How Harley-Davidson, Inc. Hopes to Gain Market Share
Feb 5th 2014 6:00PM
Updated Feb 5th 2014 6:02PM
Heavyweight motorcycle leader Harley-Davidson has new competitive pressure coming from Polaris' revival of Indian-brand motorcycles. As expected, Harley gave back some market share during its most recent quarter leaving it with a still dominant 54.9%. To continue improving motorcycle sales, the company has focused on growing the diversity of its customer base through marketing and product innovation.
Hit the Street
One of Harley-Davidson's key goals is to grow its U.S. sales to outreach customers at a faster rate than its core demographic of white males over 50 years old. Harley defines its outreach customer segments as young adults aged 18-34, women, African-Americans, and Hispanics.
The company plans to broaden its reach with the new Street 750 and Street 500 motorcycles. These lighter, smaller, and more fuel-efficient motorcycles are designed to support the riding needs of young adults living in urban areas. It features a Revolution X engine that is designed for stop-and-go traffic and is housed in a narrow chassis that offers better agility than a typical Harley-Davidson heavyweight motorcycle.
"These new bikes are leaner, yet still have a mean streak - they're the real deal, made of real steel," said CMO Mark-Hans Richer in a press release, "They're designed to handle the abuses of urban environments and provide authentic opportunities to customize."
The Street is the first all new platform Harley has released in 13 years and should help the company grow market share in its outreach customer segments.
A new Rushmore
Project Rushmore motorcycles rolled out in Aug. 2013 and was the largest new model launch in Harley-Davidson's history. The eight new motorcycles are the first ones to come through the company's newly improved product development pipeline and have sold nearly 28,000 motorcycles since its launch. Project Rushmore made a series of technological and design improvements to Harley's touring bikes that include new electronic controls, bodywork, and aerodynamics among many other changes.
The launch of Project Rushmore came around the same time as Polaris's launch of Indian heavyweight motorcycles. Indian motorcycles have been around as long as Harley-Davidson and the brand has the potential to rival Harley's recognition. In its most recent quarter, Indian single handedly drove Polaris's motorcycle sales up 94%.
When asked about Indian's recent performance, Harley-Davidson CFO John Olin answered, "So they sold some motorcycles, but nothing outside our expectations at all. So it's what we expected. It hasn't thrown us off our plan at all." While Harley takes all of its competitors seriously, the Indian brand doesn't seem to be worrying the company as it remains focused on its plan to expand market share.
The launch of Indian motorcycles brought more attention to the heavyweight motorcycle industry which is good for everyone in the segment.
During its 2013 fiscal year, Harley-Davidson followed through on one of its key goals when retail sales of motorcycles to outreach customers in the U.S. grew at twice the rate of its core customers. This marked the fifth-straight year that the company was the U.S. market share leader in motorcycles sales to outreach customers.
The company also seems to be thriving through the Polaris launch of Indian motorcycles. It's too early to tell how much of an effect the Indian brand will have on the heavyweight motorcycle market, but Polaris's recent sales increase hasn't worried Harley. With new the Street and Project Rushmore bikes, I think Harley-Davidson is well positioned to expand its hold on the outreach market moving forward. And as Warren Buffett once said, "Any company that gets its customers to tattoo ads on its chest can't be all bad."
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The article How Harley-Davidson, Inc. Hopes to Gain Market Share originally appeared on Fool.com.Ben Popkin has no position in any stocks mentioned. The Motley Fool recommends Polaris Industries. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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