Harley is beginning its search for a new CEO, Volvo is making some new cars, and coronavirus. All that and more in The Morning Shift for Monday, March 2, 2020.
Harley-Davidson and its CEO Matt Levatich parted ways on Friday in what amounted to a classic late Friday news dump. Levatich had been CEO since May 2015 but failed to turn things around at the motorcycle maker, with sales dropping each year he was in charge.
Levatich had been in the midst of electrifying Harley’s lineup, with the flagship LiveWire debuting last year, the first of several planned electric bikes. The LiveWire was good but it also flopped and Levatich’s other bid to get more people into Harleys—the company’s “More Roads” initiative, which includes a lot of buzzwords—was underwhelming.
Now, it must find a CEO who really can revolutionize what the company has been about, whether that’s by leaning even further into electric bikes or simply recognizing that the company is niche these days at best in the U.S., and far more valuable overseas.
Bloomberg took stock of the company in an article yesterday, somewhat inadvertently revealing how feeble the company’s turnaround attempts so far have been.
Harley was caught flat-footed by competition from more affordable, lightweight bikes as heavy motorcycles like the one Marlon Brando rode in the movie “The Wild One” went out of style, said David MacGregor, an analyst at Longbow Research in Independence, Ohio.
“They’re finally figuring it out, but they’re three years behind the curve,” he said by phone. “The board members and investors were just not willing to wait.”
The new CEO would come aboard as Harley is entering new segments with less expensive middleweight bikes, small displacement motorcycles for Asia, and a slew of electric bikes. It’s also been trying everything from tweaking its iconic logo to acquiring a kids e-bike company to attract younger riders.
Even with the yearslong slump in sales, “we are surprised by the timing of the leadership change ahead of major new product launches scheduled over the next few years,” analysts Sharon Zackfia and Tania Anderson of William Blair & Co., wrote in a note.
President Donald Trump’s trade wars haven’t helped matters but Harley was struggling well before Trump arrived on the scene. Taking over, for now, will be board member Jochen Zeitz, who previously led the German shoemaker Puma for 18 years. That isn’t exactly relevant experience but at least he might have an outside-ish perspective.
Time is running out, in any case. Harley made $423 million in net income last year, down from $531 million in 2018, a worrying number because the economy was so strong. Still, a profit is a profit, though Harley will want to reshape its business while it still is making profits. Its next permanent CEO has their work cut out for them.
Coronavirus is all over the globe at this point, taking lives while also having a real impact on the world’s economy. That very much includes automakers. Reuters reported Monday that Hyundai’s bottom line in particular is in bad shape:
Hyundai Motor (005380.KS) reported its lowest monthly global sales in a decade in February as the coronavirus outbreak hurt demand, in what is the first major indicator of damage to the broader auto sector from the epidemic.
It turned in a preliminary sales figure of 275,044 vehicles for the month, 13% below 315,820 vehicles sold a year earlier. Hyundai last reported sales lower than this in February 2010.
This will all probably get worse before it gets better, so I would expect other automakers to take similar hits.
People want to buy GM SUVs! A few at least, probably all in Michigan.
Bloomberg says GM is hiring 1,200 workers to staff up two plants in Lansing, Michigan, where GM makes the Chevy Traverse and the Buick Enclave.
While GM had planned on hiring workers for the Cadillac facility, the additions in the Delta Township plant were not part of a comprehensive four-year labor deal signed with the United Auto Workers in October. Those new jobs come in response to growing sales of SUVs as U.S. consumers abandon sedans for those models and crossovers.
Last year, sales of the Chevy Traverse rose 0.3% to almost 150,000 units. That increase came despite a 40-day strike that cut production and resulted in fourth quarter sales of the SUV falling 15%. Enclave sales rose 3% last year.
GM spokesman Dan Flores said inventory of the Traverse and Enclave are low and the company needs more of them to meet consumer demand. The company may also be trying to steal market share from Ford Motor Co.’s competing Explorer, which has suffered due to problems at the plant that builds the SUV.
Please reassess your life if you’re in the market for a Traverse or Enclave, I beg you.
The plant will have manufacturing capacity of 200,000 new energy vehicles a year, the document showed. In China, new energy vehicles include battery-only, plug-in hybrid and fuel-cell vehicles.
Toyota declined to comment on the project but said in a statement that the company regards China as one of its most important global markets and is constantly considering various measures to implement in China to meet the needs of growing the business in the country.
The brand is planning a big new crossover and a small new crossover, according to Automotive News, which spoke to some dealers. The big one will be in the same class as Mercedes’ GLS and BMW’s X7. AN claims it will be called the XC100, sure to make XC90 owners feel meek. The smaller crossover reportedly will be called the C40, which is in line with the rest of Volvo’s naming scheme:
Volvo did not confirm the information provided to Automotive News, declining to discuss future product. But according to dealers familiar with the product plans, the automaker will launch a new flagship crossover — the XC100 — aimed at satisfying America’s appetite for roomier luxury rides.
Volvo retailers were briefed on the future products in Las Vegas last month.
The crossover is expected to arrive in the second half of 2023 and will be built at Volvo’s Charleston, S.C., plant. A battery version is expected a year later.
The C40 is expected to arrive in the second half of 2021 as part of a fleet of Volvo EVs now in the pipeline, according to the dealers who attended the presentation. The battery-powered XC40 Recharge P8 will arrive in U.S. stores this year. And an electric XC60 crossover could arrive in 2021, followed by an XC90 EV.
According to dealer descriptions, the C40 will have a sloping roofline and an updated taillamp design and will feature an EV-inspired grille design. That grille will debut on the XC40 Recharge P8.
Both of these make a whole lot of sense, though I’m looking forward to the C40 more for obvious reasons, since it’ll be smaller. I would prefer a new S40 though.
I had never heard of this:
If you were CEO of Harley what would you do to turn the company around? I think would basically pursue its (sort of) current strategy of launching a bunch of small and interesting electric motorcycles, but do it about a million times faster.