Motorcycles and Millenials

[bigjohnsd]

From a CNBC article this morning:

Millennials may claim another victim: Harley-Davidson and the classic American motorcycle

Younger buyers and older buyers have different reasons for buying motorcycles.

Older buyers seem to buy bikes for hobby or recreation.

Younger buyers are more interested in ease of transportation.

This has potentially profound implications for struggling companies such as Harley-Davidson.

Robert Ferris | @RobertoFerris

Published 12:16 PM ET Fri, 25 Jan 2019 Updated 2:50 PM ET Fri, 25 Jan 2019

CNBC.com

Harley Davidson motorbikes are driven down St. Martins Lane in London.

Getty Images

Harley Davidson motorbikes are driven down St. Martins Lane in London.

The supposed millennial penchant for "killing" industries gets thrown around a lot, but it could really be happening to one American icon: the Harley-Davidson motorcycle.

Data suggest a considerable generational divide in attitudes toward heavyweight motorcycles, the sort of bikes sold by brands such as Harley and Polaris' Indian brand, said UBS analyst Robin Farley in a note published Friday.

It turns out that younger people do consider buying motorcycles, but for entirely different reasons than older customers, and that has potentially profound implications for companies such as Harley-Davidson, which has been struggling with declining sales and an aging demographic.

Shares of the motorcycle maker have fallen 32 percent in the last 12 months.

The survey's most significant finding is that 21- to 34-year-olds consider buying a bike for "ease of transportation," whereas older buyers purchase bikes "as a hobby" or because "motorcycles are cool."

This distinction is important, since the average Harley-Davidson customer is a married man in his early 50s, with a household income at or above $90,000. These are the customers buying motorcycles out of a passion for the product or lifestyle.

Younger buyers appear to be more motivated to consider motorcycles for practical reasons, which means it is likely they will be more interested in less expensive bikes that bring in lower margins for manufacturers.

"We believe this significant divergence in incentives to buy a new bike could be what is partly behind Harley's and broader heavyweight motorcycle industry's challenge to tap into a new segment of younger riders to drive growth," Farley said. "So unless there is a generational shift among younger riders to see motorcycling as a hobby vs. means of transportation, the outlook for the heavyweight industry could continue to be more dependent on an aging demographic."

It might not be all bad, though.

"Perhaps one hopeful sign for the industry is that younger potential buyers cited the second most common reason to buy a motorcycle is that it 'goes with their self-image,'" Farley said.

Harley-Davidson has initiated an ambitious plan to lure 2 million more riders to the brand in 10 years. Among other things, the company is setting up riding schools around the country, and it is releasing an electric motorcycle called the "Livewire." The company also previewed two electric concept bikes earlier in January.

Officials at Polaris weren't immediately available to comment. Harley-Davidson told CNBC the company has been aware of the demographic trend and it has been informing the company's strategy.

"There's nothing new here," Harley-Davidson told CNBC in a statement. "Our advanced analytic capabilities allow us to deeply understand rider migration trends. In fact, our knowledge of riders informed our strategy to build the next generation of Harley-Davidson riders globally, which we launched in early 2017."

The survey polled 2,100 adults in the U.S. over the age of 21 from Sept. 1, 2018, to Sept. 21, 2018..

Data also provided by Reuters

Do "we" of the Sport Touring community not also fall into this same Harley/Indian demographic?

Is this why there is little resale value for an FJR? How has BMW managed to avoid this issue?

Are 300cc bikes the wave of the future in America?

Lots of food for thought and spirited "Polar Vortex" discussion here!

 

[Pterodactyl]

Lots of food for thought and spirited "Polar Vortex" discussion here!

Words from a man that has finally run out of farkles to bolt onto his new GSA and Fester's V Strom. This is only going to continue unless someone starts a Go Fund Me page to buy him more chit.

 

[JamesW]

Love my gen 3 and I am a rider mostly, long way in a hurry as I used to describe it. Rode the Connie for over 22years, might do the same for the fjr. Retired folks (me anyway) cannot afford buying new bikes very often especially the heavy ones with the high prices. However, if I was younger the market for nice used bikes is there, and there are brand new bikes around 10grand (if you shop) that would suit my needs well. Some of the deals I see posted are amazing values to me, somebody has a 1 or 2 year old fjr, farkled to the gills, and now they are selling it! Some dealers have brand new 2 and 3 year old models floored at prices that make me drool. Getting to Harley, they are mid-sizing bikes for the M's in the future. Another factor is traffic, I rode in to the dealer for service@ 0700 the other day, in the dark, good god would I hate to commute in that stuff every morning (Seattle area). I commuted for 20+yrs in the 70s and 80s and nothing like these idiots. Oh well.

