This was written a couple months ago, before Harley Davidson's announcement last week that they were dropping the Buell lineup, and plan to try to unload their MV unit, bought in '08. This was in response to an accelerating shrinkage of Harley's sales figures. Clearly, new Harley execs see the turn around strategy very differently than I. They say they plan to focus on their “core strengths”, and make money with the Harley brand other ways. I guess that means coffee mugs, pocket books, and clothing. We'll see. I hope they're right and I'm wrong. But there's a Wall Street saying that goes, ''The trend is your friend.'' The trend in Harley has been downward, and I fear this new strategy will accelerate it.
This is the kind of essay that can get ya hurt. More, even, than insulting someone's wife, girlfiend or Mom, disparaging words about Harley Davidson are fightin' words to some. First, I must establish that I am not, by inclination, a Harley basher. I know there are some commited bashers though, folks who for whatever personal reasons would never be caught riding a Harley Davidson, wearing a Harley T-shirt, or even speaking positively of the brand. That's not me. I've owned four of them. And from about 16 years old on (that's a LONG time) I have spent probably an unhealthy amount of time with my nose buried in Harley oriented magazines, brochures, websites, and books educating myself on current offerings and the history of the brand. I've taught my sons, at an early age, to tell a Flathead from Panhead from a Shovelhead from an Evo from a Twin Cam. I've memorized, and quiz myself from time to time on the evolution of Harley models. Last rigid frame? ('57) First Knucklehead? ('36) First year of the K model? ('55) There is no product in all of commerce that has so fascinated and appealed to me as Harley Davidson motorcycles. So, having hopefully established myself as one not interested in criticizing Harley because I dislike them, I think the Motor Company has deep problems. Milwaukee has lost its mojo.
First, the obvious. Harley Davidson motorcycles, like boats, vacation homes, and pool tables are discretionary purchases-stuff that, in times just like these, we can do without. I can hear some folks, the ones with the most Harley logos inked on their bodies, boasting “No, for me a Harley is a necessity.” And there are probably the obsessive few who put their motorcycle on equal terms with their homes, utility bills, car payments, and college tuition. But most of us who participate in the real world will do without a motorcycle if the finances require it. Here in 2009, a lot of finances require it! So demand for all motorcycles is down. That's not a unique Harley problem, of course, but it is a problem.
Second, Harley, like the automakers, and more so the home sellers, have pigged out on the all-you-can-eat easy financing buffet for years, but, for now anyway, that buffet is closed! Suddenly credit scores matter, and down payment, and debt to income ratios, and all those factors that once opened the door to, or prevented, sign and ride financing are important again. Also, Harley enjoyed resale values that were unheard of in many big ticket purchases-they still do have better than most. But the supply/demand curve that once allowed dealers to get thousands over MSRP, and the seller of a one year old Fatboy to get all his original purchase price has shifted dramatically. Now you can pay under list in most dealerships, and MSRPs have been flat for years. New V Rods sticker now for less-a lot less-than when they were introduced! A new FXDI-the base Super Glide- is much improved over, say, a five year old one-bigger motor, standard fuel injection, beefier front end,a sixth gear, but has not increased in list price. All that has taken at least some of the wind out of the secondary market. So to a lienholder, the lender behind the sign and ride easy financing, the chances of recouping their money on a repossesed Harley bought with 100% financing are now slim. Just when Milwaukee needs lenders to step up, they are doing quite the opposite.
Third, and here is where the threats start coming in, it's product, product, product. Despite the claims of Harley's advertising regarding “new models” there hasn't been a truly new product since the V Rod. The displacement has been bumped, there are flat black versions, various seat, fender, handle bar combinations, polished and unpolished cases, different levels of farings and luggage, but there, really, are only Sportster, Dyna, Softail, Touring, and V Rod. Just because your brunette girlfriend wears a blonde wig, she's not a new girlfriend.
