The fight for who controls Harley-Davidson continues, as H Partners Management—the investment firm that had a seat on the brand's board of directors until their man resigned in protest because he wasn't allowed to pick the company's new CEO—has found another investor to join its campaign.
Indeed, Purple Chip Capital, which has about a 1% stake in Harley-Davidson, is joining H Partners Management in its attack against retiring CEO Jochen Zeitz, as well as board members Thomas Linebarger and Sara Levinson. Basically, they're alleging corporate malfeasance in the form of the brand's "misguided" Hardwire strategy, straying "from the core tenets" of the brand, and a "neglected" culture.
As such, they're making their grievances public in the hopes of swaying other investors and stakeholders, and are demanding that not only those three executives lose their seats effective immediately, but also that Harley-Davidson kill its LiveWire electric motorcycle arm. They're also asking for a return to the Harley-Davidson of old, one of chrome and leather, and when their return on investment was much higher.
Too bad that reality doesn't exist anymore and was left behind in the '90s.
As an aside and before I get into their claims, I'd like to point out that Purple Chip Capital's statement not only failed to include the dash in Harley-Davidson in every single mention, but also misspelled Harley-Davidson in one instance. It's a minor quibble, but by the end of my reading of its statements and claims, it made me so annoyed, and just added to my belief in these people being so unserious and clueless about the brand, that I just kept refuting their points.
According to Purple Chip Capital's statement, "As long-term Harley-Davidson shareholders and customers, we have watched in dismay as the Company has drastically strayed from the core tenets that made it a true and lasting American icon. Being a Harley-Davidson owner has always been so much more than simply owning a bike. It has meant becoming a part of the distinctive culture and community that is so widely recognized across the United States."
The firm goes on to talk about dealerships being the lifeblood of the company, how the brand's culture has been neglected, how online sales (which isn't a thing at Harley) have basically destroyed the company, and how the board favored "egregiously off-brand product lines and a departure from the high-quality optionality that made each and every Harley Davidson bike truly unique."
Sure, 800 pages of accessories just isn't enough in terms of optionality. But here's when they get into wanting LiveWire dead.
"On the product front," they state, "the Company must acknowledge that the electric LiveWire line of bikes was horribly misguided and should be discontinued. Harley-Davidson owners do not want an electric engine, they desire raw American power. Instead, the Company needs to refocus its efforts on attracting the next generation of Harley riders, revamping the lineup, and bringing back the iconic Sportster 883 as an entry-level motorcycle."
First off, electric motorcycles have their place. I've got a forthcoming article on what I think Harley should actually do in the space to create some waves. But I do agree that LiveWire's product roadmap has been...misguided. But discontinued, nah. There's a path forward there, and Harley-Davidson needs LiveWire to continue if it's aiming to survive another 125 years. Research and development is something every company needs to have lasting success, and LiveWire could be that arm.
Second, "raw American power" is just a silly thought based on Harley's current financial issues. Most of Harley's new customers are aging out of motorcycling, as no one under the age of 50 can afford a $30,000 to $50,000 bagger. And those who can already own one. Likewise, younger demographics don't give two shits about "raw American power." You know what they do want? Affordability, which Harley really only has in its used models. Even those, however, are expensive.
But to that end, bringing back the Sportster 883 is so stupid, only an investment banker who doesn't pay attention to the industry could've thought that up. This isn't an entry-level motorcycle to today's motorcycle customers, folks. Look at what's doing well in the entry-level market. Look at the motorcycles that encompass that market. They're small-displacement and cheap. They're approachable and you don't have to worry about falling. They're easy to maintain, and won't cost an arm and a leg in terms of insurance either. They're bikes like Triumph's 400s, Royal Enfield's entire lineup, and the 300 to 500cc motorcycles from Japan.
None of that describes an 883. But here's where it goes completely off the rails.
"It is time to reignite the pride that Harley-Davidson riders have always had in their bikes and the Company, and to bring back the highest-quality parts and accessories made with chrome, steel and leather," they state. Emphasis mine, as it's just the silliest, most basic thought of what Harley-Davidson is. It's like you asked a 5-year-old, "What's a Harley?"
Because, again, the market has moved on from this era of motorcycling. We don't live in an Easy Rider era anymore. We don't live in a Boomer-centric market. Harley-Davidson's financial and sales issues aren't because it has strayed from its roots, but because it hasn't strayed far enough. Baggers still exist. Softails and Hardtails still exist. Cruisers are still a core piece of its lineup. Older white dudes are still Harley's core audience. Nothing has really changed since "the good old days."
Purple Chip Capital ends its statement, saying, "We believe unseating those three long-tenured directors, who are clearly disconnected with what Harley-Davidson has built its legacy on, would serve as a baseline step towards returning the Company to glory for the benefit of its riders, dealers and stockholders."
But it's funny to me that they use the phrase "clearly disconnected," as from someone who's actually paid attention to the industry in a far more microscopic way, both Purple Chip Capital and H Partners Management are the ones who are clearly disconnected. And the fact that these investors can't see that is proof that they shouldn't be listened to.
