Hog Wild : Oliver Shokouh Started His Harley Dealership on a Shoestring; Times Have Changed
Twenty years ago when he gave up an engineering career in Detroit to open a Harley-Davidson motorcycle dealership 2,000 miles away, many of Oliver Shokouh’s friends questioned his sanity.
“Most people thought I was crazy, especially because Harley-Davidson was considered a dinosaur,” Shokouh said, recalling his move to Glendale long ago.
Shokouh, who had never run a business, had little more going for him than a vague belief in the Harley brand’s charisma. He’d become intrigued with motorcycles as a teen-ager and later “I became a hard-core Harley buff,” he said.
As he struggled initially to keep his small-business dream alive--even dipping into his children’s college fund and customer deposits to make the dealership’s payroll--the skeptics seemed to have a point.
Harley-Davidson Inc. itself once came close to bankruptcy, and about one-quarter of its dealer network went under during the early 1980s.
But Shokouh stuck out the dark days,and his stamina paid off as the Harley factory in Milwaukee, improving its products and recharging its mystique, staged a remarkable comeback. The company’s sales rose from $295 million in 1986 to an expected $1.5 billion this year, while Harley’s profits have soared from $4.3 million to a likely $105 million in 1994.
Shokouh, 48, has experienced similar growth at his Harley-Davidson of Glendale dealership, where sales have nearly quadrupled since 1982. Last year, Harley recognized his marketing efforts by naming him its Promoter of the Year. Among other things, he organizes a charity motorcycle Love Ride every November from his dealership to Castaic, which attracted 21,000 riders this year.
These days, Shokouh, a soft-spoken man who seems more like a laid-back motorcycle enthusiast than a hard-driving salesman, presides over a dealership that is not only a motorcycle showroom, but is also part Harley-Davidson boutique.
Purple neon signage looms over racks of Harley clothing and displays of Harley earrings, mugs and miniature bikes. The new bikes are already sold; the old are museum pieces, for display only.
Shokouh won’t disclose his dealership’s revenues. But he did say a large metropolitan dealership gets up to 350 bikes a year from Harley. Harley bikes cost from $5,200 to $18,000, with the most popular ones in the $14,000 range. Given that about 60% of his revenues comes from motorcycle sales, the rest from parts, services and accessories, his business might gross around $6 million a year.
It’s a big change from 1975 when he took over a failed Harley dealership in Glendale with less than $10,000 in capital. He won’t say what the dealership is worth now, but he concedes that other Harley dealerships a third of the size of his are now fetching over $1 million in California.
His main concerns these days are trying to expand the store and training his children to take over the dealership. Some motorcycle experts believe that Harley, with its production capacity stretched to the limit, and its market share again under attack from Japanese competitors, is due for a slump. But Shokouh still has his faith.
“It’s a phenomenon, not a flash in the pan,” he insisted.
Back in 1975, that faith seemed more like a delusion. Harley-Davidson was a shadow of its once-prosperous self, a division of a company whose main business was bowling pins and pool tables. Meanwhile, Harley’s production was dogged by quality problems, and the market was flooded with low-priced Japanese imports.
Shokouh was then a research engineer for White Motor, a Detroit diesel-truck manufacturer. On a visit to a local Harley dealership run by a former colleague, he saw an opportunity to go into business for himself.
“It made business sense even though I didn’t really know what I was going into,” he recalled.
*
While Harley had franchises in Michigan available, he was more interested in California, where motorcycle sales are less seasonal and where he had gone to high school.
In Glendale, the previous Harley dealer had gone bankrupt. But he left a building that was available for lease at $1,300 a month and could be reopened at low cost.
So Shokouh moved from Michigan with his wife and four children, giving up his $20,000-a-year engineering job. Unable to raise money from banks because of his lack of business experience, he was totally dependent on cash flow to stay in business.
But sometimes things got desperate. Once, a customer, tired of waiting for delivery of his bike, called to say he was coming by to retrieve his deposit. Trouble was, Shokouh had used the deposit to help make payroll.
“Fortunately, on the way down, he changed his mind and decided to give it another week,” Shokouh said.
Early on, he exported bikes to Japan to generate sales--at one time, exports accounted for half his volume--and also came up with offbeat promotions such as a special service club, which offered round-the-clock emergency roadside service.
When Harley introduced its new, big touring motorcycle model, with a rubber cushion between motor and chassis to soften the ride, many aficionados were offended by this soft styling. But Shokouh took the new bike out on weekends with his service club and had members test-ride it during pit stops, which led to a lot of sales.
After a management group bought out Harley in 1981, the company, saddled by debt and swamped by Japanese competition, barely avoided bankruptcy as many dealerships folded. “Nearly every dealer had to scrape through, and many, many of our dealers did not make it,” recalled Jerry Wilke, Harley’s vice president of marketing in Milwaukee.
According to Wilke, the survivors were dealers like Shokouh who hung on to their faith in the Harley mystique. “He has a passion for the product, he has a passion for the company, and . . . it’s that type of passion the customer can feel.”
“I believed in the product,” Shokouh said. “Somebody had to keep it going.”
Harley roared back with new models and updated engines, and a marketing strategy that expanded its appeal beyond its traditional blue-collar niche to a more upscale clientele revived the company.
Shokouh was well-placed to take advantage of the “rich urban biker,” or “rubbie,” phenomenon. “There are so many entertainment people out here and they’re the ones that really glommed on to the Harley,” said Bob Jackson, senior editor of Motorcycle Product News, a Westlake Village publication. Indeed, Shokouh’s customers include Jay Leno and rocker Eddie Van Halen.
Still, Shokouh admits he isn’t selling as many motorcycles as he’d like to. Harley, leery about compromising quality for quantity, has not matched supply with demand and exports some 30% of its bikes. As a result, U.S. dealers have long waiting lists and impatient customers end up asking for their deposits back. “It’s really hard not to do a sale when the customer’s willing,” Shokouh said.
According to analysts, capacity constraints were the main reason Harley’s share of the domestic motorcycle market has slipped slightly in the past year, and some believe the “rubbie” phenomenon has peaked.
But Shokouh isn’t losing any faith. He is negotiating to double the size of his store, mainly to provide more space for merchandising, and he is hoping to pass on the business to his children. His daughter is in the accounting department and his 19-year-old son is also helping out while pursuing a business degree.
There’s an irony in making it a family business. During the bad days, he would drop his son off at school on his Harley. “It embarrassed the hell out of him,” Shokouh recalled. “The attitude has changed. Now the kids are really into it.”
