Harley-Davidson has instructed its dealers not to talk about how sales have been throughout the recession, but the news that 36 dealerships have closed in the past year, and more closures are expected in 2011, speaks for itself on how sales have been. On a conference call with analysts CFO John Olin said, “This contraction was expected and in-line with our desire to modestly consolidate our U.S. dealer network in response to lower overall volume since the economic downturn took hold,” which is a very glossed over way of saying that American brand has become too bloated over the past years, and needs to go on a diet.

Harley-Davidson expects to ship between 221,000 & 228,000 motorcycles worldwide in 2011, which is up 8% over last year’s figure, but still pales in comparison to the numbers the Milwaukee brand was posting before the economic collapse (303,479 in 2008). Since 2006, sales at Harley-Davdison have continued to slide, but the most dramatic affect was in 2010, where sales were down 30% compared to before the recession (over 36% in the domestic market).

Harley-Davidson Units 2010 2009 2008 2007 2006
All 651+cc
Sportster 41,409 47,269 60,684 72,036 64,557
Custom 87,158 91,650 140,908 144,507 161,195
Touring 81,927 84,104 101,887 114,076 123,444
210,494 223,023 303,479 330,619 349,196
Domestic 131,636 144,464 206,309 241,539 273,212
International 78,858 78,559 97,170 89,080 75,984
210,494 223,023 303,479 330,619 349,196
Buell Units 2,614 9,572 13,119 11,513 12,460

The operative word being used in Milwaukee right now is “restructuring”, but we imagine there’s some heavy face to palm action over the considerable loss of purchases in the cruiser market. With sales already on the decline over the past five years, there’s a serious question as to whether the recession has just kick-started what analysts have been seeing for the past two years: the brand is on its way out.

While Harley-Davidson is optimistic about this coming year, and rebuttals talk of its aging demographic with factoids like “we hold the #1 share position with young adults,” the fact remains that the core demographic, the preponderance of Harley-Davidson purchasers, are still coming from the Baby Boomer generation. Suggesting that Harley-Davidson is effectively catering to riders in their 20’s & 30’s is misguided at best, since a company that accounts for roughly half of the domestic motorcycle market should lead in sales over every demographic because of sheer volume alone.

The call confirms that the attitude is the same in Milwaukee, as the company outwardly continues to put lipstick on a pig (or is it hog?), while quietly pandemonium surely ensues behind closed doors, as Harley-Davidson executives continue to bang their heads over how they’re going to paint themselves out of this corner.

Source: Harley-Davidson

  • Other Sean

    Stand well and truly back, the dragon is in its death throws. The rest of us will continue on into the 21st century, leaving the Hog behind with the dust bowl, polio, and her other contemporaries.

  • The overall sales picture is likely much worse than stated … Harley considers a bike “sold” when it’s shipped to a dealer. Dealer sales figures are likely worse.

    The contraction is pretty obvious in Bay Area dealers, with 3 going out of business, and one downsizing it’s real estate footprint, in less than a year.

  • MotoGuy

    H-D is outperforming the motorcycle market in a down economy and gaining market share…in fact it has record U.S. market share in the entire 108-year history of the company. Hardly the sign of a brand on “its way out.”

  • Richard Gozinya

    MotoGuy, what makes you think they’re still gaining marketshare, when other companies sales are up, and Harley’s are down another 30%? With both BMW and Ducati gaining marketshare, especially since those are both high end brands, there’s just no way for Harley to have gained. I haven’t heard about Triumph sales, or sales numbers from the Big 4, but it seems unlikely that Harley’s overall marketshare has increased when the numbers tell a different story entirely.

  • Dabber

    Other Sean, I couldn’t have said it any better. Like a paint job means it’s a new model. There was an article I read somewhere titled (“when tradition isn’t a business model”) it speaks to this very thing. Other moto companies build new engines all the time, while HD just ups the displacement and calls it a new engine. It’s like polishing a turd. It’s just a shiny turd. The vrod had it’s promise but the chassis is terrible. Lets have some American Innovation!

