Archive for Friday, July 26, 2002

Harley rumbles into new century

Motorcycle maker celebrates 100 years of classic machine

July 26, 2002

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— Harley-Davidson is in an enviable position for a U.S. company it has a brand and reputation known throughout the world, and orders for its motorcycles well into 2004. And its stock price is holding up even as the overall market plunges.

The company has just started a yearlong celebration of its 100th birthday, with motorcycle festivals planned in big cities around the world. But there's a serious marketing side to the partying: attracting younger buyers who will buy Harleys and succeed baby boomers as the company's core market.

Devin Mottern, 6, Cartersville, Ga., was one of thousands who
enjoyed the Harley-Davidson 100th Anniversary Open Road Tour in
Atlanta, the world's largest rolling birthday party. Atlanta was
the first stop of a 10-city worldwide celebration that leads to
Milwaukee. The second leg of the tour will be Aug. 16-18 in
Baltimore at the Pimlico Race Course.

Devin Mottern, 6, Cartersville, Ga., was one of thousands who enjoyed the Harley-Davidson 100th Anniversary Open Road Tour in Atlanta, the world's largest rolling birthday party. Atlanta was the first stop of a 10-city worldwide celebration that leads to Milwaukee. The second leg of the tour will be Aug. 16-18 in Baltimore at the Pimlico Race Course.

Harley-Davidson started in 1903 when 21-year-old William Harley and 20-year-old Arthur Davidson built their first motorcycle in a small wooden shed. It survived the Depression, two world wars and the 1980s, when Harley faced quality problems, debt and slow sales.

It has grown into a company that earned $437.7 million in 2001, continuing a 25 percent average annual earnings growth in the past five years. Forbes magazine named it the top company of 2001.

"As long as we stay hungry and not let ourselves get complacent, then I think we can continue to be successful," said Jeffrey Bleustein, CEO and chairman.

The company has a legion of loyal fans who shun sleek foreign performance bikes in favor of Harley's big cruisers with their distinctive "potato, potato, potato" rumble.

"It's about an image freedom of the road, hop on your bike and go, independent living, the loosening of the chains," said Dave Sarnowski, a teacher and Harley rider from La Farge, Wis.

That image, so appealing to baby boomers, has powered Harley's growth, but the company knows it needs to hook younger riders. It is counting on its V-Rod and Buell lines to help do that.

Harley introduced the high-performance V-Rod last year, its first new line in more than a decade. The sleek silver motorcycle has a liquid-cooled engine, making it faster than other Harley bikes without the signature rumble.

The company's Buell subsidiary, known for its sport-performance bikes, launched the Firebolt this year. The bike has a frame that doubles as a fuel tank, which designers believe will let riders take fast curves easier.

"Time will tell if it actually works, but they're moving in the right direction," said Joseph Yurman, an analyst at Bear Stearns in New York.

That direction has some longtime fans worried the company will stray too far from its rough-and-tumble image.

"The old Harley traditionalist gets on that (new) motorcycle and doesn't feel the rumble and the roar," said Ron Catronio, a motivational speaker and Harley rider from Fort Lauderdale, Fla. "But if there's a way to keep that rumble going, Harley'll do it."

Harley, which has the top market share in the United States, hopes the new bikes will also make inroads in the European market, where motorcyclists tend to prefer sportier, speedier bikes made by Honda, Suzuki and BMW.

In the United States, many Harley dealerships are sold out of bikes until 2004, but some worry they will experience a post-anniversary slump although the company saw an average 20 percent sales increase the year after its 85th, 90th and 95th anniversaries.

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