This video sums up most of the reasons Harley-Davidson is in trouble. There are a few other reasons, as well.
I wrote before about Harley-Davidson and why I thought they were heading for trouble. The bikes they sell today are just "meh" to me - I prefer the older, classic looks, but apparently I am in the minority on this. There is also the image problem. One reason we sold the M Roadster was that every jerk-ass kid in his Mom's Hyundai would want to race us. And while you could leave them far behind at the stoplight, they would drive 80 mph in a suburban neighborhood to try to catch up and "beat" you - and that just isn't safe. You get tired of attracting attention. So we sold it and bought the hamster. Never looked back. Sometimes it is better to blend in than stand out.
A Harley? Well, when you ride one, there are certain expectations that are set up, and Harley-Davidson and its dealers actually promote this image and "lifestyle". In the comments section accompanying the video above (yea, I know, YouTube comments - usually toxic) I was surprised to see a pretty civil discussion from Harley owners as well owners of other makes. There was only one or two poorly-worded hostile responses to the effect that anyone who questioned any of this was a lightweight and not a serious biker, blah, blah, blah. The rest were actually thoughtful and rational. And there was a pattern in the responses - the same topics were hit again and again.
What I found interesting was that many younger commenters went to Harley dealers, intent on buying a bike, and no one would talk to them. Since they didn't fit the image of a Harley rider, they were basically ignored, if not, in fact, told to piss off. They went down the street to the Indian dealer or Kawaskaki dealer or whatever, and the salesman sold them a bike. I guess that is part and parcel of the image thing - to sell the idea that you are lucky to even be allowed to own one, which you tend to see in products that are often wildly overpriced and under-performing. You have to act like the customer is annoying you and even talking to him is a waste of your valuable time. If you can power-shift this way - and get away with it - you can get customers to eat out of your hand.
In good times, at least. When the shit hits the fan, in terms of the economy, toys are the first thing to go. And more than one Harley owner commented on being "upside-down" on long-term bike loans. Oh, that's not good, let me tell you. But that is one sure way to ensure that people don't unload their bikes on the used market - but rather make payments on a "garage queen" for years on end. It helps prop up resale prices and make new bikes look like a better bargain.
(By the way, one way to avoid this problem is pay cash. Can't pay cash for a toy? Then you can't afford said toy. We paid cash for all of our RVs, our boats, motorcycles, and even most cars. That doesn't mean some of them weren't poor decisions to buy - but it meant when we wanted to sell, we could.)
Reliability was also mentioned frequently, both by Harley owners and their detractors. Union-made, American-made products have never had the reliability and quality of foreign-made products, except in certain circumstances. You spend $20,000 on a motorcycle, you expect it to be perfect. But as I noted before, just because you spend more, doesn't mean you get more. People fall into this same trap with BMWs - expecting them to be twice as reliable as a Honda, because they cost twice as much. It doesn't work that way, and in fact, often the opposite. Boutique products are often far less reliable than mass-produced ones. A Toyota Corolla is bound to be more reliable than any BMW, for example, only because they make ten times as many of them.
One commenter - a Harley owner - joked that 85% of all Harleys are still on the road. The other 15% got to their destination without breaking down. Ba-da-Boom! A good joke, but I suspect it has been repeated many times with "Ford" or "Mopar" inserted as the brand being denigrated.
Price is the real kicker, and for today's 401(k) generation, such purchases have to be considered carefully. If you are not funding your retirement, but buying Jet Skis, Motorcycles, or Motorhomes, you are not being very responsible, and I think the current generation sees this, as their broke parents lurch toward retirement (but Dad says he'll never give up the Harley, even though he stopped riding it five years ago). Besides, if you are struggling to pay student loans, a motorcyle is just not in the cards.
On the company side, there have been blunders. The company is loaded up with debt, in order to buy back shares and prop up the share price by increasing the dividend yield. This is a snake eating its own tail and not sound financial management. The new "electric" bike was apparently a $30,000 overpriced, fire-prone disaster, which was pulled from the market. The efforts to get into bicycles of all things, backfired (although ironically, the first Harleys were little more than powered bicycyles). There is just too much competition in that market - $60 bikes from China - to make a real dent.
Their efforts to expand their market by finding new riders didn't seem to go anywhere. The dealers were not too enthusiastic about selling the newer, smaller "entry-level" models, and buyers already had a slew of Japanese makes to choose from in that market segment - models that are probably far better bikes, to boot, and thus a better value proposition.
For the youth market, style sells (just as H-D style sells to the older demographic). You show up at a meet with your 20-something buds who are all on crotch-rockets, and you're riding a hog, well, you're going to be laughed at. The Japanese have really done a good job of selling this while manga-culture rice-racer crotch-rocket idea to young folks today. And you know what? It looks like they're having a lot more fun that the bitter angry belligerents riding in "rolling blunder" with Trump flags-a-flying and protesting. The crotch rocket kids are doing wheelies - at 110 mph - and not wiping out, or dragging their pipes on the pavement.
Many commenters repeated the joke that Harley-Davidson is a clothing store that sells Motorcycles on the side - and there is some truth to that. I bought a "Harley" Hawaiian shirt in their store in the Atlanta airport (which had one bike on display as a prop only, with a "do not sit on" sign on it.) They make a lot of money from licensing - some say half their profits. Long ago, I worked for a guy whose wife went to work for H-D as a Trademark attorney. In the AMF days, Harley was lackadaisical about licensing its marks, either letting people pirate them, or refusing to license altogether.
They needed money to design and build the new "evolution" motors, so they started an aggressive campaign of licensing - which is where we are today. You can buy a Harley-Davidson edition Ford F150, or a jacket, or boots, or socks, or even underwear. Whatever it is, you can buy it with a Harley-Davidson logo on it. I hear they even sell motorcycles that way!