  • F2

    @ motoguy, most of the other motorcycle companies have far greater resources to fall back on. HD, by comparison, does not. I’m not sure but I think Honda & Suzuki makes cars,, Kawasaki Heavy industries, Yamaha has something to do with music. Riding out the tough times is a bit easier when you have a bigger family..

  • j

    That units graph tells you everything you need to know. It’s as if HD is making business decisions with a blindfold on. They let advertisers and bean counters convince them that the product is good, the just aren’t selling it well enough. The truth is that the product is not good enough, so the marketing is irrelevant. it seems to me that while newer, younger motorcycle buyers are looking for more modern and technically advanced offerings, HD is trying to force them to accept not just old and outdated bikes, but an old and outdated “lifestyle”.
    HD can turn things around, but they need to make a drastic change to their product. I am not saying that they should not make classic bikes, because Triumph shows that you can have some success with that, but the market for those bikes is small and getting smaller. The difference is that Triumph also has modern and stylish bikes that have a much wider appeal. If HD were to take a step back and revamp the Sportster with a new engine, chasis (well, pretty much new everything), but still keep SOME elements of the classic style, they could take a step in the right direction.
    It’s not going to happen though.

  • The “Tradition is Not A Business Model” series was five-part editorial I did here on Asphalt & Rubber. You can find the articles listed here: http://www.asphaltandrubber.com/tag/tradition/

    Harley-Davidson did gain market share in the US in 2009 & 2010, but when your volume goes down by 30% over the same time period, you’re really just proclaiming yourself the best of the losers.

    The thing that was perhaps the most worrisome during this period was the 87% decline in revenue for Harley-Davidson. HD can make all the bikes in the world, but if it doesn’t turn a profit, it’s going to go out of business. Thanks to Wandell, they’ lowered their break-even point, but they’re still in a precarious position.

  • Dabber

    Jensen, I thought that article series was right on point. Back 26 years ago when HD made the evo motor I bought one. First a Sportster then the Softtail custom. There wasn’t a big selection back then. Not much has changed since then,except displacement and fuel injection. I went with Victory a more technically advanced bike. Loved it for seven years until I got on a sport bike. My riding life has changed probably forever. I never new what I was missing. My passion for riding is re-kindled. HD and Victory both will miss out if they stick to just cruisers. I say this on every one of my posts ” let have some american innovation”. Until then I’ll be happily buzzing around Kawasaki loving life!

  • William

    I have to agree with the consensus of it being worse than thought . I too have also read other articles on Harley’s vanishing demographic, it seems that a younger generation isn’t to keen on their products.

    They have moved some production overseas though i can’t see Harley’s capturing a large market share there. I predict competitors will sell similar products at a substantially lower price with the same or better quality( ie Japanese manufactures eating the Americans lunch .)I also see a backlash on American products coming. The days of culture masking our politics are numbered in a large part (market) but not all of the world.

    Harley sold off their best bets to maneuver in the sport market also Mv Agusta and Buell. Although not the most successful brands, it didn’t help one bit that The Company Operating them is now painting itself into a corner and paid no attention to the longer term.

    I have absolutely No sympathy for Harley. There are many companies starting with no- where close to the resources, money and advantages they squandered. And sure most will fail but one or two will succeed.

  • Bruce Monighan

    2006 – 349,196 units
    2007 – 330,619 units
    2008 – 303,479 units
    2009 – 223,023 units
    2010 – 210,494 units

    It takes no genius to read the pattern here and it predates the recession. Not only less units but the only profit being reported for the company is through the finacing arm and it required a Warren Buffet and US Treasury loan to stabilize that business just before it went bankrupt.

    I can understand the faithful continuing to support the brand, heck I do it with Moto Guzzi because I love those bikes and the brand. However the reality is something entirely different. They may survive as a boutique brand but the cruiser market will go to the better engineered, better performing and more reliable manufacturers.

