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[jpdchicago]

Harley just announced it was reducing production during the next few quarters to preserve their "premium brand" and keep the prices up (Wall Street Journal April 21st, 2015.) Supposedly their new strategy to fight large discounts by Polaris (Indian) and other competitors.
I wonder how that is going to impact CVO production...and value...

[Cross threaded]

Interesting, I can't wait to see how this effects the brand.

[ultrarider123]

Harley just announced it was reducing production during the next few quarters to preserve their "premium brand" and keep the prices up. Supposedly their new strategy to fight large discounts by Polaris (Indian) and other competitors.
I wonder how that is going to impact CVO production...and value...

Could you post the source of your information JP?  I would like to read the entire deal. 
I'm sure the MoCo's press line explanation of reduced production states what you posted.  However, let me read between the line just a bit here.  How many of us here on the site know one, two or more dealers with LOTS of leftover new 2014 bikes not to mention unsold 2015s sitting right beside them?  My guess is one of the main reasons of reduced production is to let sales of current inventory catch up a bit....
As JC would state:  justsaynzall

[jpdchicago]

Just modified my post to include the source. Article from the Wall Street Journal from April 21, 2015. You should be able to google it. For sure there is a need to reduce inventory...and quickly... before 2016 models come in...

[ultrarider123]

thank you sir

[jpdchicago]

You are Welcome!
I think you are right as well...they need to sell those bikes quickly before 2106 models hit us!

[CVOStreetglide]

Harley just announced it was reducing production during the next few quarters to preserve their "premium brand" and keep the prices up (Wall Street Journal April 21st, 2015.) Supposedly their new strategy to fight large discounts by Polaris (Indian) and other competitors.
I wonder how that is going to impact CVO production...and value...

Please remember that the Annual Dealer meeting usually takes place in late July to early August.
 This is where the new models are rolled out and shipments start the following week or two. Of course CVO's may or may not show up in the initial shipments.
SO, to reduce production now means that there really is only 1 more 2015 production quarter remaining. So, slowing down is really a normal process every year. They will start changing over the production line in early July to start making 2016's and staging them for shipping.

Clearing out inventory is a normal process too. How many of us went into our dealers and saw $2,000 or at least $1,500 discounts on the 2014's last year after the 2015's hit the floor?

The "spread" is still large enough to allow the dealers to make a good profit even with that kind of discount.

I think the important thing is that Harley realizes that it is better to closely match production to dealer inventory and customer demand than it is to continue making as many motorcycles as they can, jamming them down the dealers preverbial throats only to see lots and lots of last years models sitting on the floor and not selling.

Jerry

[Nicky Pass]

Here is a link....

http://www.wsj.com/articles/harley-davidson-cuts-shipment-guidance-amid-competition-1429615662

They are only scaling back 4%.... Not much.

[agedwards63]

Well they can't put a Tariff against Polaris LoL but seriously is Vic/Indian selling any even with the discounts???

[JCZ]

Since we're running on speculation......it's so they can ramp up early for the 120ST......coupled with letting them get rid of the new 110s sitting on the floor right now. 

[CVOStreetglide]

Since we're running on speculation......it's so they can ramp up early for the 120ST......coupled with letting them get rid of the new 110s sitting on the floor right now. 

+1 

[OBB]

Since we're running on speculation......it's so they can ramp up early for the 120ST......coupled with letting them get rid of the new 110s sitting on the floor right now. 

   



Nah,,,, they're slowing down the line to catch the stupid mistakes like upside shocks and loose bolts along with screwed up paint.

[BritGuy]

I suspect that much of this is inventory management. The motor trade runs on manufactures financing bikes/cars whilst it's on dealers shop floors for up to 90 days. After that, the dealer will be expected to pay the manufacturer and get their floor stock financed through a bank or other credit facility (a stocking facility). Whilst interest rates are low, not too much of an issue but with the Fed signalling a potential rate rise in the coming quarters, dealers do not want to be stuck with a large stocking facility and see their debt servicing costs go up.

