Harley-Davidson plans to boost marketing spend over 50% next year to stay on track, as third-quarter results seem to show the company slowing.
The third quarter this year didn't work out the way Harley-Davidson wanted. The company had hoped it would enjoy the kinds of renewed volume that the auto industry has enjoyed. But Harley-Davidson sales sales were down 1.4% worldwide for the third quarter versus the year-ago period. In the United States, sales are down 2.5%, while they are up nearly 1% globally, the company reports.
In a statement, Matt Levatich, CEO of the Milwaukee company, said the competition is stiffer now. "Now is the time for us to dial things up with significant additional investments in marketing and product development.”
The company's plans include reallocating spend toward where consumer demand is. And the company expects a one-time charge of $30 million to $35 million in the fourth quarter of 2015, primarily for employee separation and reorganization costs related to this reallocation.
The motorcycle manufacturer said that next year it will increase its marketing budget by 65%, versus this year's spend. And H-D says it will increase its investment in new product development by about 35% from 2015 levels. These changes represent an approximate $70 million increase in investment to drive demand compared to 2015, the company said.
The larger goals driving increased marketing and product spend are increasing product and brand awareness; growing new ridership in the United States; increasing and enhancing brand access; and accelerating the cadence and impact of new products, the company said, in a statement on third-quarter results.
Those goals are part of the brand's brand map with five points: lead in every market; grow the sport of motorcycling in the United States, in part by growing the number of U.S. core customers and growing the number of U.S. outreach customers at a faster rate; outperform the S&P 500; grow U.S. retail sales and grow international retail sales at a faster rate. For the latter, the company says it will grow its international dealer network by 150 to 200 new dealerships by 2020.
Year-to-date in 2015, dealers sold 217,770 new Harley-Davidson motorcycles worldwide compared to 220,850 motorcycles in the year-ago period, with retail unit sales up 6.9% in the Asia-Pacific region and down 1.3% in the United States.