Harley-Davidson’s recent results have been poor and there are some concerning signs that the broader motorcycles market in certain geographies might be suffering currently. Harley-Davidson is attempting to combat some of the problems that it sees to make its vehicles more appealing to younger generations and expand their appeal globally, by updating designs and engines and spending more on marketing. However, there are some fundamental problems that are affecting the motorcycle industry which are yet to be addressed by these changes. Millennials becoming the new largest generation means that companies are having to adjust their offering to suit this age group and for the motorcycle industry this generation’s reluctance to purchase motorcycles in quite the same volumes as generations before is a major challenge to overcome for the next decade.
Harley-Davidson an iconic motorcycle brand is the largest US motorcycle manufacturer. Its brand and style of product is instantly recognizable and the company has a huge committed following from customers that are buying a lifestyle product. However, Harley-Davidson has identified some significant business issues and has been trying to address them, but the scale of the problem is significant. Motorcycle sales are down in the US in general, never really recovering to pre-recession levels and finding new customers is difficult because traditional customers are getting long in the tooth and younger consumers are not purchasing in healthy numbers.
Harley-Davidson issued a voluntary recall for 57,138 units of its 2017 touring motorcycles which are its highest value and list price products meaning the recall is going to be expensive. The issue stemmed from a potentially weak oil line that could detach and release oil in front of the rear wheel, a significant safety issue. Furthermore, this isn’t an isolated incident.
In some respects, Harley-Davidson is becoming stuck between two customer demographic trends: Millennials who aren’t widely embracing the motorcycling lifestyle quite as readily and the Baby Boomer generation who are aging out of riding. Millennials are now the key generation in terms of consumers, they are the largest generation and troubling for motorcycle companies and particularly for Harley-Davidson, with its traditional and very specifically cultivated image. Overall, millennials are considerably less interested in motorcycles than previous generations and this is a worry for the entire industry, let alone Harley-Davidson.
Harley-Davidson has spent a great deal of R&D money on improving some of its most important product lines and the company is very aware of the need to reconnect with customers and find a new audience. The company in 2016 spent 35% more on development than 2015 and 65% more on marketing. As a result, the entire “softtail” range and “street” range has been revamped with brand new engines developed, chassis improvements and the introduction of more modern technology along with a complete remodeling.
Harley-Davidson has made good progress in India. India is an absolutely crucial global market and many manufacturers prioritize India, precisely because it is the world’s largest bike and scooter market. Harley-Davidson only takes a very small section of its income from India around 2%, but its market share in the big bike sector is huge, controlling 60% of that market in India.
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