The big challenge for Harley is that their core franchise is getting older and less is being spent on P&A. The Street is clearly a response to that, but will harley be able to move first time Harley buyers up their value chain to the larger engined models and spending on 'customization'. I think the x-wire is a side show, a good one which they can spin off into their twin models, for example, the brakes on a Chevy now are far better because they developed electric powered cars that had no engine breaking, so brakes had to last longer and be more powerful. Good trickle down technology to more traditional vehicles.

Harley still have the time to make the required changes, Rushmore part of that granted. The brand and whole lifestyle is an incredibly valuable asset as I am sure that Polaris is understanding and with over 50% of the US market, Harley have a delicate balancing act to on board the next generation without alienating the cash flow attached to their legacy market place.

Which is why CEO's (good ones anyway) deserve to b rewarded for making long term strategic decisions rather than short term revenue generation to keep the scribblers (analysts and investors) happy.

Just my 2 cents worth to an interesting debate.

[DCFIREMANN]

Please remember that the Annual Dealer meeting usually takes place in late July to early August.
This is where the new models are rolled out and shipments start the following week or two. Of course CVO's may or may not show up in the initial shipments.
SO, to reduce production now means that there really is only 1 more 2015 production quarter remaining. So, slowing down is really a normal process every year. They will start changing over the production line in early July to start making 2016's and staging them for shipping.

Clearing out inventory is a normal process too. How many of us went into our dealers and saw $2,000 or at least $1,500 discounts on the 2014's last year after the 2015's hit the floor?

The "spread" is still large enough to allow the dealers to make a good profit even with that kind of discount.

I think the important thing is that Harley realizes that it is better to closely match production to dealer inventory and customer demand than it is to continue making as many motorcycles as they can, jamming them down the dealers preverbial throats only to see lots and lots of last years models sitting on the floor and not selling.

Jerry

Third week of August.

If the 120 ST is going to be introduced. I'm sure it will be on the CVO Models only. With that being said ALL of the 110 models that are sitting on the floor MUST be sold before they roll out the 120. If not they will be sitting a long time. Hell I know a Dealer that had a 2008 CVO that was sitting on the floor for over 2 years. He finally put it in his warehouse and decided to keep it. It still has no miles on it.  So again this is all speculation. But IF the 120 ST is going to be introduced that would not explain the decision to cut back production. Less bikes will mean a lot of bikes no longer sitting on the showroom floor. It will also mean less to choose from. I'm not exactly sure when the Factory shuts downs to retool for the next model year, but it coming up real soon!!!!

Just my thoughts!!!!

Be Safe

THE DAWG

[mark]

HD is cutting back production because their sales are sliding.  I don't think it has anthing to do with a 120.

[ZVO]

Less bikes won't necessarily create demand.

[smkymtnboy]

the one dealer I have talked to says his sales are ahead for 2015 by a good margin compared to years past. I realize this just a very small part of the big picture.

[JCZ]

I suspect that much of this is inventory management. The motor trade runs on manufactures financing bikes/cars whilst it's on dealers shop floors for up to 90 days. After that, the dealer will be expected to pay the manufacturer and get their floor stock financed through a bank or other credit facility (a stocking facility). Whilst interest rates are low, not too much of an issue but with the Fed signalling a potential rate rise in the coming quarters, dealers do not want to be stuck with a large stocking facility and see their debt servicing costs go up.

The big challenge for Harley is that their core franchise is getting older and less is being spent on P&A. The Street is clearly a response to that, but will harley be able to move first time Harley buyers up their value chain to the larger engined models and spending on 'customization'. I think the x-wire is a side show, a good one which they can spin off into their twin models, for example, the brakes on a Chevy now are far better because they developed electric powered cars that had no engine breaking, so brakes had to last longer and be more powerful. Good trickle down technology to more traditional vehicles.

Harley still have the time to make the required changes, Rushmore part of that granted. The brand and whole lifestyle is an incredibly valuable asset as I am sure that Polaris is understanding and with over 50% of the US market, Harley have a delicate balancing act to on board the next generation without alienating the cash flow attached to their legacy market place.

Which is why CEO's (good ones anyway) deserve to b rewarded for making long term strategic decisions rather than short term revenue generation to keep the scribblers (analysts and investors) happy.

Just my 2 cents worth to an interesting debate.

