Recent years have not been kind to Harley-Davidson. Its sales have sagged, its core customers have aged, and its push toward the electric future, while newly serious, has underwhelmed so far.
In 2019, the last full year unaffected by the coronavirus, Harley shipped 218,000 motorcycles, earning $424 million in net income on $5.36 billion in revenue, healthy enough but well off its glory days. Results from the first quarter of 2021 suggest the company, which is based in Milwaukee, may be turning a financial corner, but the reality is that not enough new buyers are entering the market to offset the riders aging out of it. Harley recently made its innovative LiveWire electric model the flagship of a free-standing brand, but electric sales won’t contribute to the bottom line until there’s a more affordable model that sells in higher volume.
The company openly acknowledged these headwinds as far back as 2018, when Matt Levatich, who was the chief executive, laid out his “More Roads to Harley-Davidson” strategy. A key part of this blueprint would be to poach customers from other brands, which meant branching out from Harley’s traditional (some might say stereotypical) beefy cruisers.
Perhaps the most daring proposal was a high-tech, high-performance “adventure touring” motorcycle named the Pan America, to be powered by a new Revolution Max engine, already in development. The response was skepticism — that any Harley would be too heavy and too expensive.
The Pan America was delayed a year, during which Mr. Levatich resigned under pressure from the company’s board and after five years of falling sales. He was replaced by another board member, Jochen Zeitz, who was previously the chief executive of Puma.
Mr. Zeitz grabbed the handlebar, replacing the “More Roads” strategy with a hard-nosed approach he called “Hardwire.” He cut overhead and staff, closed some foreign subsidiaries, reduced the number of U.S. dealers and cut inventories. Additionally, he reduced the pace of new model introductions and spun off an electric bicycle division.
The plan looked like retrenchment, and some industry observers wondered if the Pan America would even be released. But the new chief was just as determined to enter this market. The result, hitting dealerships now, is a bike that is definitely not your dad’s Harley-Davidson cruiser. The audacious 1,250-cubic-centimeter Pan America Special is a shot across the bow to the European manufacturers that have long dominated this niche market.
“Before you launch into a new category, you always get the doubters and the cynics, but I don’t really care about them,” Mr. Zeitz said in an interview. “Adventure and touring are in Harley-Davidson’s DNA,” he added. “We have not been active in the adventure touring market because we didn’t have a bike, but we sure have the history. We would not have been able to build this bike if it wasn’t in the DNA of the company.”
The adventure touring category traces its roots to 1980 when BMW began selling the R 80 G/S — a model inspired by motorcycles raced in the Paris-Dakar rally. Fast-forward 40 years and BMW’s R 1250 GS is still a best seller. You’ve seen them parked in front of your local cafe — tall, brawny motorcycles with knobby tires, often accessorized with rugged aluminum side cases. They’re motorcycles that seem to say, “Today I’m just having a latte, but tomorrow I’m heading for Tierra del Fuego.”
Fans just call them “ADV” bikes. They’re all flagship models that can hold their own on the autobahn, with long-travel suspensions capable of handling fire roads or worse; they all have advanced anti-lock brakes and traction control.
Another European manufacturer, KTM, sells a Super Adventure model that’s even taller. Ducati, known for sport bikes, offers its take on the category with the Multistrada. When Ducati recently introduced adaptive cruise control to motorcycles, it did so on the Multistrada V4 S Sport.
In February, Mr. Zeitz hosted a much-ballyhooed virtual launch of the Pan America on the company’s YouTube channel. To the surprise of skeptics, the weight (the base model is 534 pounds) and the price (from $17,319) seemed competitive. (Those figures were 200 pounds and $2,000 lighter than Harley-Davidson’s most popular heavy cruisers and touring bikes.)
