#2:Harley-Davidson Is Doubling Down on Street Bikes

abc news - #2:Harley-Davidson Is Doubling Down on Street Bikes          


stock has tumbled more than 14% in the days since it reported third quarter earnings, which not only showed lower sales and shipments but also forced the bike maker to lower its estimates of full-year shipments,
indicating business was worse than management had previously suggested.

A lot of Harley sales seem to have migrated to rival Polaris Industries, which saw
motorcycle sales soar more than 150% in the quarter, driven primarily by its Indian Motorcycles nameplate -- which, ever since the brand was resurrected, has resonated with bike enthusiasts. But it doesn't mean all the news is bad for the big bike maker.

Harley has had its own share of success with new bike introductions, particularly its Street 500 and 750 models. Since their reveal in the fourth quarter of 2014, the bikes have already become the top-selling motorcycle in Australia and India, and the 750 was Harley's best-ever selling bike in the Asia-Pacific region when it was introduced earlier this year.

Even here in the U.S., it has been key to introducing new bike riders to the Harley brand, with some 70% of Street bikes sold in the first year to first-time Harley riders.

That, of course, has been the focus of Harley-Davidson's marketing ever since sales broke down. The core Harley rider is an aging white male with money to spend, but since bike sales growth is occurring in virtually every other demographic -- women, blacks, Hispanics -- Harley designed a whole new bike experience to appeal to them. In a sense, it has been working, but by largely abandoning the core bike buyer in its positioning, it risks alienating what is still its biggest cohort of buyers.

Still, the Street bikes have been a success. At the end of the second quarter, Harley's Sportster/Street division was the only one experiencing sales growth, with year-to-date revenues rising 11% compared to a 13% decline in cruisers and a 5% drop in touring bikes.

In the third quarter, though, Street sales tumbled due to a recall that left very few bikes available to purchase, though inventories were restored by the end of the quarter.

Customer response to the bikes has convinced Harley to invest up to $70 million in new marketing and products, with almost two-thirds going to the former and more than a third to the latter.

Going with what works plays to Harley-Davidson's strengths, and right now, it's the Street model that could allow it to ride out this rough patch.

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