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Passion ignites the Harley business

Harley-Davidson is something of an inspiration to manufacturing; it’s the 46th most valued brand in the world.

People adorn themselves with the bar and shield logo – on their jackets, t-shirts, fore-arms and other, more inventive, places. Forget the normal brand products, with Harley you can buy jukeboxes, pool tables, coffee and even a barbecue, which thoughtfully puts the logo on your burger as it sizzles.

Enter the European headquarters in Oxford and you are inundated with brand images: rooms are set up to represent dealerships with the latest merchandise on show; bikes rest in meeting rooms, on which people sit for inspiration; staff wear comfortable clothes that reflect their passion for the product. Passion is a word that comes up regularly in conversation.

A new beginning

It’s less than six months since former MG Rover director Paul Stroud joined as managing director for Harley-Davidson and Buell UK, but you’d think he had held the position for years.

As he proudly does a tour of the premises, fellow workers lift their hand up in greeting as he passes, or catch his eye and smile. Stroud has his desk on the floor with the rest of the staff – there’s no closed doors here.

He’s just as open with dealers, and it is his mission to attract more to the franchise.

“There are a number of areas within the UK and Ireland that do not have the representation of Harley-Davidson and Buell,” he explains. “We are hoping to fill these open points . The optimum size of the network will depend on the potential volume within the UK.”

Stroud “absolutely believes” that Harley dealers offer a superior service to prospects and customers than rival brands. “Go to a store and you see motorcycles, merchandise, clothing, accessories and parts – it’s the total experience coming to life.

“Our stores are filled with people who are passionately enthusiastic about the brand as well as being professional individuals. We are very good at fulfilling dreams.”

Anyone with a full license can access that dream, even if only temporarily.

Harley is the only bike manufacturer that offers free demo rides. “And it’s not limited,” says Stroud. “If you want to go out and enjoy some cruising, that’s fine.”

Extremely strong residuals

Each dealership has a HOG (Harley Owners’ Group) Chapter. The membership of HOG Chapters ranges from the biggest at 600 members, down to about 150-200 for the new-start dealers.

Internationally, there’s about one million members – no other manufacturer-based group comes close. There’s that brand passion again.

Harley-Davidson bikes are still perceived by many as being expensive, but Stroud doesn’t think this presents a problem. “The range starts at just under £5,000 and goes up to more than £16,000. The cost of ownership is phenomenally cheap. Residual values are really, really strong.

After two years, the residual guide is about 75% – that’s way above Mercedes, way above BMW. “Pricing is not a barrier. We enjoy phenomenal growth , and this year we’re seeking to grow again.”

#AM_ART_SPLIT# Continuing development for growth

Stroud believes the continuing development of the product range will help secure another year of growth. Last year, eight bikes were launched. The range has been developed laterally since 2004, and a whole line of lower models introduced – handy for those men under 6ft tall, and for women.

“Harley is very, very good at exploiting market niches and developing platforms. There’s, conservatively, about 6,300 lines to tailor your bike – and that’s just accessories,” says Stroud.

Retailers select from 8,000 lines, including merchandise. From a corporate perspective, about 90% of revenue comes from bikes and, for the dealer, bike sales account for roughly 77% of revenue.

There are two global meetings held every year, where the new ranges are released. Held in winter and summer, the meetings offer dealers the chance to view everything that’s available.

“It’s like two full halls of the NEC and all you can see is Harley: the scale is phenomenal,” Stroud says. “Harley is adored the world over, supported by rock stars, film stars… it’s strength of brand is amazing.

“Someone asked me: ‘Why do people tattoo themselves with the logo as they wouldn’t do it with Coca-Cola or BMW?’ People have such affection for the brand – they’re buying into a bit of American cool.”

Working side by side with Buell

All Harley dealerships also sell Buell bikes, and Stroud has plans to expand the presence of the Buell brand.

At present, there is just one site that has bikes and cars: St Leger (see panel below). Stroud prefers prospective dealers to be solus. “The franchise is a very sound business proposition, the average ROCE of our dealer network is 2.6-2.8%. But we would consider all suggestions.”

The market for used bikes is nowhere near as big as it is for cars, although the business split is similar: on average, dealers sell 0.8 used bikes for every one new.