With all due respect Brit Guy.....this all sounds like it's coming from a CEO to justify their compensation discrepency.  It takes the entire team from the guy that's sweeping the floors at night all the way up to the CEO to get the job done.  The CEO alone can not get the job done.....regardless of what they're paying him.

If this sounds like it's coming from a low level managment blue collar worker......it is.  And I do my job just as through, compitent and diligent as the guy sitting behind the desk in the crystal palace.  While I would expect a CEO to make more than I, a lot more....I also believe that the disparity has grown rediculously out of preportion and is not warranted or justified.

My post earlier was kind of tongue in cheek, posted with humor.  However, having said that, based on Harley's history of controlling production and inventory (remember the 100th anniversary production shifts they made) there may be some unknow validity to my above post. 

[BritGuy]

JCZ, I get just as pissed with CEO's who destroy companies, or just crank the handle on an existing 'cash cow' and get hugely rewarded for it. Too many stories of corporate greed where everyone suffers, all employees and ultimately their customers.

I do believe that visionary CEO's deserve to be rewarded and the good ones ensure that this get's distributed fairly. Just look at John Bloor and what he has managed with Triumph. Took a stale old brand with tanking sales and made it a force to be reckoned with. His investment capital, his risk. Clearly he needs good people around him to develop and execute such a strategy, but without his vision and risk taking, many jobs in the UK and else where would have been lost.

Good CEO's know that they need good people throughout the organization. It's like the Kennedy story when he asked a janitor what he did in NASA, his response? 'I put men on the moon'. That sense of inclusion gets the job done from shop floor to management. Few achieve it, but those that do are ultimately successful.....for everyone.

Probably not the place to get into a debate over how companies are managed and financed, and the last thing I wanted to do was cause any offence. But I do think that the challenges facing corporate Harley are very real and will require some fairly major changes.

Just my personal opinion   

[skippy]

that's good may make our bike value go up ... on another note i see a lot of Indians around Charlotte NC saw some in Greensboro  with the big wheel package  and  lots of customization ....  big $ being spent on Indians...  also seeing lots of the tricked out Victory

[dlaws01]

Well they can't put a Tariff against Polaris LoL but seriously is Vic/Indian selling any even with the discounts???

Just for info, there's just about as many new Indians as there are H-D's sitting out in the parking lot at work when I go in.

[Dr.D]

SMHD in Maryville TN is sell the chit out of them. It is ridiculous how they are selling bikes all day long every day. I should try and get a number to post on here. They have no fear in taking stock bike having it painted and dressed to the gills with chrome or black and selling it for 13K OVER msrp.

Colbach HD in Morristown only 30 miles down the road is dead as all get out. they still are of the old school that if it ain't black it ain't the right color. They do have so bikes with color but I do n to understand the difference in sales activity?

I think they are making to many bikes and we are sucking them up. It is now hard to trade a bike with over 50'000 miles as it seems to be disposable at that time. Really now are Harleys only valuable to that milage??? It is a disease of this culture to always have to have the new improved. Oh i am one but not proud of that.

[D-N-D]

After 2003 there were ( Inventory ) bikes leftover every year and seemed like more and more each year ?? they need to do something besides discounting the leftover bikes, make less inventory create demand sounds like pre 2003 get in line and pay MSRP.

[mark]

I posted this in another discussion thread - HD's problem is one of mathematics.  HD's resurgence in the late 1980s was fueled by the baby boomer generation and that population is beginning to age away.  Unfortunately for HD, there are not enough Gen Xers to fill the gap.  Ever wonder why HD has introduced so many different Sporters and the new Street 500 & 750?  For comparison: HD sales for 2006, when compared to 2012, are off 30%. 

[grc]

After 2003 there were ( Inventory ) bikes leftover every year and seemed like more and more each year ?? they need to do something besides discounting the leftover bikes, make less inventory create demand sounds like pre 2003 get in line and pay MSRP.

