Harley-Davidson's long-term prospects in doubt


Michael Fowlkes blogged earlier about the dip in Harley-Davidson (NYSE:HOG) stock prices. Those who plan on holding this stock for the long run might want to look carefully at the product and its market demographic.

In the short run, the brand should play strongly to boomers retiring with a wad of discretionary income and a taste for moderate adventure. They have the cash to pay for the top-line models such as the Road King, along with the (very pricey) Regalia.

For the following generation, however, H/D offers a weak lineup. Younger, more sport-oriented riders find nothing in the Harley dealership to compete with the race-tested (and promoted) sport bikes from Honda, Yamaha, Kawasaki and Suzuki. The Buell brand they have attempted to grow in this market sector has found no traction and remains a non-player. And the Chinese are ready to enter the market and beat the brains out of anyone competing strictly on price.

Looking further down the pipeline, tens of thousands of youngsters seven and up are competing every weekend in the American Motorcyclist Association's off-road motocross racing programs, another market in which Harley offers no bikes.

Another advantage the Japanese bring to the contest is their ability to leverage their R&D and customer loyalty from the auto side.

Market insiders will tell you that Harley's equipment, with the exception of the V-Rod, lags behind competitors such as the Honda Gold Wing in technology and comfort. What keeps them thriving is brand, and brand image is a fickle anchor for a company's future.

If they don't find products that speak to younger riders, the day may come when Harley's profits sink as low as the breasts in Daytona's Bike Week parade.

Tom Barlow is the former Membership Development Director of the American Motorcyclist Association.

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