Harley’s CEO Jochen Zeitz Has Killed the Golden Goose

I feel it best to begin this article with the statement. I hope I’m wrong. I look forward to writing a sequential piece correcting my flawed premise. Time will tell.

Fourth-quarter earnings calls came out at the beginning of February. As one can imagine, lots of eyes were on Harley Davidson as they’ve been hemorrhaging for years now. Despite growth from many European brands, H-D claims their sales were down 8% globally for 2022 (vs. 2021 global quantities).

During the call, Edel O’Sullivan, Harley’s Chief Commercial Officer made a statement that’s stuck in my craw, “…continue to emphasize the balance of desirability and profitability… but also restrained and very, very careful management of inventory…”

But before unpacking that, let’s rewind the clock a bit. When confronted with aging demographics and market headwinds by any other name, former H-D CEO, Matt Levatich launched an initiative he called “more roads to Harley-Davidson”. He promised something like 100 new Harley models, plans to attract younger riders, and so on. We know that the Pan America we see today is the fruit of this labor. We also know, after several quarters of negative press, Levatich left the Motor Company. His replacement, Jochen Zeitz, countered with “Project Rewire” and “Project Hardwire”. Most of which is a bunch of corporate buzzword jargon to send messages to savvy traders and snow the public wherever possible. In short, Zeitz directed the company to slash spending, slash offerings, and stifle supply to boost margins and keep the stock price aloft through “very, very careful management of inventory”.

I don’t begrudge profits. Nor do I oppose change and evolution. I do oppose cutting off your nose to spite your face. I believe Zeitz’s slash program is killing the golden goose, moreover this it’s a symptom of a global problem. That being, publicly traded companies have no stomach for hardship.

What is the golden goose?

Harley-Davidson, as recently as I’m aware, is half of the American motorcycle market in new bike sales. Yet, Harley-Davidson, until very recently, only participates in one segment, cruisers. From the 50s until now, Harley has arguably been selling “lifestyle” accessories to American consumers. Not all that long ago, for ten to thirty grand you could land a piece of Milwaukee muscle. Arguments aside, “entry-level” up to luxury touring models were available for all customers. I’m told Harley even had a commercial that said you could have a motorcycle for the cost of a cup of coffee a day (hat tip to Aled). In the pursuit of higher-margin, uber-premium status, I think those days are ending.

Regime change

I’m not a savvy stock trader, nor am I a Harley insider. Thus, this is my theory, and again, I hope I’m wrong. That said, I suspect the new models we’re seeing released today are carryovers from the “More roads…” program. The Pan America, a record-selling bike, is the flagship of that program. Further spin-offs of the revolution max engine, to a much lesser degree. And for all intents and purposes, it appears that the Bronx has been sacked.

After seeing recent press releases of the new Nightster (Sportster), I was reminded of a couple of legacy Harleys, and came to the conclusion, if someone at the bar and shield was ever phoning it in, that’s what it would look like. Ironically, AMF legacy paint schemes are suddenly in vogue. Those color tones, along with new styling blunders, tell me that a regime change is immanent.

To further expand, I suspect that the powers that be were forced to launch the new Revolution Max line of new bikes. The research and development and perhaps even the production money already spent. The Pan America, while aesthetically radical by Harley standards, still fits inside the “touring” bubble that Harley commands. The rest of the models, however, are dramatic departures from (most) Harley styling and culture.

Some will say that this redesign was necessary because of emissions. Others will say it was prudent to attract the next generation of riders. At first, I believed this. I may even concede this was the initial intent, however upon further inspection, I believe these new models are a result of the bare minimum effort required. This perspective is further solidified by the fact that the Street line of motorcycles was discontinued in 2021, and yet these new Sportster models follow so many of the “unfinished” styling cues that plagued the budget 500 and 750 twins.

I believe the bigwigs in Wisconsin don’t want to sell these base-model bikes. They’re only on the showroom floor because they need to recoup the start-up costs. I arrived at this conclusion judging by the lackadaisical, piss-poor fit and finish, combined with premium price. In a statement, holy leaf blower Batman!

Infinite growth is a fantasy

I understand Zeitz’s strategy, and on its face, it makes sense. Trim the fat, focus on what people are buying, and invest in core products. With regard to shoes, appliances, and cars, I get it. However, Harley Davidson is selling products to something like 1% of the road-going population. Slashing and cutting whilst having at least one eye on the horizon is an even more delicate dance when we’re talking about one segment of one sector of recreational goods. This is compounded by the fact that Harley-Davidson’s business model has more in common with a ford dealer than most motorcycle shops. Dealerships are selling a solely branded riding experience, with bloated overhead, and an ingrained culture making for a much larger ship to steer. Are dealers interested in evolving their internal culture? Are they interested in contracting the motorcycle supply? Will they sell these new models with the same vigor as the bloated touring models? The success of the stock is hinged on more than just what motorcycles roll off the line.

