Harley-Davidson And The “Fattening The Tails” Strategy

SOFTAILFamilyRecently, John Olin, Harley-Davidson’s Chief  Financial Officer talked about the company “Fattening The Tails”strategy. What does it mean? Simply, to increase the number of customers at both ends of its core clientele. According to the Social Security Administration more than 70 million Baby Boomers will retire before 2030. Many have already put the kickstand down, forever… If, from 1986 to 2006 Harley’s motorcycle shipments went from 36,000 to 349,000 units (an amazing compounded growth rate of 11.9% per year), and although in 2013 Harley has rebounded somewhat, the number of units sold is still lower than in 2002. For 2014 the company recently reduced its full-year production forecast to 270,000-275,000 motorcycles, down from its original shipment guidance of 279,000-284,000 bikes.

HD-ProductionThe remedy to these alarming statistics is for Harley to succeed an aggressive outreach program attracting the young, women, hispanics and African-Americans and getting a larger international market share. Easier to say than to accomplish. Yes, in the US more women are riding and the hispanic population is growing very fast, but the younger and middle-aged adults are looking for different motorcycles than the one their parents are or were riding. In addition, it is predicted that the overall US heavyweight motorcycle market will grow at a tepid 1%+ during the next few years. And Polaris, with its Indian and Victory motorcycles, is slowly but surely taking a highest percentage of Harley-Davidson’s US market share.

Internationally, if all Asia is a very promising market, competition from other international and local manufacturers is intense. In these markets Harley can’t afford to damage its brand image trying to align itself with very cheap regionally produced motorcycles. Harley-Davidson, like Polaris, is geared toward more affluent customers and will directly depend on the growth of this demographic. So, progression in these Asian markets will probably be slow. For the next decade all heavyweight major motorcycle manufacturers share Harley-Davidson’s concerns and consequently are working on releasing more affordable small and mid weight motorcycles, like the Harley Street and Indian Scout models.

As chief executive officer and president of Harley-Davidson Inc. Keith Wandell stated during his most recent conference call with investors “We’re not great, but we’re on a mission to be great. No matter how well we are doing, we can do it much better.” For sure, to survive and grow during the next decade, all manufacturers will have to be much better at becoming multi generational and multi cultural brands.

32 Responses to “Harley-Davidson And The “Fattening The Tails” Strategy”

  1. 1 Rodent Sep 12th, 2014 at 8:37 am

    Let’s face it. The motorcycle is losing is appeal among the young as a status symbol beingreplaced by the iPhone. When I started riding, the motorcycle was a statement, a girl getter, and a status symbol .
    To put it in plain English, it’s easier to meet girls, get laid with a iPhone than a motorcycle today.
    Harley’s outreach to blacks is smoke. Blacks have always rode Harley’s, remember the “Garbage Wagons” with lights all over them in Coney Island every weekend? Hispanics riding, really? In El Paso Texas probably 90% of the Harley’s are ridden by Hispanics. I think Harley will remain making bikes but never in the numbers that they’ve had in the past. They’ve peaked!

  2. 2 Matt W. Sep 12th, 2014 at 8:39 am

    Not as easy selling nostalgia to a 21 year old. 😉

  3. 3 Frank Pence Sep 12th, 2014 at 8:54 am

    Tough to be a leader. Harley’s problems. 1- Not having enough products for the youngsters. 2- Too many recalls. 3- Indian motorcycles.

  4. 4 Shifter Sep 12th, 2014 at 9:04 am

    Didn’t realize that today’s HD production is at 2002 level. It says a lot.

  5. 5 Grant Trent Sep 12th, 2014 at 9:09 am

    Although electric motorcycles are not my thing, the only way for Harley to grow during the next decades would a relatively cheap Livewire model ($12K) for the 30-something generation riding in and around the city. Make it a status symbol to own and show like a new iPhone 6 Plus.

  6. 6 Frosty Sep 12th, 2014 at 9:13 am

    “For sure, to survive and grow during the next decade, all manufacturers will have to be much better at becoming multi generational and multi cultural brands.” Exactly to the point Cyril.

