As large motorcycle purchases significantly fall in the US, the once mighty Harley-Davidson understands it’s dealing with a challenge completely outside of its control.
From bankruptcy to once America’s pride in manufacturing, Harley-Davidson is a company that’s done and lived through a lot, if not everything. Now, the Milwaukee-born company faces a stony challenge, one that’s beyond the quality or capacity of its engines.
On any given weekend, you might see a large group of Harley drivers enjoying a ride around town or in the city, but former Forbes contributor Charles Sizemore offers an interesting observation: All of the bikers you see are notably middle-aged Caucasian males. Why? Because Baby Boomers – the largest and wealthiest generation in history – are rapidly being aged out by generations that lack the time or the bankroll to buy a Harley-Davidson bike. Millennials, now in their 20s and 30s, are at the prime age for purchasing recreational vehicles like motorcycles, they’re just not into them.
Domestic sales for the 115+ year-old manufacturing business fell for the fifth straight year as it enters 2020, with a 5.2% drop revealed for 2019. Trade tensions, the criticism of President Trump because of the company’s decision to shift some U.S. production overseas, where they have most tuned a profit, and a shift un customer preference turnedHarley’s road into a rocky one. A 2018 report from the Wall Street Journal writes that three used Harleys are sold in the U.S. for every new one. A decade ago, it was the other way around. Expectations have recently been beat on some international levels and the brand has made engagement with a more younger, non-Caucasian men and women client base with flagship products like the Sportster 883 Low. These new changes have the company betting on combined leadership experience, a deep understanding of the brand, and on independent dealers to sell units and related products and services to retail customers to achieve the financial expectations it expects to ensure an effective transition.
Just recently, Matthew Levatich stepped down as President, CEO and member of the Board of Directors in one of the first company moves towards this demographic headwind. In one of his last earnings calls before exiting the company, CEO Matt Levatich announced that the company plans to add 2 million riders to the brand over the next 10 years, he also talked about revamping the Harley-Davidson academies in the U.S., Mexico, Canada, Brazil and China, where new riders learn how to ride a motorcycle and receive their motorcycle license in the process as an attempt to battle the demographics that loom over the company.
In a time where Harley’s core customers, those who live, breathe, and die by the brand and the lifestyle that surrounds it are growing out of the riding age, the future looks uncertain. That famous “Harley sound” – the roaring rumble of the bikes’ exhaust –, which was even close to becoming a trademark back in the mid-1990s, gently rides and fades into the warm and orange evening sun as it seems indifferent and even annoying to new generations who may not know or just don’t care about the existence of the HOGs. The truth is Harley has proved endurance before. We are about to see if it can do it once again.