Harley’s
problems, and how to fix them. (2019 version)
Not
the first essay on this topic, for sure, and a frequent subject flogged by many
for the past twenty years or so. But
now, with the promised release in late 2020 of two new models with actual new
and technologically current engines, it’s time to revisit the topic.
Where
it all went wrong; the back story.
Harley saved itself, or rather the board of directors did, by purchasing
itself back from AMF in the early 1980’s.
What seemed to be a function of fiscal insanity happened, with incredibly
good fortune, to coincide with a major shift in the demographic – lots of
successful yuppie types coming into all sorts of income. In short time Harley’s became the favorite
toy of all manner of adult s (mostly men), who wanted to flaunt their apparent
wealth with a nice shiny chromed-out Harley.
The
new Harleys were, at last, reliable.
They had always been attractive.
They were still (relatively) slow, did not stop or handle all that well,
and required more frequent maintenance. This mattered not a jot to the new
buyers, who were for the most part purchasing the equivalent of a flashy ring
to strut their bling. Real Harley riders
did benefit, as the profits brought more and better models with more features,
at the cost of increased price.
Obviously,
I’m taking grotesque short cuts here to avoid turning this into a book.
Apologies.
For
about twenty years Harley salespeople did not really “sell” motorcycles. They wrote up sales orders and kept track of
waiting lists. For a time, customers did not get to select a favorite
color! When a new bike arrived, they’d
be called and asked if they wanted that color. If not, they went to the bottom
of the list. Plus, it became a thing to
add a lot of expensive options, preferably Harley options, to the bike before
it was delivered.
When
I went to work for a Harley-Davidson and other lines dealership in 2000, I was
appalled to see dozens of brand-new stock exhaust systems simply tossed into
the dumpster. There was simply no market for them. At times Harley was selling pretty much two
exhaust systems with every bike – the stock pipes were thrown away and replaced
with Harley’s “Screaming Eagle” pipes, which flowed better but, more
importantly, were louder. Where I worked there was one highly skilled mechanic
who spent 100% of his time adding accessories to brand new bikes.
Obviously,
this created massive profits, but was also the seed of the problems that haunt
them today. For one, a lot of the wealthy buyers wanted to go further and
actually become a dealership owner.
Harley responded to this by ramping up the cost of entry, and adding an
ever-growing list of requirements including the décor, the Harley diagnostic
computers to be used in the service department, and much more. In a way, the company was doing to
prospective dealers what they had been doing to customers – charging every
penny they could. By 2005 it was
estimated that opening a new Harley dealership would cost at least $10,000,000
before the doors were opened. There were
people who jumped at this “opportunity.”
All of them had money, but many had not the slightest knowledge of
running a motorcycle business, or even interest. They could hire people for that.
An
even worse problem infected the people in Milwaukee and at many of the
dealerships. They had made great piles of money selling air-cooled V-Twins in
small and large sizes, all with gorgeous paint, as Harley had the best paint
infrastructure in the business. They also made substantial profits by licensing
every imaginable product. Every dealer sold t-shirts with their name and
Harley’s proudly displayed. Since Harley was such a hot brand, enthusiasts
flocked to the dealer in any city they were in to add to their collection.
And
some of the models really were attractive.
The Road King is one of my favorite rides of all time, for example.
There
was little motivation to change, as surely all of this would go on
forever. …Until it didn’t.
In
2003 or so I advised some high school marketing students on a research
project. They received over a thousand
responses from across the country to a survey they’d sent out to young people
aged 16-25 concerning what they thought of when they heard “Harley-Davidson.”
Of
the available responses, two dominated: a.) Their grandparents and b.) thugs.
The
students were surprised by this, but the data was overwhelming. A video conference
was arranged with the Harley marketing folks in Milwaukee (very cutting edge at
the time) and the students’ efforts were politely but abruptly and completely
snubbed. Harley’s marketing minds
preferred to ignore information they did not like. A valuable lesson for the students in how corporate
minds “think.”
Then
came the stock market crash. For years people had been purchasing motorcycles,
boats, sports cars, etc. with equity loans, some of them demonstrable
shaky. You could get a loan for a new
motorcycle with a credit score of less than 400. Try that today!
