July 23, 2007 – Harley-Davidson corrects its flight pattern with dealers

The Harley-Davidson Motor Company just held its annual summer meeting for all dealers from around the world. Four thousand, seven hundred people showed up at the Opryland convention center in Nashville, Tenn. The product line for 2008 was introduced and for U.S. dealers a complete change in the way in which motorcycles will be distributed was unveiled.
The 2008 lineup went well beyond bold new graphics, with three new V-twins, one new Buell and, get this, price reductions on some models. All comments I heard from dealers regarding the product line were positive. There were a few, but only a few, who did not like the new allocation process.
Previously, dealers had earned an SUA (allocation) based on a turn-and-earn basis. The Motor Company found this system was putting too many motorcycles in the wrong place, since the allocation had been earned when market conditions and dynamics were dramatically different than they are today.
The new allocation number is primarily determined by an annual business plan submitted by the dealer. This plan is subject to review and approval by the Motor Company and is subject to established criteria and limitations of the dealer. Shipments throughout the year are conditioned on dealers maintaining sales objectives, with the ultimate goal being the dealer inventory being at conservative levels established by the Motor Company. My opinion is that the plan is brilliant and far better than any I am aware of in the motorcycle or automotive business.
As was the case at the winter meeting, the central theme from the CEO on down was that things have changed. And, as at the winter meeting, no one was heard to disagree. My response to anyone talking about how things were different was, “and, so what are you doing different?”
Much to the credit of Harley, they are making major changes in the way they do business and are providing more resources for dealers to make needed adjustments. The summer meeting is a very busy time for dealers and their staff. There is much to see and consider and some key buying decisions need to be made. It was clear there was little exhibited urgency when it came to checking out the new training and information resources on display. The information being provided was, to my way of thinking, the most valuable thing being offered. To be fair, the distractions abounded.
I had traveled to Nashville in my trusty old Twin Cessna, and stopped on the way in Orlando for my annual recurrent training, which common sense and my insurance company dictate that I have. Much of the training is done in a very high-tech flight simulator. You “fly” the simulator while the instructor conjures up endless devious distractions and failures. To pass, you have to identify and solve or adjust to the problem, while continuing to fly the airplane. And of course, for some reason the auto pilot always fails.
On every aircraft there are three primary instruments. They measure airspeed, attitude and altitude. Aircraft do not crash because of mechanical failure, they stop flying when you run out of airspeed and/or altitude, which is often brought about by failing to maintain the aircraft in the proper altitude.
It has often occurred to me that dealerships fail for exactly the same reasons. We operate complex and multi-disciplined enterprises with many entry level personnel. We are seasonal and have the need to meet high customer expectations and an ever-increasing overhead. There is no shortage of distractions; they come at us throughout the day. The dealer principal and every department head has to deal with the distractions while never losing focus on what is making the dealership “fly.”
Air flow under the wing creates the lift to make the aircraft fly, customer flow does the same for the dealership. There is no more important piece of information to a retailer than how many people come in. If the count is less than you need, in every department, address it before you stall. But before throwing massive advertising dollars at the problem, check the altitude. Is everyone focused on making it easy for the customer to buy? Do you have the processes and enough people to make the most of what traffic you are getting? Altitude: are you at the right level for your customers? Is it a fun place for your customers? Are you where you need to be, and are you open the hours that the current market dictates?
We have lots of information, perhaps an overload of it. We need to change and make needed adjustments, without losing track of air speed, attitude and altitude. Cheers, Ed. psb
Ed Lemco has been involved with the powersports industry for more than 30 years. Lemco, the former owner of Lemco Management Group, is the executive director of the National Council of Motorcycle Dealer Associations. Lemco currently operates a call center for dealers in St Croix.