These challenges also run deeper. As others have pontificated before, are these actions just a temporary strategy to make the company profitable long enough to broker purchase from a larger organization that will invest in the brand’s future? To me, it seems feasible. Whether or not this strategy is true, and whether or not it succeeds or fails doesn’t change the fact that most investors don’t care if Harley Davidson is profitable in ten years. Stockholders are not in it for the long haul. Most people own shares in Harley because it makes money. When it stops appreciating, for long enough, they’ll jump ship. This is a systemic problem all across the nation. Companies are beholden to shareholders who are only concerned about returns over the next few quarters. Losses now to invest in a brighter future is not something Wall Street has the stomach for. Amazon, until very recently was the poster child for Wall Street because of its infinite growth business model. At some point, that strategy becomes unsustainable, and that’s fine because when it is, those shareholders have realized their gains and moved on. The company be damned. Unless Harley is privatized post-sale, this is one likely outcome.

Define premium

Limited supply, desirability, quality, and the perception of value, that’s how I see a premium product. Ducati, BMW, and the MoCo have historically held these attributes. Some of these attributes can be fake, others not so much, but just being expensive isn’t enough to sustain a business model built on premium status for long. Shoddy craftsmanship and high prices for fugly modern cruisers are unlikely to keep desirability aloft. I realize I’m picking on one flavor from the menu, but regulation and shifting customer taste could make their better offerings obsolete as well.

Harley Davidson is desperately trying to cling to its premium status as a way to prop up value and zero in on the fattest profit margins. Again, solid strategy, but I don’t think it has longevity on its current trajectory. Holding onto premium perception is a tricky task. Ferrari, Chanel, and Tiffany’s come to mind when I think of brands that are regarded as perennial premium brands. Inversely Kirby (vacuums), Pan American Airways, and Minolta strike me as premium brands that have not stood up to the test of time. Harley Davidson has had its fair share of flop models in the past, so certainly it would be premature to assume copious plastic and exposed wires on new models is the ultimate downfall of the company. However, a shift into “modern performance” isn’t instantaneous and it seems unwise to leave the existing customer base out in the cold.

Know yourself & play to your strengths

Per my above comments, a new, lighter-weight, comfortable touring alternative was a solid strategy with the Pan America. Undoubtedly, aging touring riders are meeting more of their peers at motorcycle hotspots sporting the 1250GSA. Harley band loyalty is literally tattoo worthy, so many folks weren’t going to stray from the black and orange so the flagship ADV machine capitalized on existing strengths in a growing market. Solid move.

On the flip side, I fear that the current Harley leadership has embraced their bean counters and lost sight of what makes Harley Harley. In my opinion, outside of the Pan America, the launch of the new Sportster is half-assed, and while they may see the new Sportster as sacrificial, their impact on the brand reputation will still be felt. Are they going to fix the apparent low quality or just let it ride? Will they axe the new stuff and claim youngsters aren’t interested? I honestly don’t know. I’m completely dumbfounded by the new bike launches. Harley absolutely needs to get people in the door as early as possible, but they can’t sacrifice who they are to do that.

I’ve recently discussed this, people like Harley Davidson for a reason. The reason, as silly as it sounds, is sex appeal, character, quality, and status. Essentially, they sell a premium motorized accessory. Do people want more performance? Sure, but it’s evident that sex appeal and fit and finish have greater pull than the stat sheet; this is also not exclusive to Harley Davidson. On the other end of the spectrum, despite extremely “premium” touring bikes, I don’t think Harley can successfully hang its hat on large-margin bloated touring bikes long term. They have to design and sell bikes that aren’t my grandpa’s bike, but still hold the image of premium quality and sex appeal. Something most of their “new” offerings find lacking.

A lot of words to say what exactly?

I believe Zeitz’s and his associates believe they can look profitable long enough to soak up cash for either meaningful evolution or land a potential buyer that will invest to do so. They may think they can stay afloat as a boutique brand that deals in high-end touring bikes, but I find it hard to believe that strategy has legs. History books are loaded with American car companies that have attempted it. Some may say Cadillac is that brand, but at this point, it’s seldom listed in the top ten luxury brands; if I’m wrong, it’s definitely no Ferrari. That’s what Harley would have to become, a premium motorcycle brand dealing exclusively in top-tier motorcycles that are not known for performance. Perhaps Rolls Royce is a better parallel, but I still don’t think that’s conceivable in the motorcycle micro-economy. In addition, I think there’s a tactical reason they have spun off the Live wire brand as a separate company. I don’t know if it is so they can mothball the petrol-powered company or the electric company when they fail, but I’m sure there’s a reason.

