Wednesday, February 18, 2009

Harley-Davidson Tries to Rejuvenate Its Business

Good article in Time about how Harley-Davidson is trying to attract younger riders to boost flagging sales due to the economy.

Yer intrepid reporter on the H-D 'Splinter' board tracker

It's been a grueling few weeks for American companies, but particularly so for Harley-Davidson, purveyor of bikes that easily top $30,000. Last month, the company reported that its fourth-quarter global sales fell 13.1%. Last year, its profit sank nearly 30%. And it's been a wipeout for investors: Harley-Davidson's stock price has plunged nearly 70%, to $11.96 a share in mid-February, from $37.34 a share one year ago. Americans haven't lost reverence for Harley-Davidson. But a key problem is that people are simply less willing to spend money on luxury items: Overall motorbike sales fell 7.2% last year, according to the Motorcycle Industry Council, an Irvine, Calif., trade group. (See pictures of the world's most expensive motorcycles.)

I have never thought of motorcycles as a 'luxury item', but then I've been a dyed-in-the-wool motorcyclist for over fifty years. Bikes are as necessary to my well-being as air. I own two Harley-Davidsons, the oldest is 77 years old, the newest, 26 years old. I would sell these first if I had to.

[...] But by the 1970s, motorcycling had become a marginalized sport. Its renaissance came in the late-1980s, driven largely by Baby Boomers' new affluence. Between 1992 and 2007, new bike sales soared from 278,000 to 1.1 million annually. Harley-Davidson rode much of that wave, chiefly with touring bikes like the brawny Ultra Classic Electra Glide (starting price: $35,499, with a "110" Screamin' Eagle Engine, and a 6-speed transmission). Its patrons grew older and wealthier, but its efforts to cultivate a large base of female and younger riders have been marginally successful.

Just as an aside, 'Screamin' Eagle' is Harley-Davidson's own line of Taiwan aftermarket performance parts. I call 'em 'Death From Above' parts because "Screaming Eagles" is the nickname of the 101st Airborne Division, whom the Vietnamese called 'rooster men' because they had never seen a bald eagle like the one on the shoulder patch. Heh. Fits the newer Harley-Davidson riders to a T.

"Marginally successful." Here's why: These sleds are too expensive for young folks with no houses to re-fi, and they're stodgy, even Sportsters, which were stone powerhouses when they were introduced fifty-two years ago. The kids want things unavailable from Harley-Davidson, such things as speed, razor-edge handling, space-age looks, and a price tag they can live with. 'Twas ever thus. Most old folks ride slow and want to look sharp and get an ego boost. Kids wanta slick their hair back and gas it! Generally speaking, the bikes from Japan do the trick.

Here's H-D's sales pitch:

"About six bucks a day. Cheaper than your smokes, a six pack, a lap dance, a bar tab, another tattoo, a parking ticket..."

So much for 'you meet the nicest people on a ...'! Back to the old tried and true! Do we still have enough juvenile delinquents to make a viable customer base? Heh.

I think the big appeal of Harley-Davidsons is their retro looks and outlaw image, all Made In America. Step right up and buy an outfit and you can be an instant old-fashioned outlaw patriot too. Visa, MasterCard, and cash-out re-fis accepted.

Don't get me wrong - a lot of older riders want a good turn of speed and handling. They have more money than the kids and turn to some truly fabulous bikes produced in Italy, Austria, Germany, and England. I'm sure that some younger riders are attracted to these as well, and probably go amazingly into hock to have one. As the old saying goes, "If ya keep spendin' money on food, clothes, and other non-essentials, ya ain't never gonna have a new bike."

I know enough about motorcycles that I'm not dazzled by them any more. Yes, of course there are machines I lust after, but to want a $10 or $20,000+ bike enough to actually buy one is probably not in the cards unless I hit the Lotto. Then, I'll need a bigger garage.

I wish Harley-Davidson well, but I'm not doing them much good. I don't give a shit what folks think I look like as I pass them on my bike, and I'm happier'n a pig in shit on my old-fashioned slow $3500 Made In India Royal Enfield, thank you very much.

Also see the evolution of Harley-Davidson in pictures.

The Alternate Brain crew prepares to go to D.C. and clean things up

Halfway there, we discover some weed, whites, wine, and chicks. The mission evolves...