  • Luke

    I find it hilarious that HD are trying to claim they are targeting the 20-30s demographic. Have you ever been in their stores? Has anyone received their quarterly mag? It is 100% squarely aimed at semi-retired baby boomers looking for a sense of rebellion.
    2 years ago I was interested enough by the styling of the xr1200x to set foot in a couple of dealerships, but once I was finally allowed to take one for a ride I was stunned at just how ‘agricultural’ everything felt, the engine was sloppy and under powered, suspension was so soft it was scary and while they had obviously done decently with fit and finish, the components were clearly cheap quality. For au18k I’ll be spending my money on a speed triple thanks. Once I was back in the store I was introduced to the parts manager who proceeded to explain how I needed to spend about 5k just to get some basic power gains and a decent exhaust note – from a brand new bike, that was supposed to be their shining light forward for the entry level (read: younger) market.
    They are going to have to do better than that to entice our generation of riders in. I think buell could have been their saving grace but they really threw that one away didn’t they?

  • doug

    I’ll be honest. I’ve never understood the Harley thing. They have never been the bike that my Honda is, and apparently never will. Taking advantage of the “Bad Boy” image, trend, or fad or what ever you want to call it was brilliant marketing but one that would surely would meet it’s end one day. That day appears to be here.

    American car manufacturers learned the same lesson in same hard manner. Either build the best or get passed by. Japan kicked Detroit’s butt for years in the quality wars until they finally got with the program. By then Toyota had taken over #1. Detroit is coming back but why did it take so long? And will they ever regain top ranking again?

    Harley is small stuff compared to the japanese companies so I understand how hard it must be to compete. That being said, those years they were riding the wave they should have been preparing for this day. They had to know it would come. Fads only last so long.

  • Tom

    But..but…but….but…but….Harley is the leading big bike company and they are expanding into the youth demographic. Give it a day or so and the Harley cultists will be here screaming about how their religion is growing despite all the numbers that matter. If Harley dies, that will make a lot of people feel righteous, but dan, that would not be good for America’s economy or psyche.

  • Despite that I would love to support and spend my money with an American company, Harley does not now (nor have they ever) built anything that I was remotely interested in. I’m not a hardcore sportbike guy, or any other ‘market segment’ that businesses try to slot us all into.

    I just could never see myself as some Frye boot, leather vest, ColonelKlink-helmet rider, spending BIG bucks while being treated as if they were doing me a favor to take my deposit on a list price plus sled featuring no rear suspension and other mechanical arcanery from the gilded age. I hear a couple years ago they added rubber engine mounts and radial tires. Wow.

    Every iconic brand can transcend their heritage while moving on. Who could imagine BMW bringing forth the fully-realized S1000RR? Who would have thought a Porsche SUV or a digital M-Leica was possible?

    But this is what happens (exactly like GM) when you grow fat and happy making the same old thing and take your eye off the ball. Plus Harley is like a lot of companies with the same name and image who is on its fourth or fifth owner: The name goes on, but who if anybody, is the keeper of that brand mojo to keep the product on track? When it all goes South (as that terrifying chart shows), whaddya do? Hire in one more blue suit MBA, slash costs, make do with whatever is in the pipeline, then wait for your product lineup to be hopelessly behind the curve in a few years, simultaneously making your problems worse while making a profit behind layoffs, lost market share, and customers set adrift and sent to other brands. Oh, but Wall St. will probably write you up for saving the company !

    I really do feel bad for a lot of their dealers who built these fabulously fancy stores, and are now facing those costs in a much smaller market.

    Harley has a brand awareness that is priceless: I only hope a new sense of American possibility could fill them, so they could jon the 21st Century as a vital and significant presence. Now, where’s that phone number for that Victory dealership . . . . .

  • Don Farrimond

    Since I didn’t get into the motorcycle “game” until I was 40 years old and had four “rice burners” before I finally got with “America’s Program” and purchased a Harley, I really don’t have much stature to state an opinion on its current status. But the fact is that my first Harley (2008 Electra Glide) became my last HD product. And after looking at the chart noted in the above article (forwarded to me by my brother who, at one time was a die-hard “Harley Guy”), I realize I’m not the Long Ranger. In another couple of months, I will turn 75 and in terms of regaining my youth….I’ve done exactly that with a 2009 BMW R1200RT.