Suddenly
dealers had motorcycles of all brands that people could not purchase. Where I
worked – 600 of them. Some of the new
and expensive dealerships went away, flushing away a lot of money and the jobs
of devoted staff.
A
large and expensive motorcycle with outdated technology was no longer a must
have, no matter how gorgeous. New
technology and new machines with a lower price point were needed, and this is
where the real problems began to set in.
Harley
decided to offer an “American” sport bike, and purchased the assets and talents
of Erik Buell. But they could not bring themselves to commit to the concept to
the extent of providing Buell with a real engine, and he was forced to soldier
on with a modified Sportster engine, which had been hot stuff – in 1958. They made the Blast!, a small single cylinder
entry bike with half of a Sportster engine, but dealers did not know how to
sell such a bike and were not much interested. Buell fell apart after 20 years
of near neglect, having never shown a profit.
Harley
did have the financial resources and engineering talent to create what was
needed, and in many cases did, but then left it to dealer personnel who were
wedded to low rpm and heavy cruisers to sell, which they failed to do with
consistency.
Consider
the V-Rod. A “performance cruiser” with a terrific engine. But – an engine that needed to get to 4,000
rpm before things got serious. This was
sold by people who felt, 3,000 rpm should be plenty. They made a sport bike
version of the V-Rod for one year, and it was really attractive and went like
stink. There were niggles, like hard
frame tubes that contacted your thighs when riding, an engine that was too
heavy, and a price that was not competitive.
No matter, as many dealers hated sport bikes and did not order the model
or did not try very hard to sell it. The
sport bike version that had so much potential was dropped after only one year, and
the V-Rod soldiered on for years as a cruiser. Each year brought new colors and
“bold new graphics.”
At
the same time – things got worse.
Advancing noise and emissions standards made it harder for large
air-cooled V-twin engines to compete, and made them even more expensive. And,
the students had been correct years earlier.
Thugs were rare, and the grandparents were rapidly leaving the highways
for a higher plane.
Which
brings us more or less to today. For the
past few years Harley has taken a “pasta” approach to marketing and design.
Throw something at the wall to see if it is done, and go with it. Unfortunately, they have often missed the
wall.
They
invested heavily in an electric motorcycle company, then sold out less than a
year later. They eventually produced
their own electric bike, which would have been terrific if it could offer 300
miles of range for $20,000. Instead it
offered 200 miles of range for $30,000, which cost them a lot of customers,
including a friend of mine. They
responded to early criticism, which was rife, to explain that the bike was
meant as a “starter” bike, and customers would eventually move on to a gas Harley.
A $30,000 starter bike! Can we say
hubris? Sales have been… a challenge.
They
brought out a new prototype for a new use every few months or so, which
generated the obligatory barrels of enthusiast ink, and then the bike would be
seemingly erased.
But
now – finally! We see the touted
introduction of two new models for late 2020.
The Bronx will be a street fighter style bike with a 975cc twin with
105hp, and the Pan American will offer 1250cc and 145hp. Both look like very attractive and capable
bikes.
But
– here is the fear. They will be sold by
the same dealers who have managed to bungle the sale of everything that was not
a large and heavy cruiser for the past two decades. Will Harley commit to training and education
of dealer staff to get them to understand and actually love the riding experience
of these types of bikes?
There
has never been anything wrong with the motorcycles. The engineers are
competent, and the line workers who put the bikes together do an excellent job.
The
problem lies with the moribund mind set and world view of top management, the sales
department, and many of the dealers and their staffs. IF Harley can change the view from the top,
and then invest in the training required to get dealer and sales staff to
embrace electronic technology, the joys of off-road dual sport bikes, and the
simple pleasures to be found in motorcycles with light weight, horsepower,
handling, and excellent brakes, the bikes will sell and Harley will survive.
And, they can and should continue to produce their traditional models.
Can
they do this? I hope so. I really
do. History argues against that hope,
but let’s be positive! The motorcycle
world needs a healthy Harley-Davidson.
Copyright
2019 David Preston
You
can read more of my work – a lot more of it – at www.davidpreston.biz.
