By Rick Barrett
Milwaukee Journal Sentinel.
Jane Schmidt wanted to join the Harley-Davidson motorcycle owners family, but wanted to avoid a big touring bike that would be more than she needed or could handle.
So the Oconomowoc woman bought a Harley Street 750, a motorcycle that’s smaller than most anything else in the company’s lineup but still has enough muscle for the highway.
She commutes to work on the bike, sometimes uses it to pick up a few items at the grocery store, and has taken day rides of 500 miles.
“It’s perfect for me until I establish what kind of riding I am going to do, until I have a full riding season in,” Schmidt said.
She’s a good fit for Harley, too, as the world’s largest manufacturer of heavyweight motorcycles courts new customers, including women and younger riders.
Last spring, Harley said its Street Glide Special and Breakout models were the No. 1 and No. 2 top-selling motorcycles in America, based on vehicle registration data. Sales to outreach customers, a category that includes young adults, women, African-Americans and Hispanics, have grown at a faster rate than sales to core customers — mostly white men over age 35.
“Younger folks are voting with their dollars, which we think is the best way of looking at the real interest out there. … We sell more motorcycles to this generation of young adults than we did when the baby boomers were the same age,” said Mark-Hans Richer, Harley’s chief marketing officer.
Still, demand for heavyweight motorcycles stalled during the recession — with sales in 2010 less than half the volume during the peak in 2006 — and the industry hasn’t fully recovered.
Companies have adjusted to a “new normal” that may not be as lucrative as before the recession but is more rational and allows for growth, said analyst Robin Diedrich with Edward Jones Co.
The real test for the Street models will come this spring and summer, Diedrich said. “The introduction, so far, is maybe a little underwhelming. There were some delays.”
The Streets are aimed squarely at attracting young, urban riders as well as buyers overseas, where the bikes are less expensive than other Harley models. The company no longer reports the average age of its U.S. customers, but industry analysts have speculated that it’s close to 49 years old.
“No question is asked more often than what will Harley-Davidson do now that the baby boomers have exited their peak riding years,” analyst Craig Kennison with Robert W. Baird & Co. wrote in a note to clients last summer.
The answer, Kennison said: “Rather than fight against the aging baby boomer demographic, Harley-Davidson is content to extend the ride for older riders, while developing new relationships with young riders. If management executes on this plan, the average age of a Harley-Davidson buyer won’t change much, but the tails on the (age) distribution curve will get fatter.”
“Results speak for themselves, with outreach growth outpacing core growth by a 2:1 ratio in the U.S. recently,” Kennison added.
This will be the first full year for Street sales. Thus far, about 60% of the sales have been to outreach customers, according to Richer.
Bill Roche bought the first Street 500 from Milwaukee Harley-Davidson last summer. Although smaller than other Harleys, it has double the power of his previous Suzuki 250-cc motorcycle.
“I am not a tall person, and my budget is limited, so I was looking for a bike that was close to the ground and was within my price range. That, and I felt strongly about the brand. This is Harley-Davidson’s hometown,” Roche said.
This could be the year of the “light and low” motorcycle, with Harley and other manufacturers offering more bikes that are easier to handle, said Genevieve Schmitt, founder of Women Riders Now, an online magazine.
The Streets should be competitive, Schmitt said, partly because of the Harley-Davidson brand and nontraditional marketing aimed at getting new people into motorcycling.
“I think Harley is straddling that line between the older buyer, and keeping them happy, while courting the younger buyer and other outreach customers. They can do both,” Schmitt said.
Harley-Davidson’s prototype electric motorcycle, named Project LiveWire, is an example of the company exploring new markets. The bikes are not for sale, and there’s no guarantee that Harley will ever build them for mass production, but it’s a significant experiment.
Harley has taken the electric bikes on a tour across the U.S. This year, the tour continues in Europe and Asia.
Some Harley-Davidson dealerships say they expect to see an electric bike in the company’s lineup in a couple of years.
“I would be absolutely shocked if they didn’t come to market with it,” said Chaz Hastings, owner of Milwaukee Harley-Davidson.
Sales of electric motorcycles have been tiny compared with regular bikes. Still, one of the leading manufacturers, Brammo Inc., has been acquired by Polaris Industries, a competitor to Harley-Davidson with its Victory and Indian motorcycles.
Harley should pursue Project LiveWire aggressively, said Xiaoya Xu, a Case Western University student, in London, Ontario, who co-authored an article about the company titled “The Road Less Traveled.”
As millennials find their place in motorcycling: “This market may not stay quiet for long, as big player Yamaha has hinted in its 2013 annual report at an introduction of electric bikes in the near future,” Xu said.
Technical issues, such as battery life and reliability, must be addressed before Harley brings an electric bike to the marketplace, according to Richer.
“We want to have a no-compromise type of product, so we are willing to take the time, and work with whatever emerging technologies come around, to make sure that we get it right,” he said.
Some Harley enthusiasts could be put off by an electric motorcycle from the company famous for its “potato, potato, potato” rumble that resonates from a V-Twin gasoline engine.
“An electric motorcycle kind of goes against the grain. It’s almost obnoxious,” said Dave Zien, a former state lawmaker from Chippewa Falls who logged more than a million miles on a 1991 Harley that’s now parked in the Sturgis Motorcycle Museum and Hall of Fame, in South Dakota.
But changes are acceptable, Zien said, if the company also does what’s important for customers who have supported it for decades.
“I commend Harley for trying,” he said. “In the long run, motorcycling should be seen as a way of life. Those individuals starting out now (on smaller bikes) will one day be riding a big Harley cruiser or a touring bike. They will be one of us.”
Harley-Davidson is big enough to meet the challenges, Richer said. “Right now, we feel like we are striking a very good balance to satisfy lots of different customers.”
Market muscle
Harley-Davidson motorcycles represented just under 55% of the 305,900 new motorcycle registrations in the U.S. in 2013, according to the Motorcycle Industry Council.
From 2008 to 2013, Harley’s share of the heavyweight motorcycle market for young adult men and women increased from 31.9% to 47.3%.