    In terms of Harley’s “Death” not being good for America’s economy or psyche, I seem to recall a lot of folks saying that about Studebaker, Hudson, and Nash Ramblers. The only thing that’s constant is CHANGE.

  • Tom

    Then those people were right. Harley’s demise, especially right now, is simply not good for America’s economy nor its psyche. Change is indeed constant but I’ll be damned if I stand on the sidelines and cheer the demise of an American icon and the devastation of thousands of American lives. You seem at peace with this idea. I’m not.

  • Harley is an American icon, it is the oldest still operational motorcycle company in the USA. But, But as it may, they have made very bad decisions over the past few decades to bring them to this situation. Yet again who can predict the future? They bought MV Agusta, lost their shorts and sold it back for pennies on the dollar. The entire Buell things was a disaster maybe not so for Eric Buell but for Harley. We can only speculate as bystanders what has gone on behind closed doors in the BOD rooms. But the numbers are synonymous to the signs of the times for everyone. People are simply not buying products for the sake of buying products, they are making decisions that are more inline with best for them not what “NAME” they buy. I will never own a Harley, never wanted one, my simple reason I don’t buy things based on a given persona.

  • Jeff

    Wow….seems there are many of you that agree on the inevitable demise of H-D…. The brand is stronger that you are giving it credit for. Someone makes a great point that the numbers being thrown around are alarming and trending towards, so are most other markets. So in an economy where success is measured by minimizing loss, H-D is ok. I don’t follow the stock market and had some trouble reading their 4th quarter earnings statement but the impression I was left with was positive.
    While it’s obvious that many of you are not paid for your opinions, your defense of the import brands on the grounds of deep pockets and other interests does not negate the fact that they have more non current units sitting in more segments in more countries.
    H-D may appear to be in a two-wheel skid to you right now, but they are still in control.

  • Bruce Monighan

    “H-D may appear to be in a two-wheel skid to you right now, but they are still in control.”

    I thought as I read that about all the Harley guys saying you “got you lay it down” to avoid a crash. While most other riders perfer to avoid diasaster by braking straight ahead and straight up, or even using the fancy ABS stuff.

    Yep two wheel skidding is very Harley!

  • Wyoming Rider

    Good points made here on both sides of the coin, so here is my 2 cents for what it is worth. (probably not 2 cents)

    When it came time to put up the padded pants, I wore when I rode my Honda dirt bikes, I set out riding all of the Japanese bikes since that was what I grew up on. I never cared much for Harleys because of their reputation for being undependable and for the vibration. I gave in, and took a ride on a 02 Fatboy. It was easy to ride, well balanced, and with the 88B engine no shaking. After seven years, and 5-7 thousand miles in 3 to 4 months each year, I went looking for a touring bike.

    I didn’t want to limit myself to only Harley’s, so my quest took me back to the Japanese bikes, but I also added the Victory, and the precision built BMW to the list. Some were great, and some didn’t feel good at all. It came down to the BMW, and once again the Harley. The Harley won out because of the expense of maintaining the BMW for me. There are only 16 BMW dealers, but 63 Harley dealers in the northwestern 8 states.

    The riders I have come across that have cruisers, or touring bikes do it for the enjoyment of longer rides, so these are the types of bikes Harley makes. I don’t know too many sport bike riders that do 500+ mile days for a week straight.

    I’m not the stereotypical Harley dude. I don’t put on the costume when I go riding. I ride in what’s comfortable and safe. I do have to agree Harley needs to do something about the performance of their engines. I would like more power for the mountain riding we do in the northwest. On the other hand more power equals more fuel. With my wife, a weeks worth of stuff, and myself on the Harley I get 46 to 50 mpg. At $4.00 a gallon coming this summer, I guess as long as my 74 hp 96” engine takes me everywhere I want to go, I just happy to be riding.