That's what they've been doing since 2008, and they still have leftover bikes at the end of the model years.  They still haven't come up with a way to accurately assess demand ahead of time, so even though they have reduced capacity and had some downtime, they still manage to create excess inventory.  Sadly, they also keep using a bad distribution model that gives extra bikes to places that don't really need them, while starving small dealers who could sell more if they had them.  The only good dealer in my area voluntarily retired and shut the doors a few years back because Harley wouldn't commit to giving him more allocation, even after he built the new building they pushed for, and then within a few more years added on and doubled the space.  The big guys won't give up the allocation they've earned from previous years of high sales, even though they no longer have as many customers, because to do so would leave them less allocation in the future if something were to happen and the market returned to the late '90's situation of waiting lists and selling anything that wasn't bolted or welded to the floor.

I haven't seen anything yet that would indicate the good ol' days are returning, now or maybe ever.  I expect to see more dealerships go away, and Harley have to further reduce production capacity.  A big chunk of the boomers who fueled the big rise of Harley are now like me, old and grey and not riding much anymore.  I don't see the same passion for motorcycling in the millenials, and of course they are a much smaller group as well. 

The next 20 years should be very interesting.  Harley shareholders need to hope the board comes up with a much better management team than the last two.

JMHO - Jerry

[HighOnHD]

That's what they've been doing since 2008, and they still have leftover bikes at the end of the model years.  They still haven't come up with a way to accurately assess demand ahead of time, so even though they have reduced capacity and had some downtime, they still manage to create excess inventory.  Sadly, they also keep using a bad distribution model that gives extra bikes to places that don't really need them, while starving small dealers who could sell more if they had them.  The only good dealer in my area voluntarily retired and shut the doors a few years back because Harley wouldn't commit to giving him more allocation, even after he built the new building they pushed for, and then within a few more years added on and doubled the space.  The big guys won't give up the allocation they've earned from previous years of high sales, even though they no longer have as many customers, because to do so would leave them less allocation in the future if something were to happen and the market returned to the late '90's situation of waiting lists and selling anything that wasn't bolted or welded to the floor.

I haven't seen anything yet that would indicate the good ol' days are returning, now or maybe ever.  I expect to see more dealerships go away, and Harley have to further reduce production capacity.  A big chunk of the boomers who fueled the big rise of Harley are now like me, old and grey and not riding much anymore.  I don't see the same passion for motorcycling in the millenials, and of course they are a much smaller group as well. 

The next 20 years should be very interesting.  Harley shareholders need to hope the board comes up with a much better management team than the last two.

JMHO - Jerry

Aha! Now I understand. Not riding as much anymore = "AKA Grouchy Old Fart"!!

I'm grey and definitely getting older and grouchier too! Not slowing down quite yet on the riding and my wife will hate how grouchy I am going to be when I do. 

[FLSTFI Dave]

SMHD in Maryville TN is sell the chit out of them. It is ridiculous how they are selling bikes all day long every day. I should try and get a number to post on here. They have no fear in taking stock bike having it painted and dressed to the gills with chrome or black and selling it for 13K OVER msrp.

Colbach HD in Morristown only 30 miles down the road is dead as all get out. they still are of the old school that if it ain't black it ain't the right color. They do have so bikes with color but I do n to understand the difference in sales activity?

I think they are making to many bikes and we are sucking them up. It is now hard to trade a bike with over 50'000 miles as it seems to be disposable at that time. Really now are Harleys only valuable to that milage??? It is a disease of this culture to always have to have the new improved. Oh i am one but not proud of that.

They also sell plain black ones.  Bought my wife's 15 Road Glide Special there.  Easy to put another 12K into the bike with out doing a lot.  Custom Paint, Chrome wheels, Chrome Forks, and rotors.  Performance front fork cartridges, CB, Phone Adapter, garage door opener, luggage rack, sissy bar and back rest, pipes, and tuner.  Rear bag guards, Led lights for turn signals and bullets in back.  Extra bag lights for better visibility. 

Great looking bike but I will loose way more on it, than my CVO's

[Dr.D]

They also sell plain black ones.  Bought my wife's 15 Road Glide Special there.  Easy to put another 12K into the bike with out doing a lot.  Custom Paint, Chrome wheels, Chrome Forks, and rotors.  Performance front fork cartridges, CB, Phone Adapter, garage door opener, luggage rack, sissy bar and back rest, pipes, and tuner.  Rear bag guards, Led lights for turn signals and bullets in back.  Extra bag lights for better visibility. 

