Motorcycles Industry Trends: Large Bikes are Dying in the US; and Harley-Davidson is Dying Fastest

Large motorcycle registrations are down significantly in the U.S. – an alarming statistic to all motorcycle makers, but none more so than the most dominant force in the segment, Harley-Davidson. As their core customer ages out of riding H-D desperately needs young riders to save their iconic brand – but they just aren’t doing it. We examine why.

There’s bad news for the motorcycle industry in the U.S. – it’s slowly dying.

This may sound alarmist, but with the recent release of industry statistics for the second quarter of 2017, it’s apparent that there is definitely a noticeable decline in motorcycling in America – and it’s a challenge that every manufacturer is struggling with and preparing for.

At the core of the problem is the aging of the average American motorcyclist, as successive younger generations get into motorcycling at a progressively lower rate. The current battleground among motorcycle manufacturers for new customers is Millenials, who – now in their 20s and 30s – are at the prime age for purchasing recreational vehicles like motorcycles. One problem with that strategy – millenials just aren’t that into them.

It’s not only something inherent to motorcycles that millenials are shying away from – young people these days don’t like to drive in general. The very possession of a driver license has fallen double-digit percentages among teens and adults in just the last few decades, a finding released in a 2014 University of Michigan study on the phenomenon.

The motorcycle industry is struggling with this, along with the aging of it’s customer base overall. As of 2016, the median age of the American motorcyclist is 47, up from 40 in 2009, and 32 in 1990. Trace those numbers back, and a scary discovery emerges – the American motorcycle riding is more or less defined by a single age cohort, that is getting older (but not being replaced by new riders.)

Another key metric particular to the American market – heavyweight motorcycle new registrations – has also plummeted by 7% since last year. The brand most heavily affected by this trend is the long-time king among heavyweight bikes in the U.S., Harley-Davidson.

In the face of a shrinking market, several other manufacturers have done a good job creating less expensive, easier-to-own motorcycles that the young people who do ride seem to love – such Ducati with it’s Scrambler line, and Yamaha with its wildly successful FZs.

But Harley-Davidson has little luck with its own version of the same strategy. It’s not for lack of trying – the Motor Company has released several new models with four-digit price tags aimed at younger riders. But the new models haven’t met with much success. We’ve reported on it periodically over the last several years, but Harley-Davidson motorcycle sales have been slipping, quarter after quarter, for years now, despite their continuous efforts to get new riders into the fold.

And recent Q2 results from Harley-Davidson indicate that it isn’t just their motorcycle sales that are slipping (which could be attributed to large-scale recalls, economic factors, or stiff competition) – it seems to be the brand itself. While sales of Harley’s bikes are down, its branded merchandise is faring far worse – sales are down 17% in Q2 on general merchandise revenue, which, as bad as it sounds, is actually up from the 21% dip during the previous quarter. Harley’s forecast for the rest of the year is no less bleak, and layoffs are already in the works.

The vast majority of Harley-Davidson’s revenue comes from its bikes and parts, with only 5% of total revenue coming from merchandise sales. But merchandise is a huge part of the Motor Company’s branding, with many using it to express their almost cult-like love for Harley-Davidson. The dramatic dip in merchandise sales for Harley this year is bad sign that the brand’s influence is weakening.

The decline of the brand itself is the real story here, as brand has traditionally been Harley’s ultimate strength. Harley’s core customers live, breathe, and die by Harley-Davidson and the lifestyle that surrounds it, which includes a lot more than just motorcycles. Owning a Harley is just the first step into a culture world that, for a large segment of Americans, has always been seen as a sign of freedom, patriotism, and affluence.

Unfortunately, the young people that Harley desperately needs to recruit into its ranks to maintain growth don’t see it the same way. It’s not for lack of effort – Harley-Davidson has been on a company wide push to appeal to Millennials in particular, with new, less expensive bikes and programs tailored at new riders, along with programs aimed at recruiting non-traditional Harley types (i.e. women and minorities.) But they haven’t been effective enough to move the needle.

There are several theories about why this is. One is simple – the fact that Millennials, saddled by debt and struggling with underemployment, just don’t have the money for expensive toys like Harleys and the lifestyle that accompanies them. The bikes other brands have deployed with much success among Millennials have all been based on simplicity and value – something HD isn’t (and doesn’t want to be) known for.

But another more nuanced explanation – and a potetially more menacing one – is that there is simply a rejection among Millennials of what H-D stands for. The company may want to be seen as an all-American, home-grown brand built on tradition and nostalgia. But on the streets, Harleys are often associated with the overly conspicuous consumption and material wealth of previous generations – something that Millennials are not only not fond of, but often, actually resentful toward.

Put plainly, Harley’s just aren’t cool to young people anymore – and for an international mega-brand like Harley-Davidson, that’s a major strategic problem. And as the core Harley customer – for whom Harley Davidson was not just a motorcycle, but a way of life – ages away from the open road and toward the retirement home, H-D will have two choices. Either pivot hard into new markets (a move which will surely upset the aging “Harley faithful,” as such moves have in the past); or, keep doing what they are doing, and age with them.

The only problem with the latter strategy – when you age, eventually, you die.

What do you think the decline in Harley motorcycle sales and the dramatic drop in their merchandise sales means for the future of the Harley-Davidson?