Bikers Of America, Know Your Rights!: Not born to be wild! Harley-Davidson sales are struggling 'because millennials don't like riding motorcycles'

Sunday, July 16, 2017

Not born to be wild! Harley-Davidson sales are struggling 'because millennials don't like riding motorcycles'

OFF THE WIRE

Millennials apparently are not interetested in motorcycles, particularly Harley, and identifies the company as the "old white guy" brand.
Wow.

A research firm downgraded Harley-Davidson's rating from 'outperform' to 'market perform' on Wednesday
The iconic motorcycle brand's sales fell in the US and abroad in 2016
Harley-Davidson's stock is down 12.6 per cent since 2017 started
Millennials are not expected to increase purchases of motorcycles anytime soon
Recession-raised millennials may see buying motorcycles as a waste of money

By Dailymail.com Reporter

Millennials might be heading out on the highway and looking for adventure, but they're not doing it on motorcycles and that's really hurting America's most iconic bike brand, according to a new report.

Investment management and research firm Alliance Bernstein downgraded Harley-Davidson's rating from 'outperform' to plain 'market perform' in a note it sent to investors on Wednesday.

The downgrade was due to the fact that the firm's survey predicted flat growth in motorcycle sales among millennials — 18-to-35 year olds. Millennials, aka Gen Y, became the largest living generation in the US after surpassing baby boomers in 2016.

Research shows sales of Harley-Davidson motorcycles are falling due to a generational gap. Popular among baby boomers, who recalled when the bikes were featured in movies like 'Easy Rider' (above), new research shows millennials aren't interested in motorcycles

Research firm Alliance Bernstein downgraded Harley-Davidson's rating from 'outperform' to plain 'market perform,' after research showed decreased millennials interest in motorcycles

Harley-Davidson is hoping new models, like 2017's Street Rod, will appeal to millennials

Alliance Bernstein analyst David Beckel said in the report, obtained by CNBC, that data showed millennials just weren't developing a passion for motorcycle riding the way previous generations have done.

Beckel added that, 'Gen Y's are aging into the important "pre-family" cohort of riders and Boomers are increasingly handing over their keys to the smaller Gen X population.'

The 'pre-family' age group was defined as age 25 to 35 and is Harley's target demographic.

Alliance Bernstein also lowered its previous 12-month Harley price target from $62 down to $55, reports Barron's, which added that the stock is down 12.6 per cent since 2017 started.

Harley-Davidson bike sales in 2016 were down 1.6 per cent overall, compared to its 2015 figures, while the company's US sales fell 3.9 per cent, according to Business Insider. A significant drop, since Harley sales represent about about half of the American big bike market.

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Harley-Davidson bikes have a long history of appearing in Hollywood films, including the 'Terminator 2: Judgement Day' and the 'Captain America' franchise

Alliance Bernstein estimated that bike 'rider growth has declined from a 3-5 per cent annual growth pace pre-financial crisis to close to 0 percent today,' Beckel said, adding that the firm expects that 'rider growth will dip into negative territory in 2017 and stay in negative territory for at least the next five years.'

This, despite the firm's original optimism that Harley-Davidson would receive a bump following President Trump's election, which came with promises of infrastructure spending and middle-class or corporate tax cuts.

Analysts suspect that one of the reasons why millennials are slow or reluctant to buy into motorcycles is that the generation was heavily impacted by the recession period they grew up during.

Describing that recession period as a 'very significant psychological scar' that 'severely negatively impacted' one out of five US households at the time, Morgan Stanley analyst Kimberly Greenberger told Business Insider that, 'If you think about the children in that house and how the length and depth of that recession really impacted people, I think you have an entire generation with permanently changed spending habits.'

Charlie Hunnam developed a passion for Harleys while playing a biker on 'Sons of Anarchy'

Greenberger backed up sentiments expressed in 2015, when Harley-Davidson's market share began to slide and the almost 115-year-old company announced that it was cutting jobs and dialing back production.

'Unless you ride a motorcycle or scooter in a city as your transportation, motorcycles are a splurge millennials can’t afford and have no interest in – especially Harley-Davidson, which seems like a old white-guy brand,' Michelle Krebs, an analyst for Kelley Blue Book told The Guardian in 2015.

In an effort to appeal to the younger demographic and encourage them to take another look at Harley-Davidson bikes now, the company revealed earlier this year that it aimed to launch 100 new models within the next 10 years.

The reasoning behind the volume of new bikes, Harley-Davidson's CEO Matt Levatich told The Street, is 'the impact these bikes have and how they make a difference for an existing rider or inspire a potential rider.'

Levatich pointed to one model in particular, the Street Rod, which retails for $8,700 and was released in the first quarter of 2017, as being a bike that is 'more inspiring to the urban population around the world, and people that are looking to enter the sport.'

Harley-Davidson was founded in Milwaukee, Wisconsin in 1903. Over the years, it's built tremendous brand loyalty, counting celebrities including P!nk, Kid Rock, Brad Pitt, Pamela Anderson, Katee Sackhoff, George Clooney, Charlie Hunnam and Tricia Helfer among its fans.

Harleys have also been featured in many iconic, Hollywood films over the years, including 'Easy Rider,' 'Terminator 2: Judgement Day,' 'Rocky III,' 'Pulp Fiction' and the 'Captain America' franchise.