  7. 7 P. Hamilton Sep 12th, 2014 at 9:17 am

    Harley needs more 500 to 750 cc bikes. The Street by itself will not do it. It is not appealing enough to generation X (poor aesthetics)

  8. 8 jd Sep 12th, 2014 at 10:45 am

    How can Indian attract young riders? The Chief variations are old man bikes..full flared fenders -not so youthful in my opinion. The Scout is sportier but is still trying to play off the stripped down board track style indian. How many of todays youth even know what a “board track” is and do they even care? The majority of todays youth grew up not even caring to learn to ride a bicycle.. they had computer games. . there’s no experience for them to be be flying along with their face in the wind. like we had.

    Polaris is still a motorcycle like any other metric bike, it has not history going past say the 1990’s? It’s great it’s american made, but todays youth barely care about american made. products. iphones are made in China.

  9. 9 Mr Dick Sep 12th, 2014 at 11:36 am

    The msrp is overblown on the big twins. At least with the auto sector, you can expect a big rebate, 0% financing, etc. With HD it’s take it or leave it. Hey Harley, the word is INCENTIVE!!

  10. 10 ColoradoKid Sep 12th, 2014 at 11:42 am

    The ONLY way for the company to grow is to ; 1) Not react to each and every ephemeral trend [ like EV’s ] 2) Do what they do best 3) Perhaps take a cue from BMW’s R Nine T ..creating a smaller hot handling roadster thats infinitely and easily customizable 4) Ride out what ever todays trend may be … realizing what they do best is always in style though perhaps not in ‘ fashion ‘ today .. e.g. It’ll al come right back around to them 5) But more importantly … quit focusing on ‘ growing ‘ the company and place the emphasis on quality and customer service … which if improved will miraculously make their sales …. Grow ! ( amazing how that works in business and retail ) 6) Follow the business statistics and come to the logical conclusion its the Boomers with all the disposable income [ and wiling to spend it ] Not the younger generations who are losing interest in all things mechanical .. not to mention lacking the funds and the willingness to spend $ on things like new M/C’s 7) And on that last one .. revamp and increase their used bike sales . Thats where the younger ones are coming into M/C’s … not new

    Finally .. if they are going to try a new tactic … make bloody well sure they don’t lose their current customer base in the process of trying to attract new ones

    As far as them worrying in the slightest about the emergence of Polaris’s newest venture ? I wouldn’t . Even if the competition sells well … it won’t affect the motor company’s sales in the slightest especially as long as the dealer network for the competition is so sparse in comparison

  11. 11 Pinhead Sep 12th, 2014 at 1:29 pm

    2005 was the peak of custom bike manufacturers in the US, there was a custom shop on every corner and people tripping over them selves to spend big bucks on custom production bikes. By 2008 it was all but dead saxson, iron horse, big bear, Titan, big dog, bourgets, swift, ect…. All went under. I don’t think we will ever see it like that again.

  12. 12 dmj Sep 12th, 2014 at 1:49 pm

    “And Polaris, with its Indian and Victory motorcycles, is slowly but surely taking a highest percentage of Harley-Davidson’s US market share.”

    Very, very, very, hardly even measurable, slowly. The Motor Co will be holding it’s own for a very long time.

  13. 13 Robert Pandya Sep 12th, 2014 at 1:50 pm

    One thing we can ALL do is help encourage new riders. Dismissive statements about “real bikes” “girls bikes” and “you’ll outgrow that in a year” all play towards undermining the confidence of somebody getting into the game.

    I don’t have kids, but I would have a hard time giving a child the freedom to practice in a metropolitan area. Distracted drivers, way too many stop and go situations and compounded pressure to start on a bigger bike all would strike fear in me as a parent.