Great looking bike but I will loose way more on it, than my CVO's

I just bought one of their custom paint all decked out SGS for my wife. Never can trade that bike for sure.

[FLSTFI Dave]

I just bought one of their custom paint all decked out SGS for my wife. Never can trade that bike for sure.

I understand.

My plan is like I did on her Street glide, it had the custom paint and fork legs and so on.  When it hit 45K miles I traded it on a plain black one, and we with SMHD knowing swapped all the accessories to the new bike, including the paint.

So, I know the body and such will not change for several model years.  When she hits 40~45 K miles we will trade and keep all the custom stuff. It helps spread the cost of a couple bikes.  Keeps the wife happy with her custom purple paint.

[Dr.D]

I understand.

My plan is like I did on her Street glide, it had the custom paint and fork legs and so on.  When it hit 45K miles I traded it on a plain black one, and we with SMHD knowing swapped all the accessories to the new bike, including the paint.

So, I know the body and such will not change for several model years.  When she hits 40~45 K miles we will trade and keep all the custom stuff. It helps spread the cost of a couple bikes.  Keeps the wife happy with her custom purple paint.

That is very savvy. Happy wife is good but not free.

[Puma]

Please remember that the Annual Dealer meeting usually takes place in late July to early August.
 This is where the new models are rolled out and shipments start the following week or two. Of course CVO's may or may not show up in the initial shipments.
SO, to reduce production now means that there really is only 1 more 2015 production quarter remaining. So, slowing down is really a normal process every year. They will start changing over the production line in early July to start making 2016's and staging them for shipping.

Clearing out inventory is a normal process too. How many of us went into our dealers and saw $2,000 or at least $1,500 discounts on the 2014's last year after the 2015's hit the floor?

The "spread" is still large enough to allow the dealers to make a good profit even with that kind of discount.

I think the important thing is that Harley realizes that it is better to closely match production to dealer inventory and customer demand than it is to continue making as many motorcycles as they can, jamming them down the dealers preverbial throats only to see lots and lots of last years models sitting on the floor and not selling.

Jerry

Right there is the truth. Totally normal and nothing new.

[J-Carr]

This isn't a CEO move.  This is an accounting move.  The CEO is listening to the accountants while ignoring the customers.  Harley's entire business model is outdated.  And until they get a visionary CEO who can strong arm the suits to change it, Harley will continue to slide.  Is it permanent as suggested earlier?  Who knows.  Know one saw the resurgence and buy back in 1979 and at the end of the next decade they could do no wrong.

Here's an idea:  Eliminate all the models.      

Make a touring bike, a dyna, a sporty, a softtail, a v-rod and the street.

Make it so you order it with the parts you want.  Just like you do at a car dealer.  I go order a touring bike.  Add Fixed Fairing, lower fairings, and water cooled head engine in a 110 configuration please.  Add the gee whiz line of heated grips and matching controls.  Pick the sliceyourarmoffinator wheels in a 22 front and 18 back.  And I'd like the fully loaded BT headset protocol supporting infotainment system please.  Add it all up and it would cost a little more than what a limited costs  now, but it would be the bike I want, just the way I want it and it would be cheaper than trying to turn an existing Road Glide into a Road Glide Custom with Ultra DNA.

MoCo can work out how to channel that with the dealers... who does what as prep and what comes from the factory.  It would get buyers because your not buying the chit you take off and throw away.  They get market share to make up for the lack of P&A up front.  And guess what.  People would change their minds and still go back later and add more P&A stuff.  It might hurt the dealers a little on the outrageous mark up accessories, but they'd get customers to come in for service and sell more bikes.

Of course you'd have to have product that worked and really did address what people are looking for.  Not package a turd and call it the greatest infotainment when you can get better than that on the lowest end cars on the market.

Letting bean counters who only see numbers run the business is a sure way for a CEO to look good for a year or two and then watch a company slip away.  Having a true visionary who can radically change the market, define the demand, meet it and steer it while balancing the bean counters advice... that's a guy who might just save Harley.  Is the new guy going to be that guy?  Hey... I'm just an idea guy.  I don't do fortune telling.