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It has been known for a while that H-D has been struggling but their problems run far deeper than most people think Here are 17 reasons H-D is in trouble

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by Jason Bagnall

Harley-Davidson is a modern, publicly held company with a growing market increasing overseas. Unfortunately, the company has a lot of secrets and problems that could end up in another downfall.

Firstly, since the company went public in 1965 there have been a series of episodes where product, service, and price were not in line with what someone would expect that a company wants to appeal to the widest market it can acquire.

17  How The Problems Started

While Harley-Davidson is credited with supporting the cruiser market extensively, it dabbled in other markets such as small bikes and golf carts. The issue that hurt them is the development of the non-cruiser market for them was very limited in scope and the company never diversified to withstand market changes that come with time. These sidebar businesses were often sold by the company just before they could have capitalized on the ownership of those assets.

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16 Going Through The Motions On Autopilot

Too often this is attributed to Harley as being part of a lifestyle and cultural phenomenon. Really, when you dig deeper that isn’t true. The company went bankrupt once already back in 1981, and it had to be bailed out by a team of investors headed by Vaughn Beals and William G. Davidson who returned it back to a private firm for several years, and who bought out the stock at a price equal to $0.25 a share.

15 Emphasis On Not Making Waves

The problems started with a decline in engineering improvement and cancellation of several projects the company already had been working on, and a continuation of the status quo until Japanese competition stole a large section of their market share at the end of the 1970s. The company did not sell stocks for several years after the restructuring.

Harley-Davidson is in a bad way but it still refuses to change it’s ways

14 Inappropriate Management Choices

Another thing about Harley is they have put people into top management positions that were overly focused on stock valuation and not the core product line of cycles and accessories.

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The most recent example is the resignation of Matt Levatich who stepped down as CEO because the company has not made the increases necessary to maintain dominance in its market share. An example of that would be the Live Wire electric motorcycle which is a great idea but at $30k per copy, it isn’t going to sell in large numbers.

13 Same Direction, Picking Up The Pace

Then there is the introduction of the 500 c.c. and 750 c.c. Street line of cycles. While moving much of the production into India, Thailand, and Brazil to help with localization of manufacturing, the smaller bikes themselves are awkward and not very attractive. You don’t see very many Americans buying one.

So you still have the buying age of a Harley being moving toward older buyers with higher incomes, while Harley struggles to get large gains in the emerging markets, with the exception of newly affluent riders in those markets.

12 Really Bad Management Decision

The hiring of Keith Wandell in the mid-2000s as CEO was not a good idea either. The guy had no background in motorcycles and didn’t own one prior to working there. Even stranger, the company pulled the support of “The Buell Motorcycle Company” which they had a 49% share in, and they bankrupted it rather than selling it off.

What makes it even crazier; Buell had a large market share of younger buyers who would later buy other Harley related products, and Buell was profitable. H-D and Buell took a huge loss equal to its entire investment in Buell since it bought the majority share of Buell in 1998.

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11 Selling Off Assets

Another poor decision made by The Motor Company was to divest its ownership of a niche’ brand of Italian Sportbikes, M.V. Augusta, thus doubling the loss of market share in performance bikes, which both Buell and M.V. Augusta made. Instead of going after the broadest market share it could successfully manage domestically and internationally, Harley Davidson concentrated on its core buyer in the U.S.A.

10 Doubling Down On Bad Decisions

H-D never changed the direction of selling to an audience of ever-increasing age and high-income status rider who wanted a flashy cruiser or touring motorcycle while trying to offer small economical, yet awkward, motorcycles to emerging markets using parts made around the world, but assembled regionally in their respective geographical areas.

9 Good Fit And Finish, So-So Reliability

While Harley has made good gradual product changes over time and is known to have excellent fit and finish cosmetically, it has never been known for building vehicles that come anywhere close to the reliability of a typical passenger car.

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Few motorcycles have that level of reliability, but Harley Davidson charges a premium for their bikes, whereas half of their competition will sell a similar model at a much lower price point.

8 Over Concern With Stock Options

Again, limiting options eventually hurts the brand. Harley Davidson’s ever-important stock price has fallen 56% in the last 5 years. Historians point to the American Manufacturing and Foundry ownership era of Harley Davidson as the longest run of lackadaisical management.

In reality, except for direction under William G Davidson and Vaughn Beal, most of the modern era of Harley Davidson has been dominated by management mostly worried about quarterly profit margins at the possible expense of long term survival.

