Harley-Davidson’s problems, and how to fix them. 2019 Version

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.

About david

I am a 74 year old motorsports nut who lives in Snohomish, Washington. After a 31 year career as an English teacher, I segued into a self-created job in the motorsports business. Now retired, I was involved in customer relations for Ride West BMW in Seattle, after almost 10 years of similar work for the Cycle Barn MotorSports Group. I own, at the current time, a Triumph Rocket 3 (2020), a 2020 Triumph Bonneville, and a 2016 Ford Focus ST. What else would you like to know?
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