Harley Davidson

HARLEY DAVIDSON

Company Background

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Founded 1903 in Milwaukee, WI R&D innovations spawned the motorcycle industry around globe In the decades following WWII, the firm floundered and was purchased by AMF, 1969 – sales and brand loyalty plummeted In 1981, the firm is re-purchased by a group of HD executives. In 1986 the firm is listed on the American Stock Exchange, and in 1987 it is listed on the NYSE.

High on the Hog: Company Status as of 2003

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Tremendous levels of respect in the industry

 Following

the 1981 takeover product quality, dealer service, and customer loyalty improved  In 2003 Ranked 3rd in Automotive quality behind Rolls Royce and Mercedes Benz  Held a place on Fortune Magazine’s 100 Best Places to Work List

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Compounded growth of 16.6% for the prior decade – leading to $4.6B in revenue for 2003

A Rough Road Ahead

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Harley Davidson Management was very bullish on their future, analysts not as much

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Harley Davidson’s North American image was heavily based on appeal to baby boomers Younger Gen X and Y buyers were not drawn to the “Easy Rider” image

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Europe was the largest market for motorcycles, and second largest market for heavyweight cycles.

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Harley Davidson struggled in Europe at around 6% share European cyclists often preferred, smaller, sportier machines

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Poor production planning had led to an abundance of supply – reducing wait times and forcing the firm to offer special financing to increase sales

These combined effects of a market focus on a narrow demographic group, the difficulty experienced in gaining market share in Europe, and short term forecasting problems point to the need for action

Potential Solutions

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Refocus on existing assets such as the VRod and Buell brands

 Market

the sports bikes and HD history to Europe

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Acquire a smaller, European manufacturer

 Smaller

Euro style bikes, engineering, and dealer networks are already in place...