7 Repeat Buyers Changing Opinions

According to ConsumerReviews.com: A 2018 survey of buyer satisfaction of 36 buyers rated dealership service satisfaction and reliability of the brand as an average of 1.5 out of a possible 6. Combining ratings like that, while charging a premium price does not make for a stable growth market.

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These are significant strategy errors. Ever since The Motor Company investigated and found the Japanese had much better managers running their manufacturing and assembly production lines, H-D vastly improved their day to day operations, so they are good at tactical changes, but their ability to think long term severely lacks vision.

6 Premium Price, Meh Quality

It’s great that they support the lifestyle fan base, but that really isn’t inclusionary to the majority of potential buyers around the world who see motorcycles as a form of transportation.

Honestly, their quality isn’t worse than competitors, but it isn’t better either. Their finish for paint and plating is top-notch, but their mechanicals are mid-pack in terms of longevity.

5 Thinking Short Term Gains, Losing Buyer Appeal

To make the situation murkier, Harley Davidson dropped its earlier Porsche designed engine series which were modern and liquid-cooled in the popular V-Rod series of motorcycles.

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It is great that H-D discovered the problem with the LiveWire battery charging system, then stopped production and changed charging parameters for the electric bike, but they missed the mark entirely in terms of youth buyers who simply can’t afford one.

4 Rescuing Defeat From The Jaws Of Victory

The core buyer, the 50-70-year-old rider often acts as an apologist for H-D and can be heard blaming AMF for all the past ills of the company, but according to a September 1989 article in Fortune Magazine, the production and sales tripled in under a decade of ownership by AMF, so while yes there were severe quality issues at that period, it is more an accountability and tracking issue rather than just stodgy ownership.

Also. H-D strangely gave away or sold off to Yamaha some of the development work of “Project Nova” which was the development project for modern motorcycle engines with overhead cam designs to be made in similar form to the engines used for The current Street series of motorcycles.

3 Didn’t Know What The Had Until They Needed It

That meant there was a 35 year period where the motor-company didn’t have any internally designed modern drivetrains to offer outside of its core buyer of cruisers. It outsourced the Porsche designed V-Rod series and terminated its relations with subsidiary Buell who had successfully developed a series of Rotax designed high-performance engines for the last two years it existed.

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Going back to the basic premise of this article, the Motor Company seems quite good at maximizing a specific niche’ and is obsessed with stock valuation. That however really hurts them in as far as it limits their ability to attract growing market segments.

2 Too Worried About Financial Status And Not About Selling Bikes

Prior to going public, the company focused on being the best bike builder they could. They had no serious competition in their market niche’ prior to the 1970s, so we understand things were a little easier for them. However, if they want to continue to grow as a company they need to increase their sales.

In order to increase their sales, they will have to go after unfamiliar niche’s such as sportbikes, attractive low-priced entry-level cycles – which they did have, but willingly gave up! Now, as a matter of survival, they will have to recapture those market segments!

1 Not Admitting Changes In Market Forces Were Happening

Matt Levatich stepping down as CEO for failure to improve the attainment of goals towards growth isn’t necessarily a remedy for their ills in as much as it’s an admission of failure.

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Yes, they need a fresh perspective, but unlike in the mid-90s when they brought in someone who didn’t really like motorcycles to head the company, they should look towards management that likes multiple aspects of motorcycling and not just a few small buying sectors.

Source hotcars.com

19 comments

  1. I agrre with some of the points mr. Bag-n-all has made.. but he didnt mention how they left the harley owners on the back burner as the raced toward the commercial market.. LOTS of the good old harley shops told them to fuck off when the told them to build a new building ,,, by a busy hyway,,, stock all thier t-shirts and leathers or lose the dealership..in my area alone that move cost them two VERY PROMINENT dealer/sevice shops.. and we still all go see those guys and still have Exellent sevice ..these guys also still do VERY WELL selling used harley davidson bikes and millwaukie gets no cut…looks good on them yuppy fucks.. they wanted the crowd that wanted to buy a bad ass t-shirt and call them seves a biker and guess what…THATS WHAT THEY GOT…

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  2. There are many reasons but, the fact of the matter under Levatich and his team were Cluster Phufks, Idiots, Poor leadership.
    Harley-Davidson Motorcycle MUST Support H-D Bikers or Fail.

