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Harley’s Bad News Could Be Worse Than We Think

Continued declining sales may have an effect on more than just revenues.

Harley-Davidson announced Tuesday that it has suffered yet another dramatic decline in sales, with worldwide retail sales down 9.6 percent in the fourth quarter of 2017, as compared to the same quarter in 2016.

RELATED: My Beef With Harley

Things in the United States were particularly bad, with sales plummeting a whopping 11.1 percent in Q4 2017 compared to Q4 2016. For the full year, the motorcycle company that made Milwaukee famous suffered an 8.5-percent drop in US sales. Sticking with full-year results, things were a little less awful beyond the gold-painted walls of Trumpistan. In Europe, for example, sales slipped just 2 percent. Looping in the results for all markets in which Harley operates, the company’s worldwide sales were down 6.7 percent for the full year. You can get the full breakdown of results by checking out the Harley-Davidson investor website.

All of this continues a bad news trend that’s been plaguing Harley-Davidson every quarter for the past few years. There’s no doubt it’s causing pain; coinciding with Tuesday’s financial results was news that the company plans to scrap its Kansas City, Missouri, manufacturing plant next year, thereby putting some 800 people out of work. That’s hard times, daddy.

As a motorcycle enthusiast what really worries me about all this is not the farcical idea that Harley is doomed. Its negative sales are relative, after all; selling “only” 260,289 bikes last year may be bad for Harley-Davidson, but that’s 204,481 more bikes than Ducati managed to get out the door in the same time (55,871 units sold in 2017). And 2017 was the Italian company’s best year ever. Instead, what worries me is that this continued downward trend will cause Harley-Davidson to make really bad decisions about its future direction.

If Harley were run like internet companies, the bosses would conclude: ‘Hey, people don’t want quality. We need to go back to giving them crap!’

Let’s look at things from a simplistic point of view: 20 years ago, Harley was making bikes with crappy engines and crappy brakes that would scrape pegs on a corner with a radius the size of Texas, and yet it was selling the damned things hand over fist. Now H-D is making genuinely good motorcycles with fun engines, reliable brakes, modern tech, and the ability to navigate twisty roads far more quickly than anyone would imagine, but its sales are diminishing. If Harley were run the same way as internet companies, the bosses would be looking at these two truths and conclude: “Hey, people don’t want quality. We need to go back to giving them crap!”

I’m optimistic/hopeful the folks in Milwaukee are more intelligent than that, but, the fear that they might not be kind of depresses me. Because in recent years Harley-Davidson has managed to transform itself from a company about which I… uh… didn’t have a lot of good things to say, to one that is increasingly near and dear to my heart.

For example, take a look at my review of the 2016 Harley-Davidson Street Glide Special. I wasn’t impressed. I felt the bike, with its rattling Twin Cam engine, simply wasn’t fit for the stated purpose of touring. A few months later, however, I threw a leg over the Milwaukee Eight-equipped 2017 Street Glide and loved it. I loved the Road Glide even more (I regularly daydream about owning one of those). Since then, I’ve had the opportunity to ride the Milwaukee Eight-powered Road King Special, as well as several models from the new Softail line-up (Breakout, Heritage Classic, Street Bob, Fat Bob, and Sport Glide), and with each new bike I encounter (except, maybe, the Breakout) I’ve thought: “Damn it, Harley makes some good bikes.”

RELATED: 2017 Harley-Davidson CVO Limited – First Ride

I mean, actually good bikes. No caveat is needed. You don’t have to say they’re good compared to past versions, or that they’re good for a cruiser, or whatever – they’re just good. And to see that the company is not necessarily being rewarded for making good bikes makes me nervous. The quality of Harley’s product has improved so much. I’d hate to see the company take a backward step, thinking it was responding to some unspoken customer demand.

Model Year 2018 New Model Photography
Taken for what it is and what it’s supposed to be, the Harley-Davidson Road Glide is one of the best bikes out there today.

The good news here is there are a lot of things to suggest Harley won’t do that, that it is on the right track and knows it is. For example: the company’s European sales. As stated above, they’re not in as rough of shape as US sales. Equally, European sales – like the sales in other non-US markets – haven’t been in perpetual decline. They’ve gone up and down, with the overall trend being one of slight increase. Harley has spotted this and said it wants to see its international sales making up 50 percent of overall annual volume (at present international sales account for 39 percent, with the US market still doing the heavy lifting).

Marketing to the rest of the world means continuing to make bikes that the rest of the world wants to buy: bikes that are good. Unlike many US motorcyclists, folks in the rest of the world are not locked into the idea that there is only one kind of bike. To sell in Not America, Harley has to make machines that can stand on their own against other brands. It’s doing that now, and I think it knows that if it wants to see sales increase it will need to continue doing that.

Another reason to be hopeful comes from something that was somewhat buried in Harley’s financial statement press release. The release quoted Harley-Davidson President and CEO Matt Levatich as saying: “The EV motorcycle market is in its infancy today, but we believe premium Harley-Davidson electric motorcycles will help drive excitement and participation in the sport globally. As we expand our EV capabilities and commitment, we get even more excited about the role electric motorcycles will play in growing our business.”

livewire
Harley-Davidson LiveWire. Not dead.

In other words, the company hasn’t given up on the LiveWire. It still believes in the electric motorcycle and still sees it as a relevant part of its future. Certainly that doesn’t seem like the talk of a company that’s planning to regress.

Ultimately, I feel Harley’s current hard times are unfair. People who have an entrenched hatred of the brand as a result of what it was and how it behaved in the 90s might be seeing all this as something of a comeuppance, but those people have blinded themselves to the reality of what Harley-Davidson is today. With the company now making some of the best bikes it has ever made, it deserves to be doing better.

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