July 3, 2018

Harley-Davidson Has More Problems Than Tariffs

Tuesdays With Coleman

Last week, Harley-Davidson announced it would start shifting production of some of its motorcycles overseas. The company cited new tariffs from the European Union as its rationale. A prepared statement reads, “Harley-Davidson maintains a strong commitment to U.S.-based manufacturing which is valued by riders globally. Increasing international production to alleviate the EU tariff burden is not the company’s preference, but represents the only sustainable option to make its motorcycles accessible to customers in the EU and maintain a viable business in Europe. Europe is a critical market for Harley-Davidson.”

Harley-Davidson

Unfortunately for Harley-Davidson, tariffs are just another bump in the road for a company that needs to focus, like all brands do, on what’s most important – its base position.

What is Harley-Davidson’s base position? What’s the core foundation of its business?

Just taking a shot here, but how about something like: “American-made, big, loud motorcycles”?

So, announcing you’re moving production – even some production – out of the United States is a major brand violation.

But it wasn’t the first violation.

A few months back, Harley-Davidson announced it would debut its first electric motorcycle in 2019.

Harley-Davidson LiveWire electric motorcycle

Is that a brand violation? Take a look at some of the comments at the bottom of the article that appeared in The Verge announcing the news:

That would be like Apple saying you should buy their newest iPhone because you can install Android on it. Might work for some other motorcycle brands. This is Harley-Davidson.

We’re talking about Harley-Davidson, a company who tried to trademark the sound of their idling motorcycle engines. It’d be a hell of a 180 for them to advertise how quiet the bike is.

It’s just not really their kind of advertising, being in harmony with nature, listening to the wind as you silently cruise across the countryside.

For consumers to love the brand, they have to clearly understand the brand.

If you want and can afford a luxury car yet want to go all-electric, chances are you’re not going to buy a Chevy Volt. Or a Nissan Leaf or even a BMW i3.

You’ll probably want to buy the one that has consumers happily plunking down $1,000 to get on a minimum 12-18 month waiting list.

Tesla Model 3

Tesla’s new all-electric Model 3, the most affordable model the company has released.

And why is Tesla so hot?

Because sporty electric cars is what they do. It’s their base position.

Tesla can add different kinds of models. They have a high-end model, an SUV, and the waiting list is for the more affordable Model 3. But none of the models deviate from the base position. They are all sporty electric cars.

Will consumers go for the Tesla pickup truck supposedly coming in a few years? Tough to say, but it certainly won’t look like the pickup trucks we’ve always been used to seeing. If it stays true to the Tesla brand, it could work.

Harley-Davidson’s challenge is real. Sales of Harleys are declining. The Harley consumer is aging out, while the younger demographic wants smaller, more affordable bikes. Indian, Ducati and Triumph are experiencing growth and success. Meanwhile, the legacy Harley-Davidson brand stands for large, loud, expensive bikes.

How do you adapt the brand to appeal to a younger market without compromising the base position?

One step would be to launch the electric motorcycle under another brand name.

Harley-Davidson is trying something worth noting – the Jumpstart Motorcycle Experience.  This simulator, which utilizes an actual Harley, is taken by many HD dealers to shows, festivals and expos with the goal of bringing new riders into the fold. Their goal is two million riders in the next 10 years.

Harley-Davidson Jumpstart Motorcycle Experience

You can see how this issue can translate to other brands and businesses, and it certainly applies to media.

Radio stations, morning shows, podcasts and television shows for example, all have to evolve to stay relevant.

Research can play an important role in helping to keep track of its audience’s tastes and how they evolve. Focus groups is a great way to help brands learn how their audiences perceive them and how their tastes correlate to the brand in their own words.

One thing is certain. While evolution is inevitable, the evolution must stay true to the brand’s base position. Changing brand images takes an incredible amount of time, especially for one so strongly cemented.

Harley-Davidson is the American-made, big, loud motorcycle brand.

Last I checked, people still like big, loud American things.

Authors

24 thoughts on “Harley-Davidson Has More Problems Than Tariffs”

    1. Jay Nachlis

      Sure! There are successful big, loud stations, soft stations, and plenty in between. Tastes vary by market, which is one of the ways research can be helpful. When you’re clear on tastes and appeal, the key is understanding your brand and communicating it effectively.

  1. Michael

    How would it workout for Tesla if they announced to the world they were going to start producing gas powered vehicles.? My guess not to well.

  2. Stabbed in tha Back

    I wondered how long it would take them to announce production overseas of items they closed down in Kansas City’s production. Not long …huh! Just another marketing trick that this company is forcing down to America. Greed has taken over the Wheel at H-D.

  3. Terrence squier

    Harley Davidson should be 100% made in USA. I do not buy Harley Davidson because they have made in China parts on them. They also have aluminum parts on the engine now.

    1. Garland

      Writers keep saying what they think bout why younger riders arent coming to HD but I have seen none mention the extreme price tag on these things. The cost associated with owning and operating these things is a big responsibility. Not for the faint heart.

