Harley-Davidson Roaring Back, Fueled by Pop Culture Status

Harley-Davidson, the made-in-the-USA icon that has both wrapped itself in the flag and cultivated an outlaw biker image, is on the verge of toppling global leader Honda in U.S. motorcycle sales, a startling and symbolic reversal in an industry the Japanese have dominated since the 1960s.

Harley has pulled off its turnaround by selling mystique as much as machinery: the sound (which the company once tried to patent), the look and, most important, the bad-boy image.

The motorcycle has come to permeate American popular culture through films and music, something Japanese bikes could never come close to achieving. But the typical Harley buyer these days is anything but an outlaw.

“The classic Hells Angels rider can’t afford a Harley anymore,” said Brock W. Yates, a veteran motor journalist and author of “Outlaw Machine: Harley-Davidson and the Search for the American Soul,” published earlier this year. “It’s the 45-year-old, divorced orthodontist that is buying them by the tons now.”

The turnaround is dramatic for two reasons: It would mark the first time since Japanese manufacturers overtook the U.S. motorcycle market that a domestic firm has become the top seller. And it would represent the latest step in a long climb back for Milwaukee-based Harley, which was teetering on financial disaster in the ‘70s.

The shift is documented in exclusive sales data compiled by Don Brown, an independent Irvine-based analyst who has been tracking the industry for major manufacturers for more than four decades.

“It’s an absolutely amazing comeback for Harley,” Brown said Wednesday, “especially considering they make a limited range of motorcycles.”

With little more than a week left in the year, Brown’s analysis indicates that Harley holds a slim but seemingly safe lead over Honda of about 1 percentage point in market share. That represents several thousand units in the key American market, which is expected to approach 500,000 in sales of new motorcycles for the year.

Harleys have gained a better reputation for quality since the company changed owners in 1981. But if quality alone were the issue, Honda would still be No. 1.

“The Harleys are slower, heavier and more expensive,” Yates said. “Their technology is basically 100 years old.”

But baby-boomer males, who make up the vast majority of Harley buyers, aren’t so interested in mechanical niceties or even the cost of the bike relative to its quality. Harleys sell for up to $20,000.

“What they want is ‘the real thing,’ ” said Owen Edwards, coauthor of “Quintessence: The Quality of Having It,” a book about products that have become icons. “ ‘The real thing’ is not necessarily the best thing. The Japanese cruisers that copied the look of the Harley might be much more technologically advanced and reliable and cost half the price, but that doesn’t matter.

“The Harley guys don’t want something that looks like a Harley--they want a Harley.”

Harley will account for 26% of all motorcycles sold in the United States this year, according to sales figures through October and Brown’s recently compiled projections for the full year. His estimates might even be on the conservative side: Through October, Harley was doing a bit better than 26%.

Honda is only slightly behind at a projected 25%, but the change in status represents a symbolic breakthrough, and Harley doesn’t plan to relinquish its lead.

“We have been watching the numbers and it’s pretty exciting,” Harley spokesman Steve Piehl said Wednesday. “We’ve invested hundreds of millions to increase our capacity over the last decade, and we still have waiting lists for some of our models.”

Piehl said Harley will post a sales increase of about 12% over 1998.

Ray Blank, vice president of motorcycle sales and operations for Torrance-based Honda America, acknowledged that Harley had bested his company this year.

“It’s a very impressive performance. They are a great competitor,” he said.

But he said Honda had embarked on an arduous, three-year campaign to reclaim its No. 1 status--”if not in the ’00 year, then the year after.”

One key to Honda’s long success, Blank said, has been its wide range of motorcycles, including off-road, sport, racing, cruiser and touring styles.

Harley makes only the laid-back cruisers and heavyweight touring motorcycles that appeal mostly to the middle-aged baby-boomer crowd.

“Right now, Harley is in the right place at the right time for their type of motorcycles,” Blank said. “But our ‘portfolio’ is flexible. We can meet changes in the marketplace.”

The success of Harley-Davidson, founded in 1904, comes in the midst of a continuing motorcycle boom--this is the seventh year in a row that U.S. sales have risen.

But it has also been a year in which other American entrepreneurs, seeking to emulate Harley’s success by reviving venerable motorcycle marques, have run into trouble.

On Tuesday, the owners of Excelsior-Henderson (founded in 1896) filed for Chapter 11 bankruptcy protection in Minnesota after spending nearly $100 million and six years trying to revive the long-dormant manufacturer.

In October, the American owners of the rights to the famed English motorcycle name Norton (founded in 1902), ran short of cash and shut down their project, which aimed to design a new model.

Harley remains the only major American motorcycle company to be turning a profit.

The publicly held company reported a 21% increase in fiscal third-quarter sales, to $623.2 million, and a 25% rise in earnings, to 42 cents a share.

With such a dramatic increase in earnings, spokesman Piehl said, it was not a surprise to learn that analyst Brown’s projections put the company at No. 1 for 1999.

“We felt good about where we were going,” he said.

Brown said Honda’s tough talk about coming back and reclaiming its status at the top is more than posturing. The last time the company faced a serious challenge came in the early ‘80s, when it seemed archrival Yamaha might claim the U.S. sales crown.

“The next year, Honda came out with 11 new models and crushed them,” Brown said. “You never want to count them out. Honda is an aggressive, proud company, and it has the resources to come back strong.”