Also, without serious effort invested in cleaning up the imagery of the new revolution max line of motorcycles, these bikes will struggle to sell against similarly priced Milwaukee-8 powered cruisers. The new bikes have better performance than the Harleys of yore, but we also know the V-rod, while it had a cult following, never caught on the way classic pushrod twins did. These new bikes look more soulless than ever, and that’s a major strike against bikes that sell on status and sex appeal. I think Zeitz’s direction was to expend the least effort necessary, and that’s what we’re seeing.

As far as the Pan America, if it’s not already evident, I’ll concede it’s been a success. However, as of late, I’ve noticed a great deal of used Pan Ams for sale on market place. Many of these are top-level trim models with low mileage listed at prices near the base models new. For a bike this new, that doesn’t bode well. In a 2021 economy when credit was cheap, I see why a lot of buyers snatched these bikes up. I question whether or not the initial rush of customers will continue. A few years back, Triumph”s Bonneville Bobber broke all previous sales records. I have a strong suspicion that dealers struggle to move those new cruisers these days. I expect the Pan Am will face a similar fate if certain things aren’t changed. It’s good, but against the competition, it’s not as great as the price would indicate. There are rumors of major quality issues to boot, but that’s a different article.

Again, I hope I’m wrong. I look forward to saying so. If I’m not, I expect we’ll see some interesting shakeups in the next 3 years. If I forget to set an alarm, please be sure to come comment here and remind me to follow up.

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18 Responses to Harley’s CEO Jochen Zeitz Has Killed the Golden Goose

  1. TheQ says:

    H-D lacks passion for what they´re doing, is driven by shareholder-value and therefore doesn´t reach the target audience.

    Royal Enfield is driven by passion, does reach (by that passion) the target audience (young riders) and gains shareholder-value.

    H-D seems to rely solely on their heritage until recently building the same old stuff over and over and over again. Different colours and price-increases don´t make their bikes more appealing. Especially in economical tricky times for most of us.

    Liked by 1 person

  2. parasympatheticsynapse says:

    IIRC, Zeitgeist was Puma’s former chief salary grabber. He did pretty good selling us felt tennis shoes from the 80s. You can’t really blame him for the Revmax. The money was spent for that stuff by the time he got there.
    I think the starboard side of the new Sporty is salvageable. The port side is an unmitigated disaster, but so are most new bikes saddled with govt regulations. Japanese just shoot everything with a matt black rattle can so the ugly doesn’t stick out too prominently. Take a look at the left side of a Honda Rebel or Yami MT09 in your dictionary under “butt ugly.”
    Maybe Zeist figures today’s youth have no choice but to buy ugly, so he might as well get his share of that market?
    I’m a fan of the Road King, but as they killed that off, I’m out of the club so to speak. I don’t need the gigantic fairing full of heavy amplifiers & big screen TVs. I have a $35 XM radio that give me far better fidelity with a pair of plug in headphones.
    If govts are left unchecked on their unscientific commandments, ugly bikes may be our best outcome regardless of who is in charge.

    Liked by 1 person

    • MotoADVR says:

      Agreed, and I said as much, I think the nee power plant was in cycle before he took the reigns. My point is merely that it appears to me that the Pan Am was mostly complete before the slashing and cutting started. The new Sportsters are a half assed tragedy.

      You also make good points about the left sides and Japanese bikes. In a world where they weren’t so beholden to stock holders, perhaps had they started 10 years sooner, I think harley could have liquid cooled engines and maintained the aesthetics and sex appeal that the harley loyal love. Triumph has succeeded. They also started in 2016.

      Liked by 1 person

      • parasympatheticsynapse says:

        Triumph and as someone else pointed out, Royal Enfield. What both have in common is they trade off maximum power output for tidy sized radiators.
        HD went down the Japanese path of most bang for your spec sheet buck and bolted black refrigerators to the down tubes.
        If everything stays black enough, you’ll remain “sinister,” and will blend nicely into the asphalt road background all while maintaining internet power bragging rights.


  3. It is very important to express the feeling of gratitude towards someone who has taken out time to give you a present

    Liked by 1 person

  4. rider marc says:

    Interesting to read. I don’t follow H-D much; but, became more interested with the Revolution engine and applications. (Even though it is strangely tall) My favorite is the Bronx and thought that could be my first H-D. That Revolution engine equipped models could generate lots of sales and impact competition too. Now, if H-D would design and build a 270-degree parallel twin like everyone else, they could sell even more bikes.

    Liked by 1 person

    • MotoADVR says:

      I shared your view. I want the new bikes to be successful, but they still have to possess the elements that make Harley Davidson successful, they can’t be a brand they’ve never been (or haven’t been for decades). They’ve been perceived as a premium brand for decades. These new bikes are not premium. They could be, but it seems like they just dumped them off the back of the truck.

