I’ve been thinking about why Harley-Davidson had a significant negative Net Income for the year of 2009. My thinking led me to look at the number of models that H-D has. They seem to have very few engines and very many models per engine. This seemed like a slow moving and high cost product strategy.
From that initial idea I decided to look at the number of models offered by the various motorcycle brands. Since H-D is a cruiser only company I tried to break up the motorcycle market into ‘cruiser’ and non-cruiser or ‘sport’. I took the number of families the company groups its bikes into, plus the number of different engines it offers, plus the total number of models it touts. The families are the least important of the three, since families are largely a marketing decision and therefore slightly arbitrary.
What I was left with was a general idea of product complexity per brand.
As I expected H-D is the most complex of the cruiser brands, yet I was surprised to see Star so close behind. The problem with the complexity of H-D products is the narrow band of its appeal. Star is very complex as well, however, Yamaha Motors, Star’s parent company, is a much more diversified company than H-D, especially after the closing of Buell. If large displacement cruisers fall out of favor, as they did in 2009, H-D is really far up the creek without a paddle and with a hole in their boat.
Victory, H-D’s main competitor, is much more focused in it’s product offering. Indian is a competitor but not a strong one due to their market position, however, we can see their ultra-focused product line: One family, one engine, seven models.
Complexity in the ‘sport’ market, as it is here defined, is less troublesome since it includes many different riding styles and applications. As I have defined it, the ‘sport’ market includes any two wheeled vehicle that is not a cruiser/retro style bike. This includes, super-sport, sport, touring, motocross, scooters, and so on. Since there are many sub-markets to the sport market risk is spread out over many different types of consumers.
I started this idea thinking about H-D, so that is how I will end it as well. H-D is introducing too many models that are very similar. I suggest cutting out several models. For example the Nightster and the Forty-Eight are so similar, why not have a base model of something similar to the NIghtster then having customers opt in to having it modified to the Forty-Eight.
Since, in general, H-D owners are so quick to customize their rides, the strategy I am explaining is a hybrid of what already takes place. Currently, consumers purchase an H-D then use after market parts to make it “their own”. This strategy would be similar only there would be fewer base models to choose from initially, yet with a few changes of parts, performed locally at the dealer, the consumer can have the base model modified to one of several base+ models.
This won’t be an easy transition for the company nor for the public, however, with such a high level of complexity H-D stand to have drastic lows like it did in 2009. By example, producing a Nightster plus some Forty-Eight parts, tank, mirror…., is a lot cheaper than producing and stocking inventory of both the Nightster and the Forty-Eight.
I wish Harley-Davidson then best of luck in coming years. With proper leadership the company should be fine.
Thanks for reading and happy riding.
