Harley-Davidson CEO steps down
Matthew Levatich will leave the post of chief executive at Harley-Davidson and its board of directors.
The AP reported the news:
Harley-Davidson CEO Matthew Levatich is leaving the struggling motorcycle maker.
The Milwaukee company announced Friday that Levatich will leave his post and seat on Harley’s board of directors.
Board member Jochen Zeitz will become acting president and CEO while a board search committee is formed and Harley hires an outside search firm to fill the job.
“The Board and Matt mutually agreed that now is the time for new leadership at Harley-Davidson,” Zeitz said in a prepared statement.
Harley has been struggling with declining sales in the U.S., its biggest market, as it tries to adapt to an aging customer base while looking to expand markets overseas.
The announcement of the leadership change, made after the markets closed, pushed Harley’s shares up 5% in after-hours trading. They had fallen 2.3% with the broader markets during the trading day.
Harley’s closing share price Friday was down 18% for the year.
Harley reported a net profit of $423.6 million in 2019, but it made only $13.5 million in the fourth quarter.
Gabrielle Copolla wrote for Fortune:
Chief Executive Officer Matt Levatich unexpectedly stepped down Friday, parting ways with the board after a 26-year career at Harley-Davidson—including five years as CEO in which the company lost more than half its market value. Board member Jochen Zeitz will fill the job for now, the company said after the close of business Feb. 28.
Harley shares rose as much as 5% to $32.06 in after-hours trading following the news, suggesting investors were ready for a change at the Milwaukee-based manufacturer.
“An external hire that can look at the business with fresh and critical eyes is needed,” Joseph Spak, analyst at RBC Capital Markets, wrote in a note to investors. That said, “the stock could be in limbo until a new, permanent CEO is named.”
Levatich had been wrestling with several headwinds as CEO, including an aging customer base in the U.S., its biggest market, and heightened tariff costs from President Donald Trump’s trade wars. Harley’s first electric motorcycle, LiveWire, won positive reviews but has yet to kickstart sales or help it achieve greater market share abroad.
Forbes’ Bill Roberson wrote:
The iconic American brand continues to struggle in the marketplace as demand for it’s often expensive motorcycles has seen declines year over year. Analysts have blamed a number of factors, including the “greying” of the company’s core customer base, a decline in interest from younger consumers, and increased competition from other makes, including Indian, which was resurrected by American conglomerate Polaris in 2013 and has taken aim at the new riders Harley-Davidson is competing for. And while Harley-Davidson has competed successfully with Asian bike makers for decades, the new battles with the resurgent Indian and the rising popularity of other legacy marques such as U.K’s Triumph and Italy’s Ducati (which is owned by Germany’s Volkswagen) have resulted in a multi-front battle for the dollars of what seems to be a shrinking pool of people interested in riding motorcycles at all.
During Levatich’s tenure as CEO, Harley-Davidson became the first (and perhaps most unlikely) major legacy motorcycle maker to produce and sell an electric motorcycle, which it calls the LiveWire, as part of Levatich’s “More Roads To Harley-Davidson” brand expansion campaign. However, the $29,799 price tag was thought be too expensive in some quarters, although H-D said less-expensive models were in development. Harley also introduced a less-expensive “Street” line of bikes that started at $7,600, which competed price-wise with many Asian and Euro models and are also sold in overseas markets where Harley-Davidson has been trying to grow market share. Indeed, international sales gave the company a boost in the 3rd quarter of 2019. However, the Street bikes also got Leavtich sideways with President Trump after it was revealed that some Street models were being made overseas. Harley had to clarify that Street models made for the U.S. market were indeed made in America while models for overseas markets were made in countries closer to those markets, often to avoid tariffs.