After Appointing a New CEO, What's H-D's Next Move?

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Don Brown Harley-Davidson H-D CEO

Editor's note: Economic conditions are affecting the powersports industry, as they are affecting many other industries. Some of the significant declines in our sales forecast could be the result of a very slow start in the first two months of 2009. This slow start could be the result of manufacturers depleting stock at the end of 2008, then not being able to have the right models for early sales. In the end, we won't know enough about what this year may do for another two or three months. Our forecasts are made with the best of efforts and techniques, but given these economic pressures, we must advise the greatest care in evaluating these forecasts. Stay tuned! — DJB

As i was writing this column, I received a call from a Milwaukee newspaper asking the same questions that are probably on just about everyone's mind, if they make their living in the motorcycle business. (Click on charts for larger view.)

Of course, not everyone is equally interested, but when the No. 1 manufacturer of motorcycles (at least in terms of U.S. sales) finally wakes up after a significant period of "doubt," it's not strange that questions abound. After all, we are talking about a company that has cut a very wide swath since its rebirth in 1982. It's relevant also to point out that despite the terrible downward pressure on industry retail sales of late, Harley still holds the top position in the sale of motorcycles.

I quickly found out that the important news was that Harley's board of directors had appointed several senior executives, the most important being a new president and CEO of Harley-Davidson Inc. The new boss is Keith Wandell (left), formerly with Johnson Controls, an important company in the automotive aftermarket.

Now that Harley has decided to make a move, what should we expect it will do? It's hard to determine what its direction will be, because the new boss isn't a motorcyclist at all. (He does have a brother who is a Harley owner and member of a HOG club.) Some I spoke with said they doubted he would have all that much to do with sales, although that is an assumption based on his lack of sales experience detailed in his letter to dealers.

From what I can determine, Wandell is a specialist in manufacturing and in controlling manufacturing costs. That could prove to be an important ability if Harley decides to build a new range of vehicles that will compete more directly with the Japanese. I doubt he will be directing the marketing or sales execs, at least not in the usual sense.

To be fair, we don't yet know this fellow. We may soon find out that many of the "barbs" I've heard (and some I am responsible for myself) are wrong. I know that most people wish for Harley's success. After all, what it has contributed to this industry might reasonably be compared with the tremendous change brought about by American Honda when its founder Sochiro Honda decided that the U.S. was the best market for introducing its range of runabout bikes in 1959. Harley has revitalized the aftermarket of the motorcycle business just as Honda changed the potential of the entire industry at that time, and literally for an undetermined future.

So Harley-Davidson has finally decided to appoint a new CEO, a move that on its own merit will be applauded by many who were critical of a financial person running a manufacturing and sales company. Only time will tell if this change will really make the kind of difference that many — including myself — have wished for.

What will Harley's next move be? Will it decide to design bikes that Gen Y will yearn for? If so, that won't be easy because, while that generation has plenty of capital, at least in normal times, it doesn't seem to favor particular brands as much. The next four or five years ought to be full of interest and, I might add, intrigue. — DJB

INTERPRETING THIS INDEX

Index is based on the author's analysis of the MIC Retail Sales Report, SEC filings of quarterly and annual reports, and other information provided by publicly traded companies (such as Harley-Davidson and Polaris). Readers are cautioned that these estimates are subject to error, which can result from changes in seasonal patterns due to unexpected weather conditions and fluctuations in the economy. Interruptions in the supply of popular models can also affect these forecasts. Forecasts are not intended for investment purposes. Questions concerning this index should be addressed to the author, c/o Dealernews, or the author via e-mail at djb-llc@cox.net. Composite Index Advisory Board: Lindsay Brooke, Motorcycle Historian and Analyst • Tom Hicks, Owner/President, Southern California Motorcycles • Paul R. Puma, GE Commercial Finance • Craig Southey, COO of Cycle Barn MotorSports Group

* The DJB Index is the square root of the total of our sales forecasts for motorcycles, ATVs and scooters. This index allows readers to look at (and keep track of easily) one number that is a summary of our predictions.