Harley certainly has the bases covered in heavyweight, air cooled, V twin cruisers. They own the category. They certainly have cred in the heavyweight Tourer segment as well. After all, before the FX in the early seventies, that's what HD was, except for Sportster. (OK, I know, they offered some lightweights-the Italian built Aermacchi stuff badged as Harleys. They, to say the least, earned Harley no cred.) But the world of motorcycling is so much broader and deeper. And the growth, at least at the moment, is in places Harley has no presence. If Harley Davidson is going to refill its customer funnel as age, economics, and changed tastes drain it, they must broaden and deepen. They need entry level, lightweight or middleweight choices. They need a credible Sport bike. They need a Dual Sport, something that likes dirt roads as well as interstates and boulevards. They must attract young riders. They're not doing real well in that regard. The domestic auto industry gave away a huge chunk of an entire generation by offering Pintos and Vegas to compete with Civics and Corollas and Rabbitts. Many of those early Civic buyers have bought Hondas and Acuras ever since. Vega buyers, rightly so, probably never set foot in a GM showroom again. Today's 20 somethings are entering motorcycling via Kawasaki EX250s, or KLR650s, or Honda CBR600s, or Suzuki SV650s, or dozens of dirt bikes. Harley's entry point is the $7000 solo seat, no passenger pegs Sportster 883. What young guy wants a motorcycle he can't take a girl for a ride on? Too many of those young riders will stay with Honda or Yamaha and never consider HD.
There are, I'm afraid, deep systemic, cultural obtacles to this transformation happening. The evolution of Harley's product has always been slow, gradual, incremental. Nothing remotely like the pace of change at the big four Japanese brands, or even, now, at the revived British threat Triumph. And there may never have been a “brand” with as clearly a defined look, sound and image. Just look at the controversy and cool reception in some quarters to the V Rod. But if the “don't mess with it” forces prevail, for fear of a “new Coke” debacle, Harley's target, or default, demographic will shrink. To advocate abandonment of the Harley tradition would be suicidal, but growing the line in new, unHarley like ways would not.
There are some positive signs. The Sportster XR1200, while certainly traditional HD in many ways, has been well received by the Sport bike press, and may bring new and different people to Harley showrooms. And, there is interesting thinking at Buell. Adventure Tourers. Sport bikes. Contemporary concepts. I've thought for a long time that Buell was the place Harley could redefine their product lineup without messing with the Harley name, but Buell sales volume is tiny. Now, though, they have 2 models powered by a liquid cooled 1125cc, 146 horsepower engine built by Rotax. This is interesting in that they were willing to go outside the company for a credible engine, and, like V Rod, bends the definition of a Harley-even if it's called a Buell. Erik Buell, who's approach is certainly out of the box, has been anchored down by having to use Sportster engines. Maybe we'll see a 600 cc version of that Rotax engine. Or a V four, or an inline four, or a $ 4500 replacement for the laughable Blast. (Even Buell is laughing at it now that they've mercifully pulled the plug for '10). Who knows? At least Erik Buell isn't hyping a flat black paint scheme as a new model. (the Nightling?)
Also interesting, but leading as yet to no conclusions, is Harley's acquisition in '08 of MV Agusta and Cagiva, premium Italian motorcycles with strong high performance heritage. Will we see those products in Harley or Buell dealerships? Or is this more about Harley gaining a bigger share in Europe?
Neither brand can in any way help the “entry level” void, but could, potentially, allow Harley to compete with Ducati or Aprilia in the high end.
BMW was once a motorcycle brand that, like Harley, had a tightly defined approach to bikes. Air cooled, opposed twins. Change was slow and incremental and they had a loyal ownership. Over the last ten years or so BMW has completely reinvented themselves. They still build top quality, dependable, not inexpensive motorcycles, and continue to sell “boxers”-opposed cylinder engines that are instantly recognizable as BMW, and appeal to their loyal base. But look at the BMW website today, and you'll see models that are nothing like the traditional Beemer. There is a 450cc enduro, a 650 parallel twin dual sport, and an 800cc version, a 650 single, and other new, exciting, broad appeal offerings that are not what anyone would have expected from BMW ten years ago. BMW has shown it can be done. A brand can redefine itself without abandoning tradition. They had to. Harley Davidson has to, or it will, over time, gradually, incrementally lose market share. The recession will end. Sales of motorcycles will rebound. But Harley can not count on a revived economy alone turning their numbers around.