    Off road training, once so easily accessible, is more of a mission now. But is a GREAT way to learn. Likewise small bike (below 500 cc’s AND 40 horsepower) on country roads open the world up at a smarter pace. Celebrating training as a key to entering the segment – it has become a pillar for the shooting community, new car drivers, hell, even golf. It should be for us also. Even experienced riders need to practice basic skills. MSF, Riders Edge, and independent training outlets are everywhere. I know who my local go-to training school and National MSF people are.

    We are involved in a complex hobby / lifestyle / avocation / commitment. Fear, emotions, family and society acceptance, exhilaration and constant adaptation to the situation make it a daunting thing to choose to get into it. The core of why to do it has not changed – just the framework of that decision has become much more prickly than in the past.

    There is no one answer – it’s a mix of things that will rudder us in the right direction. It all starts by being open and cool to everyone who is interested – even if they are considering a brand you despise, a type of bike you don’t personally care for, or a displacement range you would not be caught on for whatever reason.

    Robert Pandya
    External Relations Manager
    Indian Motorcycle

  14. 14 Charles Greenwood Sep 12th, 2014 at 2:01 pm

    dmj. What exactly do you know that Cyril doesn’t know? We are all interested. As far as I know, almost all trade-ins at an Indian dealership are Harleys. Go figure. Doesn’t mean Harley is not going to stay the US leader for a long time, but it’s getting harder and harder for them to maintain their market share in the US.

  15. 15 James just another crazy Kiwi Sep 12th, 2014 at 3:18 pm

    Robert is right Motorcycling is many things to many people and the one thing we all get out of it is Fun.

    It is Fun to ride a Motorcycle, I hope that future generations will get the opportunity to enjoy what we have had. I don’t want to be a Dinosaur waiting for the asteroid to strike.

    Robert is also right that each and everyone of us needs to promote and encourage what we have.

    Every child that looks up from his mothers side of looks out the car window wondering I wave to.
    Plant seeds wherever and whenever you can.
    The old adage if “I have to explain” has to be forgotten. This is a different world now.
    Thirty years ago we did not need to care about passing on what we have, now we must !
    If everyone makes an effort things might hopefully change ( And Robert will have to vie for the Vp’s job)

  16. 16 James just another crazy Kiwi Sep 12th, 2014 at 5:33 pm

    bad grammar, sorry. too many is’s and of should be ”and”

  17. 17 Seymour Sep 12th, 2014 at 6:24 pm

    This corporate speak buzzwords about “fattening the tails”, they’ve lost it. The only tails they are interested in fattening are their own. RIP

  18. 18 Zipper Sep 13th, 2014 at 6:31 am

    The new strategy should be “clean the machine”. Year after year HD just makes heavier, slower, and worse handling bikes. Kids today want high tech. Sorry Indian and Victory SOSDD. ..Z

  19. 19 Wilhelm Sep 13th, 2014 at 6:32 am

    What about market saturation? They’ve been selling five times the bikes they sold in 1986, year after year for ten years now. Where are all those customers to come from? They’re just greedy, that’s what.

  20. 20 Doc Robinson Sep 13th, 2014 at 8:11 am

    Zipper what planet are you on? Saying “Year after year HD makes heavier slower and worse handling bikes” – you could not be more wrong. Check out the Rushmore range. The bikes are faster and with recent changes to the front end, linked ABS brakes and many other improvements, as well as the multi-functional very high tech Infotainment systems, HD keeps on lifting their game and the bikes are better every year.

  21. 21 Smittydog Sep 13th, 2014 at 8:40 am

    Remember when you were on a waiting list for two years for a Harley?

  22. 22 JackS Sep 13th, 2014 at 9:16 am

    Robert Pandya is right. All potential new riders should be encouraged and no deference should be given to the type of bike or style of riding chosen by existing riders. HD has painted itself into a corner with air-cooled heavyweight road bikes and that will always appeal to some. However, if they were serious about the 20-30 somethings demographic, they would produce something that competes with the Hayabusa, Kawasaki 14R, Yamaha YZF-R1, and Suzuki Ninja. I believe HD is on the right track with the Livewire. Now they just need to give it a range of 125 miles, a top speed of 186 mph and sell it at a price point of about $14K.

