Harley-Davidson's War on Old Fat White Guys

A dying company needs to recreate their core clientele

Harley-Davidson’s Q1 financial report is in. The American motorcycle manufacturer reports that gross revenue and earnings per share beat analysts’ expectations by a large margin (so to speak). So all those reports of HD’s death spiral are greatly exaggerated, right? Nope.

According to HD’s press release, Harley North America’s 17 percent sales dip for its petrol-powered products was “driven by the timing of new product launches, as well as the shifting macro conditions.” Vague much? I get the “people holding off for the new bike” dynamic, but “shifting macro conditions” could mean anything.

Interest rate hikes? Recessionary fears? Global warming? Environmental consciousness? It could also be Harley’s way of saying “pay no attention to the market attrition behind that curtain! Our pumped-up stock price tells the tale!” Just like it did two years ago…

If the video’s TLDW, Harley-Davidson’s “preparing to drive off a cliff” by using its cash reserves to buy back stock, and, thus, maintain the stock price. Down where the rubber hits the road, Harley-Davidson’s chasing two markets: old fat white guys who love them some Hog and young ‘uns who want to sing the body electric.

OFWG’s hold a staggering $2.6t in buying power. Yes, well, check out the chart above. Currently clocking-in between 58 and 76-years-old, Baby Boomers represent less than seven percent of the today’s total motorcycle market. They’re literally a dying breed.

As this shrinking core and potential Harley ridership heads for the big sleep, Indian Motorcycles is building better Harleys than Harley. As is Honda (for riders who like their prostate stirred, not shaken) and BMW (for riders who like their bike to start).

Anticipating the shift from the Boomer boom to the Millennial majority, HD developed the $22,795 LiveWire (above) and upcoming $15,449 S2 Del Mar (below). These plug ‘n play motorcycles are fast AF, run off of coal-fired power plants and don’t require mechanical expertise.

Harley’s electric motorcycles are the ideal bar bikes for well-heeled environmentally conscious mechanically illiterate non-touring urban or suburban speed freaks born between 1981 and 1996. The target demo for HD EV’s brings to mind the Little Feat lyric: do they really exist at all?

Not for HD e-bikes they don’t. The company’s Q1 electric motorcycle shipments sank 35 percent, dropping from 97 units to 63. And yet Harley wants investors to believe they’ll triple Q1 electric motorcycle shipments to hit 750 – 2k electric e-bikes by year’s end. Best case: the division will lose $115m to $125m. Worst case: worse.

No wonder pundits are telling the world to stick a fork in Harley-Davidson, they’re done. But are they? Could HD’s expensive electric bikes suddenly catch fire (not literally)? Could their cruisers cruise back into fashion? Maybe, if Harley-Davidson returns to its roots….

HD’s marketing materials reflect the company’s desire to appeal to hipsters, women and people of color, and white men who like to buy from companies appealing to hipsters, women and people of color. Yes, well, six percent of U.S. motorcycle riders are African American. Twenty percent are female. Regardless of HD’s inclusionary ethos, to survive, they must sell motorcycles to OFWG’s.

They are the motorcycle maker’s traditional clientele. Good news: the healthiest motorcycling demographic isn’t getting any younger. White Millennials are the next OFWG’s and they can be convinced to ride a Harley. I’m talking about born again bikers returning to the fold after the kids are grown. I’m also talking about OFWG’s who’ve never ridden before. Think of it this way…

Campbell’s Soup dominates the wet soup market; Campbell’s makes nine out of ten soups that soup buyers buy. At some point Campbell’s realized they were spending huge marketing money chasing meaningless market share. So they started promoting soup to non-soup buyers, knowing they’d snag nine out of ten wet soup newbies.

Harley needs to adopt the Campbell’s soup solution. HD needs to promote the hell out of its Riding Academy. To do that, to put bums on seats, they have to come up with ads and social media come-ons that disarm proto-OFWG’s fear of death and serious injury, get them out of their luxury SUV and make a case for riding a traditional or electric bike.

Make that riding period. Harley-Davidson can only soup-up sales by selling motorcycling, not motorcycles. Their ad for their new bikes that dropped yesterday proves they don’t get it. (Complete with a headline that screams WE’RE NOT GOING OUT OF BUSINESS!)

Ah but someone in HD world does get it. I’ll leave you with this locally produced Harley ad that perfectly plays both the negative and positive cards. What it doesn’t do: talk about safety. That’s another ad I suppose. One that most OFWG’s need to show someone else in their household.

If HD doesn’t refocus their marketing on OFWG’s they’ll continue sliding down the slippery slope to their own demise. It’ll be the inevitable end of a long, hard ride.