By Dennis Chung
Harley-Davidson laid out the details for The Hardwire, the company’s new strategic plan for the next five years. Highlights of The Hardwire include investing in the touring and heavyweight cruiser segment, expanding into new segments and creating a new division dedicated to electric motorcycles.
The Hardwire’s goals from 2021 to 2025 include a mid single-digit annual growth in revenue and a steady improvement in operating margin from motorcycle sales as well as a double-digit growth in Harley-Davidson Financial Services (HDFS). Capital spending will range between $190-250 million annually, including expanding Harley-Davidson’s digital ecosystem and establishing the new electric vehicles division. Harley-Davidson also targets a low double-digit growth in earnings per share.
The Hardwire builds on the groundwork set by the previous Rewire strategy and consists of six key priorities:
- Investing in Harley-Davidson’s most profitable segments
- Selective expansion into new segments
- Leading in electrification
- Growth in non-motorcycle businesses
- Connecting with customers
- Inclusive stakeholder management
Most of these priorities come as no surprise, as they continue trajectories established by the Rewire.
The first two priorities go hand-in-hand, as Harley-Davidson strikes a balance between its existing segments – large cruisers, touring motorcycles and trikes – and new segments like adventure touring with the new Pan America.
Jochen Zeitz, chair, president and chief executive officer of Harley-Davidson, says the company will establish a 70-20-10 construct; a 70% focus on its core segments, 20% on new segments, and 10% on other opportunities including small displacement models.
Harley-Davidson’s Core Segments
Putting the bulk of its focus on its existing segments is a conservative choice, and one Harley-Davidson has made time and time again. While this approach tends to draw the scorn of critics, it’s the smart decision, as heavyweight cruisers, tourers and trikes have proven to be highly profitable for Harley-Davidson with strong margins.
Critics argue that Harley-Davidson needs to branch out into new segments, …read more