  23. 23 William Bushall Sep 13th, 2014 at 10:12 am

    Nostalgia gee dumb asses didn’t do a 50th Anniversary Electra Glide hum and me with a 65 FLH to go with it

  24. 24 SoCalPhun Sep 13th, 2014 at 11:29 am

    I think the issue for Gen-X’sis simply economics.

    Here is a quick snapshot: My friends and I are Gen-X’ers (mid/late 30’s). All of us chose different career paths, some of us faired fairly well over the course of time, some of has not. All of us love motorcycles, but many of us simply cannot afford a HD product beyond a Sportster.

    I’m in my late-30’s and EXTREMELY fortunate enough to be in a position to afford multiple motorcycles, one of which is a HD, a car, a house, etc….This is mainly because I was lucky enough to choose a profession/field that kept me gainfully employed, no matter what the condition of the economy was or is. Some of my buddies, well, they been through the ringer like many American’s have been in the past 6 years. As some of you may know, when you are put through the ringer and quickly humbled by the hard reality of simple economics….your perspective on life changes and begin to realize what is truly more important. Perhaps a 40K CVO Ultra isn’t one of them….heck, even a Street Glide.

    This is even effecting the young generation of today. I do not have kids, but I look at my nieces/nephews, or hear about the interests of many younger generations of today….cars, motorcycles, credit cards, bank accounts….not on their list of interests. I think alot of it has to do with witnessing the hardships of these material items being a burden on their families is making them shun them away for themselves. Another is, social media has brought the world so close together…subconsciously, perhaps they are thinking, why bother even going over to their house when I can just share pictures on Facebook or whatever. Vacations? I can check out what the Grand Canyon looks like on Instragram and YouTube.

    Anyways, I think the days of HD moving significant volume of Ultras/CVO or any of the upper Bagger’s will be over, over the course of the next 10-15 years. They employ some smart people, and things like the Livewire and whatever future projects they have are all probably a part of the grand-plan to generate lost revenue stream of Babyboomer’s as they “retire” away. I think with the introduction of the small 750’s is evidence that they do recognize that lower cost options is a must for the survival of the company in the future.

    Overall, though, cars, motorcycles, etc…..I think they will all continue to find it difficult getting the younger generation on board. The mobility has gone digital….and unfortunately, they will miss experience of the analog feel of life.

  25. 25 B. D. Howard Sep 13th, 2014 at 3:24 pm

    Keith Wandell is an ass, and so are the morons who decided to hire him as CEO of H-D.

    He has now decided to try to appeal to younger riders, who are much more interested in sportbikes than cruisers. Just remember that the second thing he did after becoming CEO of H-D was to kill off their sportbike division, Buell, to concentrate on cruisers. (The first thing he did was learn how to ride a motorcycle for the first time in his life, so that he could be photographed riding a Fat Boy).

    He tried to screw the 200 Buell employees and kill off the brand, but Erik Buell’s brilliance and perseverance brought the company back from the dead so that he could re-hire most of his employees. He is now back in business and thriving in the same building as when he and his crew were H-D employees and even though H-D still owns Buell’s name and refuses to let him use it, he just instead uses his initials as if to say, ‘in your face, H-D’.

    And now that EBR has partnered with Indian motorcycle manufacturing giant Hero, expect them to grow at a rate, especially in the expanding markets throughout Asia, and with a line of bikes so diverse that H-D will surely be envious and rue the day that they pissed away this key division and the brilliant visionary that is Erik Buell.

    I recommend that anyone interested in this subject read (with hindsight) the articles that appeared in the May 1, 2010 issue of Cycle World on The Death of Buell and the Barracuda 2.

    Frankly, he might just as well have named his new company Phoenix Motorcycles (if the name is available) instead of EBR, since this company truly continues to rise from the ashes from which H-D left them.

