USA: Harley-Davidson bets big on a small new urban bike aimed at attracting younger riders

Record ID: 190071

  • Title: USA: Harley-Davidson bets big on a small new urban bike aimed at attracting younger riders
  • Date: 7th April 2014
  • Summary: CHICAGO, ILLINOIS, UNITED STATES (APRIL 2, 2014) (REUTERS) (SOUNDBITE) (English) JAIME KATZ, MORNINGSTAR ANALYST SAYING: "Harley Davidson's traditional customer base was a white male, over fifty, or around fifty years of age. And over the last few years they've really moved to break that demographic and reach a much wider audience."
  • Embargoed: 22nd April 2014 13:00
  • Keywords:
  • Location: Uruguay
  • Country: Uruguay
  • Topics: Industry,Transport
  • Reuters ID: LVA32KOQF4PM1K2XXMCTPE8X9J1F
  • Story Text: Harley-Davidson has unveiled a new, lighter motorcycle unlike any other Harley.
    Known as the Street, it is the company's first entirely new bike in more than a decade and the first U.S.-built small bike bearing the Harley name in nearly 50 years. With an expected retail price of $6,500 to $7,500, the Street is the most affordable bike Harley has brought to market under its name in decades and an unapologetic effort to bring young riders around the world into the company's two-wheeled fraternity.

    "Harley Davidson's traditional customer base was a white male, over fifty, or around fifty years of age. And over the last few years they've really moved to break that demographic and reach a much wider audience," said Jaime Katz, an analyst at Morningstar.
    The Street, which will arrive in dealerships this spring, is a stripped-down bike built for urban environments -- a major departure Harley, known for heavy touring bikes built for the open highway.

    "The Harley-Davidson motorcycles are known as Hogs. They're usually bigger, heavy bikes suited for the open road, to be incredibly stable on the highway. So they wouldn't be as suitable for a city environment where you have to hug the curves and, in-and-out of traffic and so forth. So this new bike is designed with that in mind," said Carolyn Marosy, manager of Harley-Davidson in New York City.
    The last time Harley introduced a new bike, in 2002, it spent big bucks -- it refuses to say how much -- building a new line in Kansas City dedicated to the motorcycle. This time, Harley did it on the cheap, incorporating its new bike into an existing line.
    The Street's introduction is not without risks. It puts Harley in direct competition with Japanese bike makers, which have strong brands of their own. The yen's current weakness against the dollar will also help the Japanese defend their small-displacement, sport-bike turf.
    Meanwhile, Harley faces a unique problem: convincing its core customers that the new bike does not undermine the brawny, muscular quality of the Harley brand. Company executives insist they aren't worried.
    The debut will also make it harder for investors to understand where profit margins on motorcycles will settle after years of restructuring. Harley has acknowledged that the Street may pull buyers away from higher-margin entry-level heavyweight motorcycles in its line, like the Sportster.
    Harley saves considerable cost by building the Street on the same line, and often at the same time, as its larger V-Rod.
    Changeover from V-Rod to Street production can take place on the fly, several times in a 24-hour period. The process could easily devolve into chaos, said Steve Wiggins, manager of the Kansas City plant, but factory workers quietly choreograph the changeover, swapping components and tools in and out and just in time.
    The last U.S.-made, Harley-badged small bike, the 1966 BTH Bobcat, was an underpowered flop, discontinued after a year. More recent efforts to break into the market with the Buell and MV Agusta brands also ended badly.
    The Street's stripped-down design and low price -- it costs just a bit more than some Vespa scooters -- reflect the need to find a new generation of buyers. The Street is the simplest motorcycle Harley has offered since it discontinued the Buell Blast, a bike ridiculed by Harley stalwarts as the "Be-Last."
    Harley expects to ship just 7,000 to 10,000 Streets in 2014 and has confined the rollout to half a dozen countries, including the United States, Italy, Spain and Portugal. Still, executives see the debut as a pivotal event.
    Doing nothing is not an option. Harley faces a growing number of challenges, including shrinking demand in the United States, its No. 1 market, for the big, expensive bikes it has made for years. And even as that market shrinks, new competitors, including the relaunched Indian brand from Polaris Industries Inc are moving into the space.
    Harley has problems overseas as well. Europe hasn't provided the boost the company needs to offset the slowdown at home. And sales in China have been disappointing since they began in 2006.
    If the Street -- water-cooled like the V-Rod, with either a 500cc and 750cc engine -- takes off, it could reestablish Harley-Davidson as a growth stock by increasing sales to members of the "millennial" generation worldwide.
    The Street will be Harley's first global bike, with models built in Kansas City for North America and at a plant in Bawal, India, for the rest of the world.
    It's also not clear that Europeans, who have until now been supplied by U.S. factories, will accept an Indian-made Harley, though company executives downplay those concerns.
    It may be some time before investors will know whether the Street is a hit. Most of the bikes produced in 2014 won't be sold to consumers straight away but will instead be used as training bikes in dealer-run motorcycle riding classes.
  • Copyright Holder: REUTERS
  • Copyright Notice: (c) Copyright Thomson Reuters 2014. Open For Restrictions - http://about.reuters.com/fulllegal.asp
  • Usage Terms/Restrictions: None
Register