 

[bruinFJRguy]

"" Officials at Polaris weren't immediately available to comment. Harley-Davidson told CNBC the company has been aware of the demographic trend and it has been informing the company's strategy.

"There's nothing new here," Harley-Davidson told CNBC in a statement. "Our advanced analytic capabilities allow us to deeply understand rider migration trends. In fact, our knowledge of riders informed our strategy to build the next generation of Harley-Davidson riders globally, which we launched in early 2017." ""

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We'll see how these "advanced analytic capabilities" work out for revenue and stock value. I think there was a lot of buzz for the Livewire, which was later dismissed with a chuckle when they announced the thing would cost THIRTY GRAND!

The more desirable Harleys have always come with a relatively steep price tag, at least as long as I've been paying attention. But I don't think millenials have the disposable income to buy outright at their current prices or the willingness to make a 7 year commitment (which seems to be typical on a HD loan).

It seems the cliche characteristic of a millenial is to be "experience-focused" rather than "asset-focused." They might want to ride, want the image, etc, but don't have the attention span and aren't willing to make the commitment to really get into hobby/sport. Especially at the exorbitant prices Harley charges for a bike someone would actually want to own.

The entry-level "Street" line Harleys lack the 'cool' factor and are not aesthetically appealing to really anyone as far as I can tell. The Softail line has more potential, but a new Slim will still run close to $20k all up. The bagger line is virtually limited to the more mature customer; they are probably priced in line with what that buyer is willing/able to pay, but that product alone won't carry the day for HD.

Personally, I think HD has more changes to make before they'll be anywhere close to out of the woods. They need a more desirable product at a more palatable price-point. The Livewire had potential on the first prong, but failed epically on the second. The Slim, Sport Glide, Fat Bob, Street Bob all still hold potential in my opinion; but HD imputes an inflated value to their product that is disconnected from both its position relative to the competition and the market. To be fair and not place all the blame on HD, they have a problem in that they need to keep costs down and manufacturing elsewhere hurts their brand image and their public relations image/reputation. I don't know how they'll bridge the gap, but they'll need to.

In any case, the statement above that indicates they feel they have things all under control is frightening, if they truly believe they can rely on these supposed "indicators." It seems to me they are entirely disconnected from reality and oblivious or ignorant to the fact that they are taking on water and fast!

 

[SwollenRaccoon]

Very astute observations so far (But not from the Hardly Ableson people). Maybe Harley needs to launch a new line, like Yamaha did years ago with Star. Don't have any Harley badging on it. Make a handful of smaller bikes, with a couple entry-level products. If you are a technically-capable company, and have the financial critical mass to support the tooling and engineering costs to do so, that may be one way to try to save your company. I think their future is bleak unless they take action soon. But I've been wrong in my life more than I've been right.

 

[Uncle Hud]

bigjohnsd posted the following questions: Do "we" of the Sport Touring community not also fall into this same Harley/Indian demographic?

Not really, because we like the "sport" stuff as much as the "tour" stuff. We're not far removed from the H-D and Indian crowd, however, because we really do like the tour stuff., (See popularity of our "tour" events like EOM, Reuben Run, the now-defunct NAFO, our own LD/Iron Butt section, and any ride Tyler organizes.) Frankly, FJR Forum members enjoy touring more than the average cruiser owner.

edited 30 mins later: To echo a few points from bruinFJRguy, Harley's missing a key element for millennials: they don't want to own, they just want the experience and/or convenience. To wit, Uber/Lyft, AirBnB, Bird scooters, the dramatic rise in apartment living versus traditional mortgages.

H-D really blew their opportunity with Buell. That was a chance for sportbike riders (millenials and others) to "buy American" and perhaps claim some measure of the Harley mystique that seems to be valuable to many people our age.

Is this why there is little resale value for an FJR? How has BMW managed to avoid this issue?

I think used FJRs sell cheaply because new ones are low-priced. Hard to compete against new machines priced a few hundred dollars more than what I might want for my bike in a year, after it gets close to (or beyond) 90,000 miles.

Are 300cc bikes the wave of the future in America?

Maybe. Small mototorbikes are everywhere during my urban wanderings. Everything from Vespas to internet-rented mopeds are common on the street -- although they're all "motorbikes" that don't require a motorcycle endorsement on your driver's license. Apparently, they also don't require helmets or common sense,

Lots of food for thought and spirited "Polar Vortex" discussion here!

Hope my contribution has made you warm on this Polar Vortex weekday in South Dakota.