Thursday, April 21, 2005

A Word about Harleys

Motorcycle-Blog is a blog I occasionally read through. I like motorcycles, not as much as cars, but enough to read about them on a regular basis. What's interesting is that Harley-Davidson is having lower than expected earnings and Wall Street promptly punished them by having their stock price fall somewhat. They still however make a profit. What does this have to do with cars? Well I see some similarities in Harley's predicament with the American auto industry.

Harley's are known for brash looks, poor handling, a lot of power. This description characterizes a great deal of American cars, or at least the stereotype of American cars and SUVs. But even so, Harley sells outrageous amounts of bikes here and abroad, and they outsell even the powerful Honda in the US. Harley is really the only substantial American manufacturer of motorcycles, others are just expensive small enterprises.

The Big 3 could learn a lot from Harley. Like them, Harley has been through rough times, and has faced bankruptcy. They made bikes at one time that no one wanted, and have always faced steep Japanese competition. Their bikes are generally considered less reliable, and worse handling than European and Japanese competition. Yet their bikes are usually the most expensive in their class, and sell for a larger profit. Like GM, their attempts at making high end classy vehicles are successful (Harley's V-Rod, GM's Corvette).

So the empirical evidence that a company can sell an inferiorly handling, riding, and reliable vehicle versus Japanese manufacturers is evident. Harley is in no danger of going bankrupt, and makes an enormous profit selling in Europe and Japan where are weak currency increases that margin tremendously. They also dare not ship any manufacturing jobs overseas lest they lose customer support. The Big 3 have the exact opposite of problems because they don't make vehicles that evoke their companies' traditions. Harley is all about tradition, and the result has been great success.

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