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The #1 Threat to Harley-Davidson – Part 2: Shack, Shambles, and Success

Last week I denounced the belief that Indian is the #1 threat to Harley-Davidson. Their market share is too small, and their brand strength isn’t yet strong enough to be an immediate threat. This week I’m continuing the four part series on Harley-Davidson’s biggest threat by looking back upon their history.

Using books, historical sources and archives, I’ll show you what Harley has achieved, what they’ve (just barely) managed to survive, and just how strong the bond between America and her favorite motorcycle brand really is.

Will Harley-Davidson be the Next Blockbuster - Not likelyIf you missed last week’s post, check out the video above for a summary.

After watching the video, or checking out last week’s article, some of you might be thinking, “This wouldn’t be the first time the biggest player in the game ignored an up-and-comer and ended up losing big.”  And we’ve certainly seen that before. Does anyone remember this clown?

Will Harley-Davidson be the Blockbuster Video of motorcycling? Not likely, and most certainly not because of Indian, or at least, not yet.

If you’re still curious about Harley’s take on Indian, or about the format of this four part series, read the Part 1 full article here.

Article Summary Video


The Ship Too Big to Sink

HOG NYSE

“Stable is the new growth.” It was a common phrase in the motorcycle industry between 2009 and 2014. “If only we could get stable again.” It took a half decade for motorcycling to come out of the recession. I worked for Harley-Davidson during this time. It’s no secret that times were tough. Shares in Harley-Davidson sold for $42.80 in September 2008 (NYSE: HOG), by March of 2009, they were selling for $8.33 each.

But there was no way the ship was going down. Sure, there might be an oil leak, but this was Harley-Davidson. Oil leaks happen! We’re talking about the industry’s top selling brand of motorcycles. Surely, the ship was too big to sink… right? Maybe it’s time we explore the storied past of Harley-Davidson. Maybe before we get into Harley’s biggest threat and what they’re doing about it, we should look at what Harley-Davidson is, and what else the brand has overcome.

For better or for worse, Harley-Davidson’s history has led it to the position the company finds itself in today.

Building American Motors, Built an American Icon

Motorcycles, and the Harley-Davidson Motor Company specifically, go hand in hand with Americana. Since Harley-Davidson’s inception in a Milwaukee shed over 100 years ago, the brand has been through it all.

Harley-Davidson Shed

Fun Facts:

  • The Harley-Davidson Motor Company was founded in 1903, the same year as another fellow American icon and automotive giant, the Ford Motor Company.
  • On July 4th, 2017, the United States turned 241 years old. Harley-Davidson has been around for 114 of those years. That means the Motor Company has been around for 47% of all American history.

Harley-Davidson was around in World War I, providing motorcycles with machine guns mounted in sidecars to the US Military[1]. By the time the Great Depression started, Harley-Davidson was already the largest motorcycle manufacturer in the world[2]. When World War II started, the company sold over 60,000 motorcycles to the American and Russian armies[3]. But that’s only the beginning of Harley’s run as a symbol of ‘Merica.

Captain America - Easy Rider

Enmeshment into Americana

Much like Jeep, the Harley-Davidson brand became enmeshed in post-war American sentiment. In 1968, Harley-Davidson’s police line of vehicles was part of JFK’s motorcade on that fateful morning[4]. In 1969, Peter Fonda, Dennis Hopper, and Jack Nicholson “went looking for America” on a pair of Harley-Davidsons in the cult classic, Easy Rider. To underline the connection between brand and country, one of those Harleys was aptly named Captain America[5].

And I won’t even get into Marlon Brando’s 1953 flick, The Wild One, or the Hells Angels being reported on in LIFE Magazine in 1965, or the entire biker counter-culture.

