An hour before midnight on New Year’s Eve in 1985, a bunch of Harley executives sat in a room at a bank with two stacks of papers, one for bankruptcy and another for recapitalization, if their last gasp ask for fresh investment came in. They had given themselves until midnight to get new money or go bankrupt, and time was running out.
Many of the executives had, four years earlier, personally invested $1 million or more—while borrowing tens of millions more on top of that—to buy the company from the conglomerate AMF for $80 million and take it private. AMF itself had acquired the motorcycle manufacturer for $14 million in 1969 (about $100 million today) with a plan to expand production and squeeze out maximum profits. But a decade of labor trouble, declining build quality, and the dominance of Japanese motorcycles—Honda, in particular—had, by 1981, left Harley in dire straits.
It was kind of a miracle that Harley had lasted that long to begin with and, indeed, had almost done so by default. Such was the impact of 1969's Easy Rider that, without it, the company might not have existed much longer after it, since, historically, motorcycle companies in the United States came and went at the ferocious whims of the marketplace. Consider that, after Indian closed its doors in 1958, Harley was the only American motorcycle manufacturer left, having succeeded where hundreds of competitors had tried and failed.
By that time, market forces were already working against them, since by the 1950s in the U.S., no one really needed a motorcycle. Unlike in Europe, Asia and Africa, motorcycles and scooters never really became a viable and large-scale means of transportation—especially in urban areas—here in America. Besides, cars were getting safer and cheaper, and bikes had already become, in the public’s mind, tools of outlaws, thanks in part to 1953's The Wild One and the (often overhyped) emergence of motorcycle gangs.
And while that image has changed, motorcycles have remained hobbies for decades, the province of the weekend rider who has some money to burn.
“We’re in the fashion business,” Willie Davidson, the grandson of Harley co-founder William A. Davidson told People in 1981. “No one needs a motorcycle. It’s your toy or hobby. It has to do something for your ego.”
Harley has found, time and time again, however, that appealing to hobbyists isn’t always a great formula for business success. If the ‘70s almost killed them, the ‘80s were even less kind, though in that room at 11 p.m. on New Year’s Eve in 1985, the Harley executives finally got a call. New investment had come through. The company would not go bankrupt. The executives in the room were jubilant, and, just seven months later, in July 1986, Harley went public.
The good times were back on for the next 20 years until recently, when sales dropped for the first time in decades, President Donald Trump imposed a damaging trade war, and Harley’s future began to look ever dimmer. It was a child of the 1900s, a warhorse of the 1940s, a Boomer icon of the 1960s, a lucrative source of nostalgia in the 1990s. Today, though, it’s just another shrinking piece of Americana.
Harley sales in the U.S. peaked at over 260,000 motorcycles in 2006, but have dipped to 147,972 last year, a number that is the lowest since 2010 and, before that, the lowest since 1993. (Retail sales fell 13 percent in the U.S. in the third quarter of 2018 compared to 2017, Harley said late last month.)
Harley’s longtime bread and butter has been Baby Boomers, those who grew up enamored with the outlaw image to the point that they were willing to spend $20,000 or more on the bikes and leather to live out that image. But the Boomers are getting older, increasingly physically unable to ride or dying out entirely. And Harley’s response—an electric bike called the LiveWire set to debut next year—isn’t so much of a Hail Mary as it is a capitulation. It also won’t be nearly enough.
“I think they have to completely reinvent the brand, and I don’t know if they can do it,” Erik Gordon, an assistant professor at the University of Michigan’s Ross School of Business, said. “The jokes are true. When I go down the freeway, I always look to see if this cliche about Harley riders is true. And the crazy thing is that it is true. I don’t think I’ve seen anyone under 55.
“My generation viewed Harleys as American fast, loud, muscle. We liked that stuff,” Gordon said. “[My students] view it as the tired old folks who screwed up America.” (...)
With some fanfare, Harley unveiled its electric bike concept a few years ago, taking a prototype on a cross country tour and letting people test-ride it, as a trial balloon. The electric bike they put into production (and will debut next year) looks and operates very much like that prototype. Which is to say very much like Harley’s gasoline-powered motorcycles, with a twist-and-go throttle but no gears to speak of. Harley has spent the time in between the prototype and the launch of its first electric bike—dubbed the LiveWire—prepping its customers to a painful degree.
“An authentic Harley-Davidson expression of individuality, iconic style and performance that just happens to be electric,” text read on Harley’s website in the build-up. It’s electric, Harley’s saying, not that there’s anything wrong with that.
The LiveWire will debut in a market—high-powered electric motorcycles—that essentially doesn’t exist yet, with fewer than 1,000 such motorcycles sold in 2017 in the U.S. and Europe, according to Cycle World. Part of the problem is inherent in the design.