This is the kind of essay that can get ya hurt. More, even, than insulting someone's wife, girlfiend or Mom, disparaging words about Harley Davidson are fightin' words to some. First, I must establish that I am not, by inclination, a Harley basher. I know there are some commited bashers though, folks who for whatever personal reasons would never be caught riding a Harley Davidson, wearing a Harley T-shirt, or even speaking positively of the brand. That's not me. I've owned four of them. And from about 16 years old on (that's a LONG time) I have spent probably an unhealthy amount of time with my nose buried in Harley oriented magazines, brochures, websites, and books educating myself on current offerings and the history of the brand. I've taught my sons, at an early age, to tell a Flathead from Panhead from a Shovelhead from an Evo from a Twin Cam. I've memorized, and quiz myself from time to time on the evolution of Harley models. Last rigid frame? ('57) First Knucklehead? ('36) First year of the K model? ('55) There is no product in all of commerce that has so fascinated and appealed to me as Harley Davidson motorcycles. So, having hopefully established myself as one not interested in criticizing Harley because I dislike them, I think the Motor Company has deep problems. Milwaukee has lost its mojo.
First, the obvious. Harley Davidson motorcycles, like boats, vacation homes, and pool tables are discretionary purchases-stuff that, in times just like these, we can do without. I can hear some folks, the ones with the most Harley logos inked on their bodies, boasting “No, for me a Harley is a necessity.” And there are probably the obsessive few who put their motorcycle on equal terms with their homes, utility bills, car payments, and college tuition. But most of us who participate in the real world will do without a motorcycle if the finances require it. Here in 2009, a lot of finances require it! So demand for all motorcycles is down. That's not a unique Harley problem, of course, but it is a problem.
Second, Harley, like the automakers, and more so the home sellers, have pigged out on the all-you-can-eat easy financing buffet for years, but, for now anyway, that buffet is closed! Suddenly credit scores matter, and down payment, and debt to income ratios, and all those factors that once opened the door to, or prevented, sign and ride financing are important again. Also, Harley enjoyed resale values that were unheard of in many big ticket purchases-they still do have better than most. But the supply/demand curve that once allowed dealers to get thousands over MSRP, and the seller of a one year old Fatboy to get all his original purchase price has shifted dramatically. Now you can pay under list in most dealerships, and MSRPs have been flat for years. New V Rods sticker now for less-a lot less-than when they were introduced! A new FXDI-the base Super Glide- is much improved over, say, a five year old one-bigger motor, standard fuel injection, beefier front end,a sixth gear, but has not increased in list price. All that has taken at least some of the wind out of the secondary market. So to a lienholder, the lender behind the sign and ride easy financing, the chances of recouping their money on a repossesed Harley bought with 100% financing are now slim. Just when Milwaukee needs lenders to step up, they are doing quite the opposite.
Third, and here is where the threats start coming in, it's product, product, product. Despite the claims of Harley's advertising regarding “new models” there hasn't been a truly new product since the V Rod. The displacement has been bumped, there are flat black versions, various seat, fender, handle bar combinations, polished and unpolished cases, different levels of farings and luggage, but there, really, are only Sportster, Dyna, Softail, Touring, and V Rod. Just because your brunette girlfriend wears a blonde wig, she's not a new girlfriend.