But the road was long for Harley-Davidson, and almost too much…

Not unlike the Ford Motor Company, Harley-Davidson has weathered the storms of the last century as well. The Great Depression nearly ruined Harley-Davidson, leaving it one of only two American motorcycle manufacturers to survive (Wilson, Hugo (1993). “The World’s Motorcycles: America”. The Ultimate Motorcycle Book. London: Dorling Kindersley. p. 17. ISBN 0-7513-0043-8).

The purchase of Harley-Davidson by American Machine Foundry (AMF) in 1969, and the backlash of the resulting layoffs led to another dark era for the Motor Company in the 1970s. Not only were the bikes expensive, but they were also inferior in handling, performance, and overall fit and finish versus Japanese competitors. Sales declined to such an extent that the company nearly went bankrupt[6]).

Harley-Davidson AMF Years

By 2000, even the police started abandoning the Motor Company. Many departments reported issues with their vehicles at high speed, which is suspected of having led to the death of one officer. Police departments abandoned Harley-Davidson in favor of more expensive options from BMW, citing safety as an important factor [7]. You can check out more details on a review by the Michigan State Police here.

A decade later, bad luck came once more. In 2009, the recession saw the value of many premium brands dropping significantly. Mercedes-Benz, Porsche, and Harley-Davidson’s brands all dropped, with Harley taking a 43% drop[8].

And the hundred year story has lead us to where we are today

Harley-Davidson has always been a survivor, right? Or at least, Harley-Davidson has always been too enmeshed in America and Americana to ever, completely, fail, permanently… Right?

The thing is, people aren’t buying motorcycles as much as they have in the past. Motorcycles are now considered a luxury vehicle, something that people buy in addition to a car, and not as a stepping-stone to a car. Moreover, in the luxury vehicle market, manufacturers such as BMW, Audi, and Mercedes-Benz are seeing healthy sales increases, whereas Harley-Davidson has not[9].

The U.S. motorcycle market peaked in 2005-6, when high home values and easy credit conspired to help drive sales of 1.1 million new bikes. But following the banking crisis and economic meltdown of 2008, that number has fallen precipitously, to 450,000 total sales in 2011—a drop of nearly 60 percent.

It hurts, but manufacturers wonder if a new crop of small motorcycles might be the key to better sales.

  • Cycle World

To make matters worse, economic analysts have rightly identified a shift away from larger displacement motorcycles towards more efficient and beginner friendly small displacement ones[10], the likes of which Harley isn’t known for.  After being the king of the heavyweight bikes in America for decades, Harley-Davidson has finally been forced to make an about-face in the direction of the beginner segment. It’s come in the form of their Street family of bikes. These are just the kind of motorcycles that help to make motorcycling more accessible to the masses. But will it be enough? And what of Harley-Davidson’s true biggest threat?

Now you know what Harley-Davidson has achieved and survived so far. Stay tuned for Part 3 of the series, coming out next week, where I’ll finally tell you, in detail, what their biggest challenge is. After that, in Part 4, I’ll show you all of the things they’re doing to try to turn the ship around.

Attention!This was Part 2 of our 4-Part series, The #1 Threat To Harley-Davidson. If you’re interested in reading the full article as it comes out, please subscribe:

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12 comments

  1. Harley’s problem is their goofy dealers. Take the V-Rod. Dealers didn’t understand them and let them languish even though it was the best bike they had. “Yes,by golly. Our quaking F models are the best”. Ignore that overhead cam piece of Witchcraft. I went into a Harley dealer in Danbury, CT. to see a Street model. ” We have one back there someplace.” Sure enough there was one in amongst a gaggle of Sportsters. One 750 coated with dust. The Street models wil fail for the same reason the V-Rod did. The dealers won’t sell them.

  2. http://www.motorcycle.com/features/Harley-Davidson-To-Close-Kansas-City-Manufacturing-Plant.html

    Where the Street Models are built. Hopefully the tooling for those bikes doesn’t fall off the truck and into a deep hole. Then all Milwaukee would have is antique, pushrod bikes to sell.