  26. 26 .357 Magnum Sep 15th, 2014 at 11:03 am

    B. D. Howard, you are completely backwards on the importance of Buell to Harley-Davidson. Erik Buell only wants to build motorcycles for racers, and that’s all. His print ads, even under HD, proclaimed that “SITTING IS NOT A SPORT,” and we Iron Butt riders would flip the magazine shut at that point and return it to the newsstand shelf, and pick up a different magazine that had more of interest to us high-mile types. “IF YOU HAVE TIME TO WAVE, YOU’RE NOT RIDING CLOSE ENOUGH TO THE EDGE.” Fine; I’m obviously not his target audience: I wave at everyone on two wheels. Erik obviously didn’t want my business.

    Oh, except I had bought a Buell Blast for my first-time-rider wife. No problem: when he announced the end of that product line by videoing one being crushed into a cube, cackling and jeering all the while, I could tell what to expect for parts and service support thereafter, and traded it for a Sportster, which my wife still rides and enjoys, now, years later. She still packs on miles and still waves at other riders, just as I do. Harley-Davidson and we, its customers, are still going strong, and for all the rumors of non-racing models, EBR’s offerings, to this day, hold zero interest to those of us who ride anywhere besides the track.

    I suspect the reason why Erik partnered with Hero is because they’re sitll not cashflow-positive. He is today, just as he was under HD, a business failure, and needs a deep-pocketed corporation to let him keep pursuing his passion. His passion cannot make money. His passion cannot survive on its own. His passion only persists by its ability to turn suckers into raving fanbois in the forums and in the blog comments, so his passion needs people like you to keep repeating how awesome he is, despite all evidence to the contrary.

    I wanted to like Buell. I almost bought a Ulysses, and indeed would have, if Erik hadn’t expressed such utter disdain for his own customers just before I pulled the trigger. There’s good tech there. But I’m not in the market for a racer-wannabe bike, and am not interested in looking like a racing poseur, so he hates me and doesn’t want my money. Fine, then. I just won’t give it to him. Problem solved. But he needs you, then, to keep his passion alive, because he can’t do it by actually producing bikes for real-world riders. Keep raving about how HD did him such a grave disservice, okay… you might find another sucker or two to fall for that crap, and keep the EBR smoke-and-mirrors racer-wannabe dream alive.

  27. 27 BigWave916 Sep 15th, 2014 at 1:49 pm

    Charles Greenwood:

    I’ve seen it mentioned here several times “As far as I know, almost all trade-ins at an Indian dealership are Harleys.”

    I wondered if that were true or not so I checked the used bike inventory at a couple of Indian dealerships here in NC. The number of Hondas, Kawasakis, Yamahas and Suzukis in the “pre owned” inventory is greater than the number of Harleys. That says to me that the above statement is probably not true. Now I know some wiseguy will counter with a claim that all those metrics were traded for Victorys and all the Harley-Davidsons were traded for Indians. Not enough data to prove anything but I seriously doubt that “almost all trade-ins” for Indian motorcycles are H-Ds.

  28. 28 Blackmax Sep 15th, 2014 at 3:56 pm

    SoCalPhun gives a good insight into what is happening here
    The younger generation is really not interested is their Father’s / Grandfather’s cycle.
    up to the industry to find out what is going to work for them
    Electric, gas powered, hell in a awhile it could be nuclear for all we know
    Agree with Robert P, that ALL new riders should be encouraged
    but you have to be careful with that too ?
    If you come off a “preachy”, they’l turn you off like a water spigot !!!
    Also agree with B. D. Howard, Wandell is an ass !!!!
    Nothing like stepping up to the plate when your hand is being forced
    H-D should’ve came out with “Rushmore” way before Indian ever hit the market.
    they didn’t because there was no need, we just keep drinking & buying the Kool-Aid …
    I’m glad both Polaris brands are here, because the Motor Co. needs to be pushed
    or lose market share