Stroud believes that bike retention is down to both the brand and the service customers receive from their local dealership. “They are integral to one another. Every person you meet when you enter a store is absolutely passionate about Harley-Davidson. Anybody who demonstrates an interest in the brand will be embraced.”

Rider’s Edge is an important part of the experience. Based at the Royal Welsh Showground in Bulith Wells, Powys, it offers a range of courses for everyone, held by ex-police class one instructors. They can take someone from complete novice to full license holder in just six days.

The success rate is 92%, and if you don’t pass first time, they continue until you do. The courses aren’t cheap – from £185 for a one day course to £1,254 for six days accommodation and test fees – but people are using the facility as a holiday.

Successful philosophy

Stroud’s philosophy for being successful is: “Having self-belief as an individual and being passionate about what you do. Enjoying life – and your job.”

When the question about his experience towards the last few days of MG Rover is raised, Stroud leans back into his chair, and the confident man is temporarily almost vulnerable. He hadn’t seen the closure coming: “It was business as usual,” he says.

Then his eyes flicker to the special edition 100th anniversary V-Rod, and a huge smile breaks out across his face. Obviously, the passion for Harley-Davidson is contagious.

#AM_ART_SPLIT# Paul Stroud CV

2005-present: Appointed MD for Harley-Davidson and Buell UK.

2000-2005: Brand strategy and communications director at MG Rover. Promoted to regional director – southern Europe, then commercial director UK, and finally sales and marketing director, Europe. In this role he had full responsibility for its eight key European markets.

1999-2000: Brand manager of Rover Cars UK. 1997-1999: Marketing development manager – MG for BMW/Rover. Developed awareness for MG brand and MGF Sports car.

1993-1997: Corporate sales manager for Rover Croup, and then area business manager – MG Cars.

1990: Joins Rover Group Ltd as commercial graduate trainee. Appointed fleet admin coordinator in 1992.

#AM_ART_SPLIT# Harley-davidson: a brief history

1901 William S Harley, 21, designs an engine to fit onto a bicycle. 1903 Harley and Arthur Davidson make the first production Harley-Davidson motorcycle in a 10ft x 15ft wooden shed. By 1909, H-D has produced its first V-twin bike and is selling spares.

1910 Bar and Shield logo used for the first time. 1912 Dealer network more than 200 nationwide. 1913 Racing department formed.

1920 H-D is world’s largest bike manufacturer – 2,000 dealers in 67 countries. 1925 famous ‘teardrop’-shaped fuel tanks used. 1928 Two-cam bikes can reach 100mph. 1929 45cu in V-twin (flathead) engine launched – used until 1973.

1932 Three-wheeled Servi-car available. 1933 Eagle design on fuel tanks marks beginning of graphics. 1936 61cu in EL introduced, nicknamed ‘Knucklehead’.

1945 By the time WW2 ends, H-D has produced almost 90,000 WLA models for military use. Production for civilian bikes resumes November. 1946 WR racing bike premieres. 1947 Sale of first leather jacket.

1952 Side-valve K model debuts, which evolves into Sportster. 1953 50th anniversary celebrated with ‘V’ logo. 1957 55cu in Sportster premieres and becomes known as “the first superbike”.

1960 Only scooter platform from H-D, the Topper, is introduced. H-D buys a half interest in Aeronatica-Macchi, which forms Aermacchi Harley-Davidson. 1964 Servi-car is first H-D to get an electric starter. 1966 First “Shovelhead’ engines available. 1969 H-D merges with American Machine and Foundry Company (AMF), which produces leisure products.

1971 FX 1200 Super Glide premieres – the first cruiser. Snowmobiles go into production. 1977 FXS Low Rider available. 1979 FXEF Fat Bob premieres.

1981 13 senior executives buy H-D back from AMF. 1983 Harley Owners’ Group (HOG) launched. 1984 Evolution engine introduced after seven years’ development. 1986 H-D buys Holiday Rambler Corporation, a maker of motor homes.

1993 90th anniversary ride has an estimated 100,000 people take part; H-D buys into Buell Motorcycle Company. 1998 95th anniversary celebrated by more than 140,000 riders in Milwaukee; H-D buys remaining interest in Buell.

2000 Rider’s Edge launched. 2002 Buell Firebolt premieres. 2005 Paul Stroud is new UK managing director.

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