Harley-Davidson goes from Mumbai to Milan to develop lightweight bike models (w/gallery)

Harley Davidson

Harley Davidson goes from Mumbai to Milan to research for lightweight bike model preferences. File: The Street 750 and Street 500 Feature New Liquid-Cooled Revolution X Engines and Dark Custom Styling

MARK CLOTHIER
BLOOMBERG

Harley-Davidson Inc., which has long dominated the market for heavyweight motorcycles, is rolling out its first Harley-brand lightweight bikes in decades as it eyes a global market that is big and, in some ways, smaller.

At events in Kansas City, Missouri, and Milan yesterday, Harley introduced the Street 500 and Street 750, the latest in its Dark Custom line of bikes that aim to bring Harley’s classic look and sound for a modern and younger audience.

The Street was developed with one eye on a global market, where many customers are put off by Harley’s classic road hogs. Harley interviewed more than 3,000 customers in 10 countries and conducted about 1,000 focus groups in cities such as Chicago, Mumbai, Sao Paulo and Tokyo, making it the company’s most researched and market-tested product.

“We’re doing a lot better job as a company getting the voice of the customer into the front end of the process so the bikes we design and develop really meet the needs and requirements of the consumer,” Chief Executive Officer Keith Wandell, 63, said in an interview yesterday.

Harley expects to begin selling the Street in 2014’s first half in the U.S., India as well as Italy, Portugal and Spain, Matt Levatich, president and chief operating officer of the Harley-Davidson Motor unit, said in a separate interview. The 500 will sell for about $6,700 and the 750 for about $7,500, making them Harley’s least expensive bikes.

“This gives us an opportunity to go after good-volume markets and learn how the product is received in different types of motorcycling markets,” he said. “We have high expectations.”

Customer Base

For most of its 110-year history, Harley sold motorcycles as fast as it could to customers it knew well: wealthy, middle- aged American white men. The global recession forced a reckoning. Revenue in 2009 fell almost a quarter from a year earlier. Wandell, installed four years ago from auto-parts maker Johnson Controls Inc., cut costs, sped development and pushed the company to expand its customer base, in the U.S. and internationally.

That meant seeking input beyond Harley’s Milwaukee headquarters from consumers in countries as disparate as India, Italy, Brazil and the U.S. The feedback indicated when consumers think Harley, they’re reminded of metal fenders and fuel tanks, rich, glossy paint and the deep, throaty rumble of a Harley engine, Levatich said.

Restricted Access

The company opened the doors of its product-development center in nearby Wauwatosa, Wisconsin, last year to dealers and sales managers. About 800 engineers and designers there are developing the next generations of Harley motorcycles. Only a third of Harley’s 5,800 employees have access to the building. It wasn’t until last year that a group of its dealers were allowed in for a briefing on new product planning.

The Street, Harley’s first new bike platform in 13 years, reflects the customer feedback. Harley tweaked the frame, lowered the seat to 25.4 inches (64.5 centimeters) and changed the handlebar sweep. At 480 pounds (218 kilograms), the bike is Harley’s smallest and easiest to maneuver, Levatich said.

Harley, which received 25 percent of revenue outside the U.S. in 2006, forecasts 40 percent of sales from international markets by next year. More than half of its dealerships are outside the U.S. as the company tries to broaden its traditional customer base to new buyers: women, younger drivers, blacks, first-time riders and customers outside the U.S.

Production Plans

“Harley’s core base in the U.S., the bread and butter of the company, is a demo that isn’t growing a lot,” Robin Diedrich, an analyst with Edward Jones & Co. who rates Harley a buy, said in an interview. “They’ve really been putting a lot of investment behind this push to expand beyond that.”

The company plans to build the Street in Kansas City for U.S. buyers and Bawal, India, for some international markets. Harley manufactures the rest of its bikes in the U.S. and has facilities in India and Brazil that assemble motorcycles from parts made in its U.S. plants.

Harley last sold a Harley-branded lightweight bike in the late 1970s, when it stopped selling the Sprint. It sold the Buell Blast through its Buell Motorcycle Inc. unit, which Harley phased out in 2009 to focus on its main brand.

Harley’s last U.S.-built lightweight bike was the Bobcat, a 175-cubic-centimeter model the company last made in 1966.

The Street 500 also will serve as the bike for thousands of participants in Harley’s Rider’s Edge driver training program. Harley had used the Buell Blast.

When graduates of the program wanted to buy a bike, Harley didn’t have a lightweight bike to offer them.

CEO Appointment

Harley fell 0.8 percent to $64.47 at the close in New York. The shares have gained 32 percent this year, outpacing the 24 percent increase for the Standard & Poor’s 500 Index. Harley has more than tripled since Wandell’s appointment as CEO was announced in April 2009.

Japanese motorcycle manufacturers, including Honda Motor Co., exported 479,163 motorcycles last year, ranging in engine size from less than 50 cc to 250 cc and above, according to the Japan Automobile Manufacturers Association.

Of the 282,000 new heavyweight motorcycles registered in 2012, 57 percent were Harleys, a gain of 2.3 percentage points since 2010, the company said in its annual report. Heavyweight motorcycles represented 62 percent of the new registrations in the U.S. last year, the company said.

Harley sees the Street competing with bikes such as Honda’s Rebel. That model, with a 234 cc engine, starts at $4,190 and is one of Honda’s more popular lightweight models. That potential has the dealer base excited, said Levatich, who showed the Street to the national dealer council last month.

“This is what we haven’t been offering,” Levatich said. “And it’s credible and its real and we’ve done it well. That’s what the dealers really got excited about. This isn’t a cheap alternative to a Harley.”


Harley-Davidson


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The Street 750 and Street 500 Feature New Liquid-Cooled Revolution X Engines and Dark Custom Styling. Harley Street Production Shoot

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