  29. 29 Boston Jim Sep 15th, 2014 at 4:52 pm

    26 comments, & nobody mentions the POS, Twin Cam Motor ! What a JOKE ! I would have expected a motor like that from AMF, remember them. In hindsight, AMF did all the R&D for the EVO motor, the motor that saved H-D. EPA Regulations dictated the need for the Twin Cam Motor, (quieter), that’s BS, the Sportster has had 4 cams since 1957, the KH flathead before that, all the way back to 1929 & the “45” flathead, all had 4 cams. The Twin Cam design, was a way to make a cheap motor fast, it has had many, many problems from birth in 1999. Problems; cams, cam bearings, cam chain tensioners, too numerous to list all here ! The 1999 thru 2002 motors had forged cranks, so to celebrate 100 years, the Greedy _ricks in the Ivory Tower gave us the CAST CRANK in 2003 ! All the Twin Cam cranks are so out of true, they couldn’t use a Gear Drive to drive the cam, the cam chains are very tolerant, of a sloppy motor. The EVO motor was the last Great Motor from H-D, THANK YOU AMF, I have 2 EVO’S ! All the New Indians with the 111″ motor have Gear Driven Cams & a Gear between the motor sprocket & trans sprocket, all Gear Driven, just like all the “ole” Indians, no phony primary chains like H-D. You have to build a nice tight motor to be ALL GEAR DRIVEN, H-D refuses to do that, they know that the SUCKERS will still buy them. I’ve done 8 Demo Days at my local Indian Dealer & 1 day at Laconia riding the New Chiefs, 24 different Chiefs, Nice Bike !

    IMHO, Erik Buell is the Greatest Motorcycle Mind of the Past 75 Years !

  30. 30 B. D. Howard Sep 18th, 2014 at 6:19 pm

    .357 magnum – your low caliber post shows that you don’t get it. You are not a sportbike guy and don’t understand real performance.

    At race tracks, H-D’s rarely race against anything but other H-D’s, the performance gap wa proven decades ago.

    Wandell now realizes that H-D riders are getting older and grayer every year, the future of the company and the sport is in bringing in younger riders, most of whom prefer sportbikes.

    H-D had a tiny division that made trick bikes that sold better than anyone ever imagined, but Wandell pissed it away and screwed over Buell, the employees, and the Buell lovers worldwide. A division that could easily have been developed into a major line of sportbikes. But Wandell hates sportbikes and even performance or race cars!

    The Blast was not something that Buell ever wanted to build or put his name on. In fact, he announced its demise with a photo of one that had been crushed, saying that this was next year’s model Blast. Buell wanted to start with the Blast and then make from it a 1200 v-twin and then an 1800 w-triple!

    But the whole thing was crushed like that Blast. What else would you expect when a motorcycle company hires as its CEO a guy who has never even ridden a motorcycle?

    Wandell is an ass

  31. 31 .357 Magnum Sep 19th, 2014 at 2:43 pm

    I’m guessing, since B. D. Howard just repeated back the part I wrote about the Blast being crushed into a cube, and completely ignored what I wrote about Buell only caring about racers, that he hasn’t read my last comment at all.

    How typical. Buell fans, Wandell haters, never even opening their eyes or applying critical thought to their opinions… just repeating themselves over and over, hoping that their ill-informed opinions will spread my mere unthinking repetition.

    Since you didn’t read it the first time, I’ll just try a little of that repetition myself: “[Erik’s] passion only persists by its ability to turn suckers into raving fanbois in the forums and in the blog comments, so his passion needs people like you to keep repeating how awesome he is, despite all evidence to the contrary.”

  32. 32 stagolee Sep 24th, 2014 at 2:36 pm

    I’d hazard a guess that the recent upswing has a direct correlation to the popularity of Sons of Anarchy which has turned into a 6+ year long HD commercial.

    I’ll go even further and bet that Street Bobs are in the top 3 sellers.

    Jax-styled (aka “Club Style” or “Thug Style”) bikes are a hot number with youngish white male riders. See what’s happening on Instagram, etc. with that crowd.

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Cyril Huze