TakeAway: Times are tough at Harley-Davidson, but not just because of the economy.
The guy who comes to mind when you think of a Harley owner is getting too old to ride.
Even worse, there are not enough younger potential customers who want a Harley because it’s not as exclusive as it used to be.
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Excerpted from Fortune, “Harley-Davidson’s aging biker problem,” by Alex Taylor, September 17, 2010
Harley-Davidson was the feel-good turnaround story of the 1990s and then the poster-boy for brand values in the 2000s. How often did you read that Harley was the only consumer brand whose customers were so loyal they wore the company’s logo tattooed on their chest?
But after expanding exuberantly in the last decade, Harley has fallen on hard times. Now it is struggling against a foe that not even cost-cutting nor brand loyalty can overcome: demographics. Its current owners are getting old, and not enough younger ones are coming up behind them.
Harley’s core customer is a middle-aged white American male, a group that will contract in the coming decade. …
Bumpy roads are nothing new for Harley. … Fighting back at what it perceived as unfair competition [from Japanese manufacturers], the company won an anti-dumping ruling from the International Trade Commission in 1982, and President Reagan imposed a 45% additional tariff on super heavyweight Japanese bikes.
Given an opening, Harley used the opportunity provided by the tariffs to regroup. … Harleys became a cult item; Harley dealers packed extra charges onto list prices and compiled waiting lists for prospective customers. By the late 1990s, certain models were back-ordered for two years.
After resisting the temptation to expand, Harley belatedly added production capacity and grandiosely predicted sales would reach 400,000 by 2007. But with ample supply, Harleys began to lose their cachet. Sales peaked in 2006 at 349,000. …
Harley’s famous brand couldn’t buffer it from the downturn once owning a Harley stopped being cool. …
… Harley survived earlier economic downturns when other discretionary consumer durables slumped because Harleys were in short supply. As it built capacity to meet demand, Harley became just another manufacturer, vulnerable to a cyclical economy. In the fourth quarter of 2009, it suffered its first quarterly loss in 16 years.
The days when Harleys were a fashion accessory are likely over. …The challenge for Harley-Davidson in 2010 is to adjust to the new normal.
Edit by DMG
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Full Article
http://money.cnn.com/2010/09/17/autos/harley_davidson_fall.fortune/index.htm
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