"Harley has been on an unbelievable roll, phenomenal by any measure," says Don Brown, and independent analyst for DJB Associates, LLC., a management and research consulting firm. "But they have a number of developing issues that they're going to have to pay attention to, the most significant one being the aging of the baby boomers.
"The results of the demographic shift won't be a big deal for Harley tomorrow at nine in the morning, but over the next ten years it will be major," explained Brown, who's been tracking the industry for more than 20 years.
According to Brown, the X factor for the future of the motorcycle industry is Generation Y, the progeny of the baby boomers. "There is concern throughout the industry of how this new bubble will be accommodated. Right now, the fastest growing segment in the US is the small, displacement bikes that are being sold primarily to Generation Y. These are bikes with engines smaller than 125 cubic centimeters, and Harley doesn't make anything nearly that small."
Harley does offer entry-level motorcycles through the Buell line – its sports-bike subsidiary. Buell features some of the technology and design cache of the popular Asian racing bikes. But its market share in the US is less than one percent, and marketing a motorcycle that is contrary to the Harley style and image could actually be counterproductive when Generation Y eventually has the buying power to upgrade.
Harley's brand image, with its free-spirited, rebellious associations, helped to re-fortify the company over the past two decades, as affluent baby boomers flocked to the brand in droves, hoping to rekindle the passions of their youth. Where movies like "Easy Rider" and books like "Hell's Angels" helped to form stereotypical notions of Harley riders as roughshod, beer-swilling outlaws, the reality of today's prototypical Harley rider couldn't be further from the truth. Instead of having a rap sheet, today's connoisseur is more apt to have an MBA or an MD; instead of running from the law, the guy you see roaring down the highway today just may be practicing it. J.D. Power & Associates puts median income of American motorcyclists at US$ 67,000 (74,056 euros). Chances are they're not making that smuggling dope in their bikes' gas tanks.
The younger generations aren't trying to recapture anything – yet. They've been influenced by the powerful allure of racing-style motorcycles in ways their parents never were.
In this tech-saturated world, where those products that can't be marketed as cutting-edge are left for dead, young aficionados crave the pinnacle in technology. Harley-Davidson is a classic brand, indicative of refined tradition, American strength, and yes, that freewheeling spirit that defined the baby boomers' youth. But tech-savvy? The weekend-warrior Harley rider straps on his boots and heads for the open road to escape the PCs, e-mails and palm pilots that define his/her existence.
To the younger consumer entrenched in the Internet age, the words "classic" and "tradition" have less marketing leverage. Until it's remade into a video game, any reference to "Easy Rider" is likely to be lost on generations henceforth.
The management team at Harley-Davidson is well aware of these realities, so much so that they recently introduced a new model that aims to attract tech-conscious bikers who prefer the Asian lines. The V-Rod is the first completely new bike the company has produced in 50 years. Its design incorporates some of the aerodynamic virtues of racing bikes, and it boasts a top speed of 140 mph (225 kph). It's also notably quiet, similar to the Japanese models and unlike the traditional Harley bikes, which tend to sound the way one imagines Armageddon would.
"The V-Rod resulted from the company's ongoing product development plan," said Joe Hice, Director of Corporate Communications at Harley Davidson and a thirty-year cyclist himself.
Hice explained that the concept was divined from existing Harley riders as much as it was from the growing sport-bike niche. "We saw a lot of Harley owners stripping components off of the traditional bikes. We felt there was a great opportunity to build a true sport-custom motorcycle with new technology, and at the same time, maintain the signature Harley-Davidson look and feel."
As far as the speculation concerning Harley's dependence on baby boomers is concerned, Hice says that demographic only speaks for 50% of Harley consumers, and that just because the boomers are nearing retirement doesn't mean there all going to suddenly stop riding.
"The oldest baby boomers don't turn sixty for another five years. My father is in his 70s. Jeffrey Bleustein, Harley's CEO, is in his early sixties. Both would tell you that they don't have any plans of stopping riding anytime soon."
Hice concedes that Harley-Davidson has not traditionally marketed to younger riders, though he does point out that 17% of the company's devotees are 35 or younger. "We obviously recognize that the baby boomer generation is getting older, but we think there's still a long road to go with that group. We expect the V-Rod will bring in new, younger customers as well as appeal to our existing base."
Notwithstanding Hice's equanimity, Harley definitely has its eye on the future, as the V-Rod's roll out would indicate. What's more, Harley recently launched its Riders Edge Program, a motorcycling safety course, which targets new consumers. "In just over a year, we've had more than 4,000 riders go through the program, 45% of whom are female. Nearly half are under 35. There's still a lot of work to do, but we have no doubt that we're aggressively moving in the right direction in appealing to the next generation of riders."
Undoubtedly, Harley-Davidson's greatest marketing asset is the Harley Owners Group. With over 660,000 members, it's the largest motorcycle-sponsored club in the world and a strength Harley is counting on to fuel sales to future generations. Hice says, "A lot of those members have sons and daughters who will inherit the passion for Harleys. Others have neighbors and relatives that see them on their Harleys and aspire to be like that. It's really a grassroots network of hundreds of thousand of fanatics out there promoting the brand. Not too many products, let alone motorcycles, can claim to have that."
In Europe, where Harley-Davidson is making a concerted marketing effort to increase its share of the "heavy bike" industry from 6.3% to 14% over the next three years, the company can't depend on its grassroots marketing power the way it can in the US. Instead, Harley is looking to significantly bolster its dealer base for both its traditional bikes and its Buell line. The V-Rod's introduction should help, as 70% of the heavy bikes sold in Europe are the performance driven sport motorcycles.
The V-Rod should certainly catch the eye of the world's pure sport motorcycle enthusiasts. But the sheer number of racing-style motorcycles on both sides of the pond begs the question if the development of a Harley-Davidson pure sport racing motorcycle is ever in the company's future. Hice doesn't think so.
"That would go against everything the Harley-Davidson brand stands for. And with the Buell line, it wouldn't make much sense. We've had fifteen years of record growth, and we see no reason why it won't continue. You look at the size of markets at home and abroad, the waiting lists in dealerships for new bikes--we don't believe there's any reason to doubt that the future is bright for the company."
Hice’s optimism is not without merit – Harley has a strong enough brand to chase sunsets indefinitely. But unless they woe some younger riders soon, the hope-I-die-before-I-get-old generation may prove too few to keep the Harley brand on the road in the next few decades.