      The Bronx or “Sport naked” of whatever they called it looked great in concept form. Hopefully I’m wrong and we see it after all. It has stiff competition, but it could work.

      Liked by 1 person

      • rider marc says:

        I looked for a Buell SX about nine years ago and then poof! There went Buell–again. Like Motus. Both brands have/had high entry costs for buyers. Then, left buyers with no OEM parts availability. Not a good scenario. This is where H-D has an advantage. I’m not into their tradtion or life-style. Just would like an American motorcycle in a standard and/or sportier style with performance. For that, H-D will most likely have to change at the front office, marketing analysis, and engineering teams.

        Liked by 1 person

      • MotoADVR says:

        I think Harley has nailed it with aesthetics, dealer network, and reliability. Unfortunately they couldn’t figure out hours to do the same with a standard bike. It’s like they always sabotaged it on purpose. Triumph has capitalized on their ability to do it. Unfortunately they’re trying to play the premium card so hard now i think it will hurt them long term. We’ll see i guess.

        I was really crushing on the Motus way back when. It’s a shame they couldn’t make that work.

        Liked by 1 person

  5. There are two ways to increase profits (which is the real goal of any business): Sell more product at a given profit level or sell less product but significantly increase the profit margin. Levatich tried the former, Zeitz is pursuing the latter.

    To me, the key to whether the plan succeeds or not will depend on whether over the intermediate and long terms Harley-Davidson can maintain the “desirability” that Zeitz talks about constantly, specifically among young people who will have to replace Harley-Davidson’s aging-out core customers. Sure, it’s a cliche that Harley-Davidson is the only brand people get tattooed on their bodies (though I do know one guy with a Yamaha tattoo, which is the exception that proves the rule, I guess), but that’s backward-looking. The key is whether younger people will aspire to own a Harley, even if they can’t right now because with the elimination of the Evo Sportster, the cheapest new Harley is about $14,000! While everyone talks about the “legendary” brand and its value, I don’t think it’s a sure thing that the brand will hold that value. Sure, some young people still aspire to a Harley-Davidson. Others take a South Park perspective and think those bikes are for old, fat, white guys, and how many young people in an increasingly diverse U.S. population want to be associated with that image?

    One minor correction of sorts. Harley-Davidson controls less than a fourth of the U.S. motorcycle market, not half, measured in unit sales. Harley used to tout that it had more than half the market, but the asterisk attached to that claim was that it only counted the 600cc+ street bike segment. So eliminate all dirt bikes and small motorcycles and Harley-Davidson outsold everyone else combined. Now, Harley doesn’t even have half of that 600cc+ market, and if you count all motorcycles, they sell less than a fourth. Still huge, but not that huge.

    Liked by 1 person

    • MotoADVR says:

      Thanks for reading Lance. I also agree with you whole heartedly. I think that’s why I’m so passionate about calling attention to these decisions. They just strike me as incredibly short sited. Per infinite comments on Common Tread, I don’t think this strategy is meant to last, it’s a stopgap to something else. You also eloquently explained what I was feeling. If they don’t get new riders on their brand, they won’t necessarily aspire to purchase those higher margin machines. People believe that’s what will happen; start on a rebel and end on a Harley. I don’t necessarily think it swings that way if they stay in this road. Time will tell indeed. Also, thanks for pointing out numbers. I’ve not found the best sources to locate that info. Time to add some footnotes.


      • A lot of the more reliable numbers are hidden behind locked doors and non-disclosure agreements. But just based on public numbers, in 2021 H-D said it sold about 126,000 motorcycles in the United States and about 550,000 in total were sold. It’s easy to find what appears to be conflicting information because some statistics you’ll see may refer only to street-legal motorcycles.

        Liked by 1 person

      • MotoADVR says:

        It’s interesting that such a small niche of recreational sales choose to hide their numbers.


  6. Simon says:

    Interesting indeed. Here in Europe I really cannot understand why any biker wants a Harley cos we do not have your 55mph limit and endless freeways, we have small roads and corners so for me the Japanese bikes are the tops for performance and speed as well as boring reliability. I have ridden thro many western European countries and even 1100km per day with my old FJR1300 and she uses ZERO oil. Try that on a BMW (or a Harley).
    I recently took a ferry from Roma over to Barcelona in Spain cos I was heading down to Gibralter. The 5 Harleys with me were heading to the north of Spain. Well TWO of the 5 failed to start when we arrived in Barcelona, so they headed to the local Harley dealer. Reliable??? CRAP.

    Liked by 1 person

    • MotoADVR says:

      Experiences vary wildly. I know Harley-Davidson to be very reliable when folks don’t excessively tinker with them. I’ve also seen quite the problems with KTMs… it’s unfortunate that it’s difficult to discern the truth.


  7. Pingback: ADV Motorcycle Trim Levels are Wrong | Moto Adventurer

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