Harley-Davidson has revealed its Hardwire 5 year financial plan. In many ways, the plan continues to follow what the MoCo has already said. But there are a few areas where there are new plans. Hardwire key highlights are as follows:
- Change from an over promise / underperform ethos to one of setting realistic expectations.
- The MoCo will concentrate on profitability and desirability through multiple paths, but especially inventory management (lower production) and reduction in discounts and promotions.
- Will reach out to both current and future riders through multiple venues including media and dealers.
- Invest in its core segments to increase profitability as well as segments where Harley sees long term growth. This means touring, large cruisers, and Trikes. And, expand into the adventure touring segment (Pan America) to unlock untapped sales potential.
- Launch a “Harley-Davidson Certified” pre-owned motorcycle program to grow other Harley complementary businesses such as Harley-Davidson Financial Services and Parts, Garments and Accessories (PG&A)
- Fuel growth by reinvigorating PG&A and expand them globally.
- Create a semi-autonomous Harley-Davidson electric motorcycle division responsible for Harley’s electric motorcycle products. For the immediate future, urban mobility will be at the forefront. Zeitz says current electric motorcycle technology cannot presently support areas like motorcycle touring.
- Incentivize employees by offering equity grants (stock options) to approximately 4,500 Harley employees.
- Make capital investments between $190M to $250M annually.
As for Harley’s Q4 financial performance, the numbers did not meet Wall Street’s expectations. It is reporting an adjusted net loss for the quarter although analysts had expected positive earnings. Sales also missed, with Q4 numbers at $531M against analyst’s expectations of $772M.
Wall Street is reacting strongly with the stock dropping nearly 19% to 32.58 at the time of this writing.