10-18-2017, 08:55 AM

The difference is that the companies (thinking Honda, Yamaha, Suzuki, Kawasaki) that sell sportbikes could see their sportbike sales go to zero and pretty much not even notice it on the bottom line. Those are huge, highly diversified international industrial conglomerates.

When I look at any company, there's only one thing I'm interested in: What is it that they do really, really well? What is it that they do better than anyone else? What is their source of competitive advantage, and how hard would it be for a competitor to beat them at it? Most importantly, how able are they to transfer that one thing into success in other products?

When I look at HD, I don't know what the answer is.

What do they have? Great history, insanely loyal (but equally insanely fickle) customers, amazing sales channel*, an iconic brand name.

What don't they have? Anything even close to market diversity. They are solely at the mercy of one segment of one market (heavy motorcycles).

What else don't they have? Design/engineering/manufacturing excellence. Sorry to say, but it's true. Consider this: Back in the 90's Ducati was having great success with their 90 degree twin engine. So Suzuki decided to get in on it, and introduced the TL1000 in 1997. That was an entirely new motor, ground up design, not just parts-bin engineering but fresh from the start. Fuel injected. Water cooled. 125HP from 1000cc. And dead nuts reliable from the word go. They went from a blank sheet of paper to a world class engine in a couple of years.

Does anyone believe that HD has the engineering and manufacturing chops to do that? If they do (have the chops, that is), they have certainly never shown it.

Put another way, consider that Kawasaki builds industrial robots. What is your "blink" reaction to that? For most people, even people without an engineering or industrial background, they are going to think something like "If Kawasaki makes it, it must be good, high-precision stuff". What do you think would be the "blink" reaction if HD announced that they were getting into the industrial robot business? See what I mean?

Willie G sold the company's soul to the "lifestyle". Buy a Harley and you too can be a freedom-loving, leather-wearing weekend badass. They caught lightening in a bottle from the 80's through the 90's when the perfect combination of demographics and product came together to give them a historic run of growth. Good for them.

But that strategy was a two-edged sword. There are probably as many would-be customers turned off by the faux-badass marketing as there are attracted to it ("Difference between a Hoover and a Harley..."). The image/branding/marketing that worked so well 20 years ago is losing power as the generations turn over.

Where does it go from here? No idea. The problem trying to predict these things is that you never know what might spark a resurgence of interest in the one thing the MoCo sells. Consumer tastes are weird like that. For all we know, some cultural event could happen in the spring that causes huge numbers of young guys to run down to their local dealer and sign up. Or the opposite could happen. There's just no telling.

* Although if things don't turn around, the dealers sitting in multi-million dollar buildings with massive overhead are going to start shutting down left and right. I suspect that, on average, they are in way more immediate trouble than the MoCo.