    “NEVER BE WITH THOSE COLD AND TIMID SOULS WHO NEITHER KNOW VICTORY NOR DEFEAT.”

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  3. Sounds like a bunch of Cluster Fucks saying Hell the buyers whom are 99% MC And more about bucks in their greedy pockets. HD can sell the Hell out of Harleys if they’d lighten up on the purchasing process. Rebate enough for those with proven income and go Zero down 60 months using adequate rebate amounts. Wake the Fuck up. You couod learn alot from Trump. That’s how He got Rich taking a gamble on consumer’s income rate Not Credir fn scores. Mr. One

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  4. This is a poorly written article with many inaccuracies. Shoddy journalism.
    I knew all of the C.E.O of the company during the nineties. They were all caring , competent and passionate about motorcycling .

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  6. Try giving people that may want you me of your bikes a chance.. just because that app.. doesn’t look good to the good ole folks up stairs does not mean that that person is unworthy.. that’s where Harley-Davidson will fall off in my opinion.. my Harley dealer experience was heart breaking..

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  7. Bought a 2019 Indian Dark Horse last year. The HD dealer was so cocky he said and I quote: “You’ll be back here to buy the street glide after you ride that Indian trash, I’ll get the paperwork ready”. Well, let me tell you… after owning 3 Harley Davidson models, one ride on the Indian changed my mind. And I’m 52, single, with a 6 figure income… You lost your core buyer Harley. Best of luck. I did keep my 08 Heritage Softail, she’s a special bike and I still love her.

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  8. Agree with all of the comments. When you go to dealership here they have a their shit dont stink attitude. Meanwhile the store is empty and it’s not just local dealership. We have been to several out of town and cant tell you how many times the store is empty and employees dont even acknowledge you. I would like to tell them all.. you are not doing me a favor by selling me a bike.!!!!

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  9. Bought my first harley in 2017 ,got the extended warranty wich covered, serving, oil changes ext..each time they serviced it i got it back scratched up and even a few dents ,was gonna buy another bike ,but thinking twice about making it a harley…

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  10. First i have tryed to to comment before. My thoughts are cut the CEO’S pay, Lower the price of the bikes alot, And yes get rid of the we are the best attiude. My wife and i rented 2 different bikes for 4yrs in a row from a mn dealer and not one time did i ever get asked how was your ride, how did you like the bikes, or even if i was interested in maybe looking at buying a bike. Too many arrogant people working for HD

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  11. Harleys problems began when they forgot, tossed aside the BIKER for the RUB. When dealerships looked more like Macy’s than a repair shop that helped the common biker with everyday issues. When they only carried custom parts at a premium and no lingered offered stock replacements ( unless they came from China ). When $10 dollar t-shirts suddenly went to $35 or more. That’s Harley’s downfall… I saw it, I lived it, and it’s left me with a broken heart.

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  12. It’s a shame but they made their beds and now they have to sleep in them ….I bought my first Harley in 1986 softail I have since owened 7 different models now I love the ultra classic but I’m getting older and my legs aren’t as strong as they once were. So I won’t ride a trike so I’m left with no clear choice. I guess I’ll have to buy a duck or maybe a Beamer.

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  13. Been riding for 54 years now, currently on a 89 Springer softball which I have had for 29 years, can’t afford to replace it, am retired, harley priced me out of their market, would love a new one but just can’t afford it, love my Springer though, wish harley would wake up and come back to earth, some of the new bikes cost more than I paid for my house, he’ll can’t even afford the t-shirts anymore

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  14. Buncha fucking Poindexter’s, wouldn’t know a real piece of American Iron between your legs if it bit ya. Ride that Polaris, German or Jap bike of your choice. No one gives a shit. It’s Polaris NOT Indian. Fucking get it right….

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  15. They have been overpriced. Won’t last as long as a Honda or other japan bikes. I had a electric guild 2011 put $15,000 new part’s on my $17,500 bike my &17,500 Harley at 1,000 mile oil change they told me it was only worth only $12,000 to them. Got rid of it the next day. Kept my 2002 Gold Wing so most better bike.

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  16. Hey don… they build hondas to keep you woodboots off our harleys..and we build round round toilet bowls so you square heads dont drink the water..the people who built your honda had round eyes till we gave them those bright flashes back in the forties…theyre still squinting… hopefully you and your type come around soon and buy american…..

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