Harley Seeks A More Diversified Hog

by , Jan 28, 2009, 2:41 PM
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Harley Davidson XR-1200 Harley-Davidson plans several changes this year to address a slower market and aging customer base.

With fourth-quarter earnings down 6.8% to $1.29 billion and an 8.2% decrease in sales, the company will try to boost ridership among younger consumers, women and multicultural segments of the U.S. market, with new products, like the XR 1200, and a new trade-up marketing program.

Harley-Davidson--for which the median age of buyers is north of 45 (versus around 38 for the rest of the business)--recently launched a trade-in program in which owners of its entry Sportster model can trade up to a larger bike and get the original MSRP back. And in December, the Milwaukee motorcycle manufacturer pulled the wraps off the new XR 1200--the company's first upright, non-cruiser performance bike--at the Cycle World International Motorcycle Show in Long Beach, Calif.

Actually, H-D had tried to launch an XR 1000 a quarter century ago, but it didn't sell--even though its predecessor, the XR 750, had been a staple of the MotoGP and flat-track racing circuit and an iron steed of choice for Evel Knievel.

The Milwaukee company--which also makes Buell performance bikes, and last year acquired Italian MV Agusta Group--also plans operational changes that will result in about 1,100 jobs being eliminated this year and next, including 800 hourly positions and 300 mostly salaried jobs. The company says about 70% of the cuts will happen this year. The changes include consolidation of engine, paint-and-frame operations, and parts, accessories and merchandise operations, and closure of a distribution facility.

The company says that after a one-time charge of $110 million to $140 million over the next two years, it expects to save $60 million to $70 million per year.

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