Just kidding. The end result was they did raise enough money this way to stay in business and develop new technologies. But the flip side is that they sort of backed themselves into a marketing corner, with this "image" thing that kind of pigeonholes buyers. If you don't see yourself as an unshaven badass, you probably don't see yourself on a Harley. And being a badass - being belligerent - gets tiring and boring after a while. You meet the nicest people on a Honda, on the other hand.
Of course, Trump's tariffs didn't help any - taking on extra costs for aluminum and steel to make the bikes and then with retaliatory tariffs, adding thousands to the cost of the bikes in Europe - one of their largest foreign markets. Just icing on the cake - no one factor is enough to sink the company, but when you combine them all?
But wait, there is more.
He didn't address it in the video, but I think people have changed over the years. We are more introspective and risk-averse than in the past, and this virus thing isn't helping any. When I was a kid, no one wore seatbelts, and in fact, they were just starting to be mandatory in cars. Most "Dads" would cut them off with a razor blade as they were felt to be a "nuisance". Today, seat belt usage is over 90% or so - you don't have to even ask people to do it. And we are used to air bags, antilock disc brakes and skid control in our cars, and most of us don't want to go back to the days of bias-ply tires and drum brakes. My new (used) truck has eight airbags in it, including two in the rear seatbelts. Why, I don't know. Our last F150 had one airbag, for the driver, only.
So we are more safety-conscious, more risk-averse. And I think the younger generation even moreso - perhaps shielded from risk too much by their helicopter parents. At the same time, however, you do see "kids" driving crotch-rockets at triple-digit-speeds (in MPH!) going between cars in traffic. And often it ends in horrific crashes.
The article accompanying this graphic claims "the sky is not falling" - sort of looks like it to me!
That being said, overall motorcycle sales have dropped and pretty much leveled-off since the recession of 2008. Perhaps a big part of this is economics. People just can't afford to drop 20 grand on what is essentially a toy. Yes, one "commenter" on YouTube claims he puts chains on the tires of his Harley and rides it through foot-deep snowdrifts in Minnesota in January. Even if he is telling the truth (I doubt it) most of us prefer heated seats and a heated steering wheel and even 4wd in weather like that. The motorcycle, on the other hand, is a fair weather friend and sits parked for six months of the year in most places other than San Diego.
But part of it is fear. Economic fear - fear of running out of money - and personal fear of being hurt. You visit enough friends in the hospital or go to a few funerals - as I have - and you realize that motorcycling is still ten times as dangerous as riding in a car, even if people "watch out for motorcycles". Besides, for less than the cost of a Harley, you can buy a nice convertible and put the top down and they don't even make you wear a helmet. I've had bikes (four) and convertibles (six) and hands-down, the more fun and relaxing way to ride with "the wind in your hair" was in a ragtop. On the bike, well, most of the time, you have your head in a bucket (or should) and it just isn't all that much fun.
People are more introspective today - they are "cocooning" as Faith Popcorn predicted - staying home in their "caves" and experiencing reality through the Internet in an online game, or through Netflix on their wall-screen television. The "lockdown" wasn't much of a burden for many of those folks. Given that background, you wonder why people aren't going out and buying boats and motorcycles? Big SUVs sales took off (its like driving your car while never leaving home) and even RV sales took off - until recently. An RV is literally driving your home on wheels - it is cocooning in motion.
I think this insular level of comfort may be responsible for overall sales declines in recreational gear, but that's just my theory.
The CEO of Harley was booted out - his electric motorcycle and other projects designed to attract the "next generation" of riders apparently will go with him. The company is concentrating on its core products, including the "trikes" I mentioned in my previous posting, which are apparently quite popular, but the author of the above video derides as "over-sized mobility scooters" (if you see the riders, you'll get the jibe).
There is a market for those, as well as the hard-core Harley riders who want and enjoy the image associated with the product. Harley can continue to prosper, in a scaled-down mode, if they can keep this sliver of market-share. As the author of the video above notes, while this might not attract the lion's share of bikers, it will attract enough to keep the company running. As we said at GM back in 1979, you can sell a million cars and make a dollar on each one, or sell one car and make a million dollars on it - the latter apparently being Ferrari's marketing strategy.
So Harleys are not for everyone. And maybe they shouldn't be. So long as there are enough people who want to play "bad ass" on a hog, they will be able to sell to that crowd. But expanding the customer base? When overall ownership and ridership numbers are down, and in the middle of a recession? It just isn't possible. It was a bad idea to try, in retrospect.
Will Harley go bankrupt? Possibly. Among other things they are hobbled by pretty high union wages and a lot of aging infrastructure - and production capacity that exceeds demand. Oh, and the staggering billions in debt the board took on to cook the books and get their stock-option bonuses. Bankruptcy and reorganization could result in freedom from this debt and onerous union contracts, thus lowering their overall cost basis and raising their per-bike profit margins. They still would have a niche market and high-priced bikes, but they could make a living with that business model, once freed of their debt and overhead burdens.
I made a little money on Harley stock - well over a decade ago. It went up in value, and as I recall, I cashed a few dividend checks. But it seemed to me that their marketing model had nowhere to go, even back then. So I sold the stock, took my profits, and moved on. And while Mr. See entertained the fantasy of having a pair of Harleys to tow behind the camper, the reality of motorcycling made him realize it was best left as a fantasy. It really does seem like everyone in a car is trying to kill you, when you are riding a bike. And that't not even addressing the costs involved, and whether his 5'8" frame could hold up a "hog" when he reached a stoplight.
No, it is a fun fantasy, to be sure. Maybe for someone else. but not for me - or most folks, I suspect.
And I suspect most Harley riders are quite happy to keep it that way.