What happened
Shares of Harley-Davidson (HOG 1.85%) were rising 6.5% heading into midday trading Wednesday after The Wall Street Journal reported the motorcycle maker was planning to considerably reduce shipments to dealers as it restarts production.
So what
Harley has suffered through five years of falling sales, which former CEO Matt Levatitch sought to reverse by committing to developing hundreds of new models over the next decade at various price points, with many intended for foreign markets.
Image source: Getty Images.
Yet he was ousted earlier this year after complaints his plans had made the production line too complicated and activist investors sought to gain a say in how the motorcycle company was run.
Now what
Recently appointed CEO Jochen Zeitz has committed to a smaller lineup of bikes to be introduced with the start of the riding season, beginning next year. Director of product sales Beth Truett told dealers in a memo seen by the Journal, "We are using this time to course correct and rewire the company in pursuit of making Harley-Davidson one of the most desirable brands in the world." About 70% of the company's dealers won't be receiving any new motorcycle shipments this year.
Investors seem to appreciate the new direction the bike maker is taking. About 20 years ago consumers willingly waited months to receive a new Harley because production was always less than demand. Going back to that mindset may help Harley-Davidson reverse course, but will also make it a much smaller company.
