Levatich’s Tough 5-Year Ride At Harley-Davidson Comes to An End

Millennials. Tariff wars. Aging boomers. Uber. Sustainability fears. Matt Levatich may have been doomed as CEO of Harley-Davidson from the start, thanks to inexorable trends in the motorcycle market that couldn’t have been navigated by Easy Rider himself. Check out the ScooterAdviser on a comparative guide on bikes and scooters. But the 55-year old chief of the Milwaukee-based icon, who was ousted on Friday, also made at least two errors over the last couple of years that surely didn’t help matters.

Levatich is out as chief after a five-year tenure that largely consisted of presiding over a secular plunge in sales and not being able to figure out how to reverse it. After 26 year career with Harley-Davidson, Levatich stepped down as president and chief executive officer on Friday and yielded to Jochen Zeitz, a Harley board member who will serve as its new CEO.

“The board and Matt mutually agreed that now is the time for new leadership at Harley-Davidson,” Zeitz said in a press release. “Matt was instrumental in defining the More Roads to Harley-Davidson accelerated plan for growth, and we will look to new leadership to recharge our business.”

Harley came back from a near-death experience in the early 1980s when company principals bought the brand back from AMF and benefited from President Reagan’s imposition of huge tariffs on foreign bike imports, giving the company some breathing room and the chance to create an ownership culture among the huge generation that was coming of age. The brand came to symbolize a lifestyle for care-free and reasonably well-off boomers who fueled sales and idolized “Hogs” for a generation. As they matured and married, the largely male market for Harleys simply got a big enough machine for their spouses to ride on the back. A cottage industry of licensed Harley merchandise made the brand image more and more culturally relevant.

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But after decades of riding that wave, Harley ran out of gas under Levatich.

Simply put, Levatich was unable to arrest a continuous slide in sales that dropped for a fifth straight year in 2019, with Harley’s global motorcycle shipments coming in at the lowest level since 2010. Harley’s share price has fallen by 46 percent since Levatich took charge in May 2015.

That’s not to say he didn’t try—and try hard. Levatich developed many new, lighter and less expensive models to appeal to pocketbook-constrained millennials (who are increasingly turning away from owning any kind of transportation—let alone two-wheeled vehicles) as traditional Hog riders aged out of the pastime. Some new Harleys started at the entirely reasonable price point of $7,600 to compete with Asian and European models at home and abroad. The CEO also authorized all sorts of programs aimed at interesting potential new Harley aficionados, including many aimed at diverse populations of women and minorities who historically hadn’t taken to the hobby.

The centerpiece of the strategy was a leap into electrified motorcycles— a new line called LiveWire—but that has not developed much traction so far. The price tag of about $30,000 may be too much of a reach even for devoted action-seeking greenies, though the company is developing less expensive models as well.

Meanwhile, just to add to Levatich’s woes, there’s been steadily increasing competition for the dwindling cohort of motorcycle buyers from Indian, a brand owned by specialty-vehicle maker Polaris Industries, and by European makes such as Triumph and Ducati.

But along the way, Levatich rode into deep potholes he should have avoided. The first was a losing tiff with President Trump over European tariffs two years ago. After Levatich drew early praise and a White House invitation from Trump for “building things in America,” the CEO decided to move final assembly of bikes for the European market overseas. He was reacting to hefty new European Union tariffs that were a retaliation for some of the president’s tariffs against EU steel and aluminum.

Trump turned on Levatich, among other things tweeting, “A Harley-Davidson should never be built in another country.” But Levatich, stuck to his strategy—perhaps unavoidably— clearly turning off a portion of the brand’s dwindling customer base who had formed a core constituency for Trump’s winning “Make America Great Again” campaign in 2016.

Last year, Levatich did something else that compounded his woes: He hired Neil Grimmer to a new position as global brand czar for Harley-Davidson. Clearly, the brand could have used some burnish at that point. And Grimmer was a denizen of Silicon Valley who had built a couple of impressive, brand-led startups: Plum Organics, which he eventually sold to Campbell Soup, and Habit, an online dietary startup. Harley-Davidson began touting the out-of-his-element Grimmer as a poster boy for the company’s approach to the millennial market.

But the move to go far afield to land Grimmer backfired badly for Levatich, and it wasn’t because Grimmer didn’t know anything about vehicle manufacturing or motorcycles. It was because of undisclosed personal-conduct violations that Levatich had to bounce Grimmer summarily in October.

Four months later, Levatich was gone. He leaves officially at the end of March, with the biggest question unanswered: In the age of Uber, could Levatich have actually turned Harley-Davidson around? And more important: Can anyone?