Harley COO: Bikes will get more "accessible," remain American
(Reuters) - Harley Davidson Inc's (HOG.N) chief operating officer Matt Levatich said the company will offer motorbikes that are more "physically and financially accessible" to buyers both in the United States and abroad, but it will continue to keep its manufacturing operations almost entirely in the country.
Levatich said at the Reuters Global Manufacturing and Transportation Summit that the company is striving to appeal to a broader array of buyers, from women and minorities in the United States to those in emerging markets. While volume and market share for several of its bikes has grown in 2011, the company's products still appeal to a narrow band of buyers.
"In the past, our market was predominantly core customers in the United States," Levatich said. "We see an opportunity, not to make (scooter-sized) bikes by any stretch, but to make Harley-Davidsons that are physically and financially accessible for emerging markets, for international markets, for the United States for that matter."
The least expensive bike Harley-Davidson offers is priced at about $8,000. Levatich said the company may consider making smaller and less expensive bikes.
However, he said the company will continue to do the bulk of its manufacturing in the United States, where it assembles nearly all the bikes it sells in the world. It also does some "complete-knock-down" assembly of motorcycles in Brazil and India due to tariff issues in those countries.
To date, Harley-Davidson has taken a largely go-it-alone strategy in places such as China and India, instead of finding a partner to develop or sell bikes.
That is partly because the company has been held back by international partnerships before, Levatich said, citing the example of a former Italian distributor which promoted lower-cost Harley sportster bikes over its upper-end models.
"We feel we were aided in waiting a little bit and not getting in early with a JV partner that had a different idea of what the Harley brand could be or should be," Levatich said. "Part of the decision to go in on our own was because of the cleanup work we've had to do, a lot of the cleanup work was where we were buying out distributors and resetting the market."
If the company should some day sell a bike that appeals only to emerging markets, he said the company would keep its options open on where to build it. But for now, it has no plans to open production plants outside the United States.
Levatich said India represents a considerable opportunity for Harley-Davidson bikes -- which he considers to be strictly a "leisure" product -- given the acceptance of motorcycles in that market.
"They grow up on two-wheeled vehicles, so there isn't an issue of use or acceptance. As the middle class continues to grow and as more leisure time becomes available and as the country continues to invest in infrastructure as they are, you'll see that market developing to more into the leisure part of the story.
Levatich said Harley-Davidson has been successful in recent years in broadening its consumer base by increasing its U.S. share of younger, female and minority buyers. At the same time, the company has increased its mix of international sales from 25 percent five years ago to 35 percent in 2010, and plans to reach 40 percent of sales in international markets by 2014.
The company is expanding its demographics by "doing a much better job of capturing these regional or country-specific trends and interests and funding it into our product planning process." Still, he said, "we have to be laser-sharp in the motorcycles we choose to develop."
(Reporting by John D. Stoll; Editing by Richard Chang)