I'd say the "wishful thinking" is that somehow people won't get old. When Harley started their first record year of this string I was 28! Now I'm 45. All Harley has to do is wait and the customers end up in their demographic.
These kids are kids, and if Harley's masterplan is to wait till they age, then their stock is going to go down a lot further.
The new generation, unlike any other American generation, have grown up in a multi-national culture. They've been raised on Nintendo and Sony, so the pejorative "rice burner" will be meaningless to them. They'll demand performance, and not be placated by that mercenary brand of patriotism that Harley peddles.
Longride beat me to the punch here but yes the 20 somethings will soon be 30 something and then 40 something. Plus, Harley does have lower priced offerings like the Sportster and the Dyna Superglide. Harleys are quite popular with the 20 something crowd and I regularly take girls in their 20s for rides.
For the record I bought my first Harley in 1996 when I was 32. So if you do the math I'm still in my 30s and have another one on the way.
With the exception of the V-Rod your old guys young guys thing I agree with. Just cause folks get older doesn't guarantee that will be attracted to cruisers. i.e. a 40 year old in 2012 will not necessarily like the same thing a different 40 year old liked in 2002. However, I think if Harley expands the V-Rod i.e. offer a Monster like bike with the V-Rod motor. or something else etc. They will be OK with the younger crowd.
On the P/E ratio. Yes 20 was the rule of thumb I learned for overvaluation. However, compared to the overvalued stocks of today with P/Es over 100 in less mature markets, some would argue Harley could be undervalued. Howerver, I tend to agree with you on that Harley could be tiny bit overvalued compared to Hondas 6 (I am suprised to see).
I agree with you on this Beta. I have argued this point with longride a few times. Just because a 40 year old in 2002 likes Harley doesn't mean a 40 year old in 2014 is going like the same things. As you correctly point out. Different generations with different influences. I think the Harley V-Rod is a good start but Harley should try to have diversfy i.e. not have the eggs in one basket.
I agree with you but be prepared to take some heat from the Harley Boyz. They think Gen Xers are automatically going to gravitate to cruisers as they get older. I agrue that bikes like naked standards Monsters and Speed Triples along with sport bikes and tourers will be the choice of future bikers.
One thing learned by many business owners who are successful is simple. It's called "know your niche." Businesses get in trouble when they stray from what they do best. That's why Starbucks doesn't sell hamburgers.
I've done a little more beach research and noticed that custom bike builders like Jesse James are wildly popular here in SoCal with the younger set.
The next time you want to do a survey with your college friends, ask them what they would buy if price was no object. I'll bet you'll get a completely different set of answers.
I have two different H-D dealerships in my area: 1) one very hard core "old school" 2) RUBS dealership. Since I have gotten to know the employees at both dealerships, I know that both are laden with bikes that are warehoused and both their floors are sitting with 100th Anniversary models waiting to be purchased. H-D needs to be very careful at this point and start heavily going into other markets with their product line. H-D is too saturated in the v-twin market with too many aftermarket vendors codependent "on the same old thing." The formula is old now and it's time for "new school." What we perceive as part of life is not necessarily so to an investor.
A lot of the faithful have been saving their pennies for the last few years to get an aniversary year model. It's logical to assume this could slightly weaken 2004 sales, because a good percentage of the customer base will blow their wads in 03. Probably not the start of a big downtrend. That said, styles and fashions change..... In 10 years, there will be much less cruisers and SUVs on the road. Nothing stays popular forever, except sex.
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