Harley certainly has the bases covered in heavyweight, air cooled, V twin cruisers. They own the category. They certainly have cred in the heavyweight Tourer segment as well. After all, before the FX in the early seventies, that's what HD was, except for Sportster. (OK, I know, they offered some lightweights-the Italian built Aermacchi stuff badged as Harleys. They, to say the least, earned Harley no cred.) But the world of motorcycling is so much broader and deeper. And the growth, at least at the moment, is in places Harley has no presence. If Harley Davidson is going to refill its customer funnel as age, economics, and changed tastes drain it, they must broaden and deepen. They need entry level, lightweight or middleweight choices. They need a credible Sport bike. They need a Dual Sport, something that likes dirt roads as well as interstates and boulevards. They must attract young riders. They're not doing real well in that regard. The domestic auto industry gave away a huge chunk of an entire generation by offering Pintos and Vegas to compete with Civics and Corollas and Rabbitts. Many of those early Civic buyers have bought Hondas and Acuras ever since. Vega buyers, rightly so, probably never set foot in a GM showroom again. Today's 20 somethings are entering motorcycling via Kawasaki EX250s, or KLR650s, or Honda CBR600s, or Suzuki SV650s, or dozens of dirt bikes. Harley's entry point is the $7000 solo seat, no passenger pegs Sportster 883. What young guy wants a motorcycle he can't take a girl for a ride on? Too many of those young riders will stay with Honda or Yamaha and never consider HD.
There are, I'm afraid, deep systemic, cultural obtacles to this transformation happening. The evolution of Harley's product has always been slow, gradual, incremental. Nothing remotely like the pace of change at the big four Japanese brands, or even, now, at the revived British threat Triumph. And there may never have been a “brand” with as clearly a defined look, sound and image. Just look at the controversy and cool reception in some quarters to the V Rod. But if the “don't mess with it” forces prevail, for fear of a “new Coke” debacle, Harley's target, or default, demographic will shrink. To advocate abandonment of the Harley tradition would be suicidal, but growing the line in new, unHarley like ways would not.
There are some positive signs. The Sportster XR1200, while certainly traditional HD in many ways, has been well received by the Sport bike press, and may bring new and different people to Harley showrooms. And, there is interesting thinking at Buell. Adventure Tourers. Sport bikes. Contemporary concepts. I've thought for a long time that Buell was the place Harley could redefine their product lineup without messing with the Harley name, but Buell sales volume is tiny. Now, though, they have 2 models powered by a liquid cooled 1125cc, 146 horsepower engine built by Rotax. This is interesting in that they were willing to go outside the company for a credible engine, and, like V Rod, bends the definition of a Harley-even if it's called a Buell. Erik Buell, who's approach is certainly out of the box, has been anchored down by having to use Sportster engines. Maybe we'll see a 600 cc version of that Rotax engine. Or a V four, or an inline four, or a $ 4500 replacement for the laughable Blast. (Even Buell is laughing at it now that they've mercifully pulled the plug for '10). Who knows? At least Erik Buell isn't hyping a flat black paint scheme as a new model. (the Nightling?)
Also interesting, but leading as yet to no conclusions, is Harley's acquisition in '08 of MV Agusta and Cagiva, premium Italian motorcycles with strong high performance heritage. Will we see those products in Harley or Buell dealerships? Or is this more about Harley gaining a bigger share in Europe?
Neither brand can in any way help the “entry level” void, but could, potentially, allow Harley to compete with Ducati or Aprilia in the high end.
BMW was once a motorcycle brand that, like Harley, had a tightly defined approach to bikes. Air cooled, opposed twins. Change was slow and incremental and they had a loyal ownership. Over the last ten years or so BMW has completely reinvented themselves. They still build top quality, dependable, not inexpensive motorcycles, and continue to sell “boxers”-opposed cylinder engines that are instantly recognizable as BMW, and appeal to their loyal base. But look at the BMW website today, and you'll see models that are nothing like the traditional Beemer. There is a 450cc enduro, a 650 parallel twin dual sport, and an 800cc version, a 650 single, and other new, exciting, broad appeal offerings that are not what anyone would have expected from BMW ten years ago. BMW has shown it can be done. A brand can redefine itself without abandoning tradition. They had to. Harley Davidson has to, or it will, over time, gradually, incrementally lose market share. The recession will end. Sales of motorcycles will rebound. But Harley can not count on a revived economy alone turning their numbers around.
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