Milwaukee, WI (October 1, 2018) BSB — Harley-Davidson Inc. is
facing a particularly tough competitor for new riders: its own used
motorcycles.
Three used Harley's are sold in the U.S. for every new one. A
decade ago, it was the other way around. New motorcycle sales in the U.S. are
down by half from a 2006 peak, while used sales are up 13%.
Harley wants to reverse it's sales slump by drawing new riders with 16 new middleweight bikes set to roll out by 2022 PHOTO: David Paul Morris/Bloomberg News
Milwaukee-based Harley in 2018 is heading for its fourth
straight year of declining sales as the company’s core older customers scale
back purchases while younger riders fail to pick up the slack. A glut of used
Harley-Davidsons has emerged after years of strong sales growth and production
volumes, and offers a variety of choices for those unwilling to splurge on
pricey new models.
“It comes down to price, always,” said Jim McMahan, co-owner
of a Harley dealership in Greensburg, Pa. “There are people who just don’t want
to spend $18,000 to $25,000 on a new motorcycle.” Used Harley's in good
condition can cost less than $15,000, dealers say.
Harley wants to reverse its sales slump by drawing new
riders with 16 middleweight bikes it plans to roll out by 2022. Among them will
be the company’s first electric model, debuting next year.
Harley hasn’t released prices for the new bikes, but dealers
expect many of the models will be cheaper than the big bikes that make up the
core of the current lineup. Offering more motorcycle choices at lower prices
could lure younger riders to the Harley brand for the first time and help offset
slumping sales of traditional models.
Heather Malenshek, Harley’s vice president of marketing,
said used Hogs aren’t the company’s biggest problem. “The greatest challenge is
to bring younger people into the sport,” she said. “Our used motorcycle base is
a great way to get them in.”
But some Harley fans—including one Harley salesman—say the
price of a new Harley deterred them from buying one. John Call, 31 years old,
has sold Harleys at a dealership outside of Cleveland since 2016. In buying his
first Hog last year, he chose a used 2009 Dyna Fat Bob for just under $10,000.
“A new Harley isn’t really practical for me,” he said. “I’ve
got a growing family.”
Harley-Davidson motorcycles tend to have long lives. They
don’t wear out easily or go out of style quickly and owners tend to take care
of them, making the bikes appealing in the used-motorcycle market.
A prototype model of Harley's electric motorcycle, live wire. Harley plans to roll it out next year. PHOTO: Harley-Davidson
Harley has struggled to lessen its reliance on baby boomers,
whose growing discretionary income and passion for hobbies including motorcycle
riding brought the company back from the brink of bankruptcy in the early
1980s. Now, those riders are aging and buying motorcycles less frequently. But
younger riders often can’t afford as many bikes as their parents or don’t see
themselves living the Harley free-spirit lifestyle.
In response, the company is pursuing younger people who
don’t fit the profile of a typical Harley fan: male and clad in a black T-shirt
and leather vest. On Monday, Harley said it would start selling its popular
branded apparel through Amazon.com Inc. Currently, Harley apparel is sold
through the company’s website or at dealerships.
Two of Harley’s new models will be dual-purpose bikes for
riding on both paved and unpaved roads, a motorcycle category that is growing
in popularity in the U.S. Nine will be sports bikes with racing-style body
features and seating to reduce wind drag. Harley doesn’t currently compete in
either of these categories.
Some dealers said they doubt customers for those kinds of
bikes will one day trade up for a new, expensive Hog. Ms. Malenshek
acknowledged some might not, but said Harley also needs to accommodate riders
who aren’t interested in its traditional models.
“The point of all of this is bringing new customers into the
brand that weren’t there before,” she said. “They don’t all want to be in the
lifestyle. You can have Harley on your terms.”
The new models are also designed to attract riders overseas,
where Harley wants to generate half its sales a decade from now, up from about
39% currently. Harley in June said it would shift production of motorcycles
bound for Europe out of the U.S., after the European Union imposed what would
have amounted to a roughly $2,200 tariff on each Hog imported from the U.S.
President Trump and unions representing Harley workers said
Harley was using the trade fight to justify existing plans to move production
overseas. Harley said that assertion was false.
Many foreign markets are dominated by Harley’s competitors.
Japan’s Kawasaki Heavy Industries , Suzuki Motor Co. and Honda Motor Co. make
popular utilitarian bikes, while Germany’s BMW AG and Italy’s Ducati, owned by
Volkswagen AG , make higher-priced models.
Harley faces those same competitors in the U.S., too, along
with a resurgent U.S-based competitor in Indian Motorcycles, owned by Polaris
Industries Inc.
Harley still accounts for about half of sales of U.S.
motorcycles built for riding on highways. That share has held steady in recent
years even as its own sales stalled because the market for new motorcycles
overall has shrunk since the 2008-2009 recession.
And some riders of used Harley's do eventually buy a new one.
Sarah Pellatiro of New Kensington, Pa., bought a new Harley Sportster this year
for just under $12,000 after riding a used version for three years. Ms.
Pellatiro said she chose the middleweight bike over a larger, more expensive
model because she was confident she could handle it in traffic after gaining
experience with a used Sportster.
“I got that bike right when I was still learning how to
ride,” said the 32-year-old photographer and silversmith. “I don’t think I’ll
ever ride any brand other than Harley from here on.”
