Earlier this week, BMO Capital Markets analyst Gerrick Johnson attended the Harley-Davidson investor day event in Milwaukee and provided Powersports Business with a research note.
“At the event, HOG provided an update to its Hardwire strategy, called Hardwire Stage II, as well as an update on the LiveWire SPAC. True to form, management kept much of the discussion at a higher, more strategic level with limited tactical details. The main themes were a customer-first approach, expanding the definition of a customer beyond a rider, reducing complexity, and investing in the dealership experience. We continue to view the Hardwire strategy positively.
“While we may wish to have heard more details on the implementation of the Hardwire Stage II plan, we do think the strategic initiatives are on target. Most intriguing, and seemingly the highest priority, is expanding the definition of a customer to incorporate non-riders as well as existing ones. For too long, HOG's focus was on the motorcycle and building a base of new riders, not necessarily growing its base of customers. Hardwire II puts the focus on the customer and monetizing that customer by not only selling motorcycles, but also through holistic brand experiences, particularly apparel and licensed merchandise.
“A Harley-Davidson discussion would not be complete without a discussion on desirability. The Street Glide may be the best-selling H-D motorcycle model in America, but what is creating excitement and buzz at dealerships is newness and exclusivity embodied by newly introduced models and limited editions. The company is expanding the use of limited editions in 2022, rolling out new sportster and middleweight models on its new Revolution Max platforms over time, and plans on investing $300 million over the next five years to update its core motorcycle line.
“Reducing complexity in order to increase speed to market, improve decision-making, and enhance efficiency in manufacturing has been a key tenet of management's strategy. Thus, it was not surprising that a considerable amount of time was spent on its new modular approach to design and manufacturing embodied by the Revolution Max platform.
“One of the most encouraging conversations was around investment in the dealership network and enhancing the customer experience, which includes an anticipated spending of over $2 billion by its dealers in the next 10 years on updates and refreshes. We think improvements in the dealer network are long overdue.”