Today in Business
Of course adventure bikes aren’t ridden virtually. The asphalt, gravel, mud and sand they must take in stride are all too real. So once the coronavirus threat had abated, the company offered test drives at a remote camp in the Mojave Desert, about 100 miles north of Los Angeles. First impressions were made over hundreds of miles of paved and unpaved roads, jeep trails and an infamous stretch of treacherous deep sand.
The model provided was the Pan America Special (which is expected to outsell the base model about two-to-one). The Special has a more expansive electronics package and semiactive suspension. As tested, the bikes weighed about 574 pounds and carried a price tag of about $21,500.
The response this time was far from underwhelming.
“I didn’t really have doubts that the engineers could do a good job,” said Kevin Duke, the editor in chief at Thunder Press, who has been writing about motorcycles for 25 years. “But I was skeptical that they could enter a new market segment and be that good right out of the box.”
Mr. Duke was so impressed by his test ride that it changed his attitude about the company. “The news about Harley for the past couple of years has been quite pessimistic,” he said. “With the older demographic aging out, there was no real hint at what the company could do to gain market share, but this really changes it. The new motor is that good.”
Harley-Davidson calls itself the Motor Company. True to that slogan, engineers acknowledge that they created the motor first and then asked themselves what they could do with it.
The only thing the Revolution Max has in common with other Harley engines is that it’s a V-twin. It produces 150 horsepower and revs to 9,500 r.p.m. — roughly double the red line of its cruiser cousins. Forget the laconic “potato-potato” exhaust note of those slow-revving traditional cruisers; this one roars.
The new motor features a balance shaft so effective that engineers admitted to putting a little vibration back in so it would feel “like a Harley.” It features computer-controlled variable valve timing that is more sophisticated than anything else in the market. The result is a motor that’s ferocious when used aggressively but docile when it has to be, at slow speeds on tricky terrain.
Like the other motorcycles in this class, the Pan America offers a range of ride modes that adjust throttle response, anti-lock brake settings and traction control for rain, “street” or “sport” road settings, as well as two off-road settings. Owners can also create their own ride modes.
Harley raised the stakes with a first for any motorcycle: The Special’s semiactive suspension continuously adjusts to suit the weight of rider, passenger and luggage; terrain encountered; and riding style.
Adventure touring bikes need extra ground clearance and long-travel suspension. As a result, seat heights reach 37 inches — they’re intimidating, even for tall riders. A $1,000 Adaptive Ride Height option on the Pan America Special lowers the suspension as the motorcycle comes to a stop. It is a game changer for shorter or less-experienced riders.
Off-road performance drives bragging rights in the ADV category. But another thing that these motorcycles have in common with Land Rovers and Mercedes-Benz G-wagons — besides being rangy, rugged and expensive — is that they’re driven on paved roads 99 percent of the time.
ADV bikes are just as fun to ride on a winding road as any sport bike. Many motorcyclists graduate to ADVs when their knees, wrists and shoulders can no longer handle a crouched riding position. And unlike conventional road motorcycles, ADVs give riders the option of striking off on paths less taken. That’s why ADVs are popular in Europe (where Harley-Davidson would love to increase its market share of 3 to 4 percent) and becoming more popular here.
Before embarking on the Pan America project, Harley-Davidson surveyed its customers. Many of them already owned or were considering an adventure motorcycle. The Pan America gives those customers a made-in-America option. (The Revolution Max engines are manufactured in Milwaukee; the motorcycles are assembled in York, Pa.) Another upside to a Harley that the European makers can’t match: its extensive dealer network.
Every Harley dealer, roughly 600 of them, will carry the Pan America — a decision made easier because customers raced to put down deposits before the machines hit sales floors.
Under Mr. Zeitz, Harley-Davidson has been careful to build dealer enthusiasm. Dealers who hit certain targets have already cycled through Harley’s training camp in the Mojave, so they’ll be able to talk the talk when a new kind of customer walks through the door.
When those customers ride away, whether it’s to Starbucks or South America, the Pan America will be right at home.