    2. Desert Tortoise

      Harleys have had foreign components since at least the 1950s. Forks were made by Ceriani of Italy and then by Showa as far back as the late 1960s, maybe earlier. Guages have been Japanese for many decades. Their cast wheels have been manufactured in Japan since 1980 or so (much more durable than the early.Morris Mags that crack with age), and later produced in Australia. Their disc brake rotors have traditionally come from Sunstar of Japan. Electrics starters came from Hitachi or Denso. In the 2000s there was more US content it seemed as a lot of the formerly Japanese electronics came from Delphi. V-Rods had a lot of German components in the engine (not a bad thing at all). Indian isn’t much different.

  4. Allen Coss

    I was in a local dealership looking at their new offerings. While I was asking about gas milage, warranty, horse power and trailering capabilities, the salesman kept saying “I don’t know, but listen to this exhaust sound” as he kept twisting the throttle on a running bike. No sale!

  5. Phil

    Harley is shotgunning product all over the motorcycle map without the deep profits to pay for potentially protracted lack of sales as those new models hopefully attract buyers.
    The Harley brand depends heavily on their v twin legacy models that Harley really really really needs to make as reliable as possible.
    American buyers would pay the Harley premium if their motorcycles were more reliable than their Japanese competition.
    What will kill Harley is Ceos not protecting the Harley bottom line.

    1. Desert Tortoise

      I keep hearing that Harleys are not as reliable as Japanese motorcycles but my shop experience doesn’t agree with that. Too many Japanese bikes I have had to work on were simply not designed to be repaired. Harleys might have a lot of qualities riders of Japanese bikes object to and being rider who prefers lighter and more agile motorcycles I would ofen agree, but durability and maintenance ease of most Harleys are light years ahead of most Japanese bikes. I don’t know what got into me but in 2007 I bought a Street Rod. I would normally shop BMW, Moto Guzzi, Aprilia or maybe even a Triumph but I bought a Harley instead. I have several other BMWs in the garage and maintenance wise it is easier than some of them, harder than others but nothing I can’t maintain at home including shimming the valves (though the clearances never seem to change). In 55K miles it has been nearly trouble free. It is a heck of a lot easier to live with than most of the Japanese bikes I used to work on. Nothing on it is as difficult as a K100 or K1100 spline lube. If you have ever tried to troubleshoot the convoluted linked brake system on a Honda VFR 750, replace the little starter chain on a Honda CBR 600 (complete engine tear down so you toss the engine and put a used one from a crash in it) remove the carbs from a Honda CBX to clean them (remove the exhaust and swing the engine forward from the fram to find enough clearance to remove them ) or replace the coolant pump on a Gold Wing (requires engine removal) you know what I am talking about. I could go on but I won’t.

  6. Al Paslow

    Harley has a problem. It has an image that has become overpriced and dated and can’t diversify enough to move forward with change. It’s stuck in the time tunnel and younger riders can’t afford. What happens next? Harley want to lie to raise prices stating Trump import taxes raised the price of metal to over $2200 on the average bike. That reflects a 25% increase in material. Does that price mean that the average Harley has $8800 in raw metal in there average bike? I think not. Steel is cheap and even right now brand new air-craft 6061 aluminum sells online to me and you for less than $3 per pound. Steel substantially less. That means for you and me to buy enough exotic high quality aircraft quality aluminum to build a 1,000 pound Really big Harley the cost would be Only $3,000. No new Harley uses that much aluminum. Virtually all Harley’s have much less expensive steel frames. If you were Harley Davidson you’d be buying steel and aluminum for a lot less than you and I could! So where does this claim of an increase $2200 tariff really comes from?

  7. Allen Smith

    Harley is pricing themselves out of business.
    I’m still riding my O4 FLHRS because it was one of the last carbureted bikes and I can’t afford another bike.
    Harley has some stupid prices on the new bikes.
    So if I can ever afford to buy a new one, I won’t, it’ll be
    A good used bike a a fair price.

  8. Vioer

    I have had both rice rockets and harleys. Still love my hog… i may not like the direction there trying to move to but then im the ole school aging out red neck yall keep referring to. My son owns a hog and looking to get another one even now laying up in a hospital with broken bones from totaling his dana because a car was in a bigger hurry to get in a driveway then to let him past. My grandkids love to ride our hogs aswell the youngest is 5 and she tougher then us all. I can see one in her future but like every thing time moves on and so does progress. All i can say really is if you cant run with the big dogs stay on the porch.

  9. Rebel

    I’m still riding my 1991 bored out 1200 Sportster. I paid $1000 in 2008 for a basket case and rebuilt from scratch. All brand new. $15,000 in parts to fix it up. A lot cheaper than buying anything from the dealer.

    1. Desert Tortoise

      There is a fellow in our town, a former drag racer with a business hot rodding Harley Davidsons named Earl Burley who’s calling card is a perfectly ridable street legal Sportster that runs in the high nine seconds at the strip on street tires. He has an FXR that ran in the high sevens on street tires when he was racing it. It has an interesting parallelogram swing arm he designed that aids hard launches. No wheelie bars! He can build nine second Sportster engines pretty much with his eyes closed he has done so many. They are durable engines too. He knows his craft. I have often thought one of those engines in a Lightning Long might be kinda interesting…….. I have gone heads up against his. Sporty on my Street Rod on a deserted desert road that shall remain unnamed. Wasn’t much of a race really. He was gone. The V-Rod was just starting to reel him in when speeds went past 100 but in a quarter mile he would have demolished me. And that is his daily driver. Man oh man.

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