Hog Tied

After riding high for two decades, the company that makes hulky bikes that devoted riders affectionately call Hogs is sputtering," writes Susanna Hamner in the New York Times (3/22/09). "I haven’t seen anything like this in the 33 years I’ve owned a dealership," says Spuck Bennett. "We’re just trying to survive." So is Harley-Davidson, which last year was forced to "write down $80 million in debt," as profits "fell 30 percent … to $654 million on revenue of $5.6 billion."

Harley’s slide certainly is tied to the recession, but there’s more to it than that. When times are bad, obviously it’s less likely that people will "shell out up to $20,000 or more for something that is basically a big toy." It doesn’t help much that most of the Harley market consists of baby boomers who are watching their savings implode. But it also appears that Harley contributed to its own troubles in a chain reaction of mistakes.

When times were good and Harleys were in short supply, some dealers gouged customers, making Harley look greedy. In an attempt remedy the problem, Harley flooded the market with bikes, undermining its cult-like image. With the market now oversaturated, "Harley goosed sales by luring many buyers with money-down loans," leading to defaults. Meanwhile, Harley’s baby boomer customer base is fading, although Harley CMO Hans Marc-Richer thinks they’re good for another 15 years. "It would be dumb to walk away from our core customer, the most lucrative customer," he says. ~ Tim Manners, editor.