new H-D President and CEO is going to be Artie Starrs of… *drum roll please* …TopGolf fame. Yes, that TopGolf – the gamified driving range. When I think of US biker culture and Harley-Davidson, my mind goes straight to golf. When I look at H-D floundering, underinvested in entry-level bikes and affordable paths into their product line, my mind goes straight to golf – a sport that’s going through its own price growing pains. A sport that is definitely not associated with gentrification and opulence (see PGA US Open Sponsor – Rolex). This obviously is going to work out. /s
At least H-D has historically had a brush with golf via golf carts. Maybe that’s the strategy, abandon motorcycles and pivot into a high-end golf cart manufacturer to sponsor PGA events next to Rolex. Maybe we’ll get lucky and instead of affordable motorcycles from a historic American manufacturer, we’ll get an Ultra Classic® with a golf club bag mount and/or more H-D branded golf products.
I think the part that frustrates me the most is that it seems to me that H-D has graduated beyond being a product-first company into an almost exclusively shareholder-first company, as it feels like that is the only way to explain some of the seemingly chaotic decisions over the past handful of years (cancellation of the Bronx, chasing high priced models, etc). Most make sense when viewed through the lens of Wall Street’s share price, EPS, and dividends, even if they don’t make sense for Main Street.
In the meantime, I’ll be watching to see what the new H-D corporate strategy is called, so we can do a sequel to our “More Roads to Rewired Hardwires” episode.