Many of the executives had, four years earlier, personally invested $1 million or more—while borrowing tens of millions more on top of that—to buy the company from the conglomerate AMF for $80 million and take it private. AMF itself had acquired the motorcycle manufacturer for $14 million in 1969 (about $100 million today) with a plan to expand production and squeeze out maximum profits. But a decade of labor trouble, declining build quality, and the dominance of Japanese motorcycles—Honda, in particular—had, by 1981, left Harley in dire straits.It was kind of a miracle that Harley had lasted that long to begin with and, indeed, had almost done so by default. Such was the impact of 1969's Easy Rider that, without it, the company might not have existed much longer after it, since, historically, motorcycle companies in the United States came and went at the ferocious whims of the marketplace. Consider that, after Indian closed its doors in 1958, Harley was the only American motorcycle manufacturer left, having succeeded where hundreds of competitors had tried and failed.
By that time, market forces were already working against them, since by the 1950s in the U.S., no one really needed a motorcycle. Unlike in Europe, Asia and Africa, motorcycles and scooters never really became a viable and large-scale means of transportation—especially in urban areas—here in America. Besides, cars were getting safer and cheaper, and bikes had already become, in the public’s mind, tools of outlaws, thanks in part to 1953's The Wild One and the (often overhyped) emergence of motorcycle gangs.
And while that image has changed, motorcycles have remained hobbies for decades, the province of the weekend rider who has some money to burn.
“We’re in the fashion business,” Willie Davidson, the grandson of Harley co-founder William A. Davidson told People in 1981. “No one needs a motorcycle. It’s your toy or hobby. It has to do something for your ego.”
Harley has found, time and time again, however, that appealing to hobbyists isn’t always a great formula for business success. If the ‘70s almost killed them, the ‘80s were even less kind, though in that room at 11 p.m. on New Year’s Eve in 1985, the Harley executives finally got a call. New investment had come through. The company would not go bankrupt. The executives in the room were jubilant, and, just seven months later, in July 1986, Harley went public.
The good times were back on for the next 20 years until recently, when sales dropped for the first time in decades, President Donald Trump imposed a damaging trade war, and Harley’s future began to look ever dimmer. It was a child of the 1900s, a warhorse of the 1940s, a Boomer icon of the 1960s, a lucrative source of nostalgia in the 1990s. Today, though, it’s just another shrinking piece of Americana.
Harley sales in the U.S. peaked at over 260,000 motorcycles in 2006, but have dipped to 147,972 last year, a number that is the lowest since 2010 and, before that, the lowest since 1993. (Retail sales fell 13 percent in the U.S. in the third quarter of 2018 compared to 2017, Harley said late last month.)
Harley’s longtime bread and butter has been Baby Boomers, those who grew up enamored with the outlaw image to the point that they were willing to spend $20,000 or more on the bikes and leather to live out that image. But the Boomers are getting older, increasingly physically unable to ride or dying out entirely. And Harley’s response—an electric bike called the LiveWire set to debut next year—isn’t so much of a Hail Mary as it is a capitulation. It also won’t be nearly enough.
“I think they have to completely reinvent the brand, and I don’t know if they can do it,” Erik Gordon, an assistant professor at the University of Michigan’s Ross School of Business, said. “The jokes are true. When I go down the freeway, I always look to see if this cliche about Harley riders is true. And the crazy thing is that it is true. I don’t think I’ve seen anyone under 55.
“My generation viewed Harleys as American fast, loud, muscle. We liked that stuff,” Gordon said. “[My students] view it as the tired old folks who screwed up America.” (...)
With some fanfare, Harley unveiled its electric bike concept a few years ago, taking a prototype on a cross country tour and letting people test-ride it, as a trial balloon. The electric bike they put into production (and will debut next year) looks and operates very much like that prototype. Which is to say very much like Harley’s gasoline-powered motorcycles, with a twist-and-go throttle but no gears to speak of. Harley has spent the time in between the prototype and the launch of its first electric bike—dubbed the LiveWire—prepping its customers to a painful degree.
“An authentic Harley-Davidson expression of individuality, iconic style and performance that just happens to be electric,” text read on Harley’s website in the build-up. It’s electric, Harley’s saying, not that there’s anything wrong with that.
The LiveWire will debut in a market—high-powered electric motorcycles—that essentially doesn’t exist yet, with fewer than 1,000 such motorcycles sold in 2017 in the U.S. and Europe, according to Cycle World. Part of the problem is inherent in the design.
by Erik Shilling, Jalopnik | Read more:
Image: Sam Woolley