  3. Harleys biggest threat for many many decades has been yamaha. While harley stuck with the same old formula yamaha was investing billions in time and energy research and design their bikes are physically better machines. Built with better engineering and better fit and finish. Their bikes have more power more torque better braking and handling. And now in the past decade or so theyve got the sound down too with a basic exhaust upgrade. Yamaha sells vikes for all people. From family friendly smaller engined bikes to true big bore monsters and high speed high reving racing bikes. They even took the look of harleys flagship sportster and improved on every aspect of it just to show they could. Theres not another motorcycle manufacturer on the planet the comes that close to taking out harley.

    • Hey Derek, I’d call Yamaha a credible threat, but definitely not their #1 threat. Moreover, I wouldn’t say they’ve taken every aspect of the Sportster. Yamaha has nothing that can beat the sound of a low idling 1200cc Sporty, or the personality. Plus the ability to put in an easy-to-come-by big bore 1350cc kit or bigger is sweet.

      • The 1200cc sportster isnt their flagship bike the 883 has always been the flagship for them. In that respect the bolt has bettered every aspect of the sportster. And i question whether youve ever heard any of the yamaha star motorcycles with a decent aftermarket exhaust on them. They are easily a match for the low idle rumble of the lowly sportster. It doesnt help harley that yamaha offers equivalent or better bikes for quite a bit less money. That is a big deal with younger riders. They dont want to spend 10s of thousands on a bike anymore

        • I think we have very different definition of the meaning of flagship. From Wikipedia: “Over the years, the term “flagship” has become a metaphor used in industries such as broadcasting, automobiles, airlines, and retailing to refer to their highest profile or most expensive products and locations.”
          Based on this definition the XL883 is quite the opposite. A Japanese bike with exhausts is never going to sound like a 750 rpm rumbling pushrod 45-degree vtwin. It can’t. It’s made differently.

          • By your own example of the definition of flagship your example is also wrong. The 1200cc sportster is nowhere near harleys highest profile or most expensive offering. However the 883 sportster is probably the most sold bike in harleys history. As such that would give a fair shake at being their highest profile bike being that is the most common one in the market. Also you do realize that yamahas star motorcycle engines specifically use a v design just outside of the patented 45degree design harley uses. Tge difference is so minimal that its a non issue in the sound department. Sure the pushrod design adds a little the sound over an overheas cam design but not enough to drastically change the sound profile. In all reality the difference between a carburetor and fuel injector affects the sound far more than wether the engine is overhead cam or pushrod design. I understand you might be a harley fan and while i do like some of their offerings and the heritage they have im not so partial to them to blind myself to the fact that other bikes mimick and exceed all of harelys offerings.

          • Correct I wouldn’t call any Sportster a flagship but I thought you meant the 1200 originally so that’s what I was going by. https://youtu.be/t3CWg55bLuU check out this video at 11 seconds onward. Let me know if you can find one of a Yamaha that sounds like this.

          • https://youtu.be/Wp0uO-FVLNo either of these exhaust systems alone are easily comparable to the soind of that 1200. Mind you that 1200 was a big bore kit and niether of these bolts are modified in anyway internally. To get the complete tone out of the sportster you had to drop a bigbore kit in it. The bolts added airfilters and exhausts. nothing more. Are they perfect comparisons? No obviously but they also arent heavily moddified engines either.

          • I could tell you that those bikes weren’t a Harley blindfolded from a block away. I think you could do the same :)

          • I never said they perfectly imitated harley. I said they where comparable .A match for their sound which they are . You also arent showing me a harley as the factory produced it. An aftermarket exhaust or air filter doesnt change the essence of the bike. Of the heart of the motorcycle .However your example specifically stated that it was abig bore kit making it a highly modified engine. And no longer the original offering.

  4. Biggest threat is clearly demographic. Population is aging and what 18 year old can/will buy a $30K motorcycle?

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