Harley-Davidson Is Making A Big Bet On Used
Younger people aren't buying many Harley-Davidsons and haven't been for many years, because Harleys are expensive and riding a Harley isn't as popular as it used to be. But mostly: Harleys are too expensive, making the decision to kill its cheap bikes earlier this year all the more of a head-scratcher. Now, Harley says it has a plan to fill that void.
That plan will be familiar to anyone who has bought a car in the past few decades: Harley says it is starting a certified pre-owned program. Lightly-used Harleys will be on offer with 12-month warranties. These Harleys are intended to replace Harley's entry-level option for new riders, and perhaps attract more riders to the Harley brand.
It is called H-D Certified. All of the certified motorcycles will be less than five years old, and with fewer than 25,000 miles on them. One (perhaps) important distinction for the H-D Certified Harleys on top of the warranty compared to other used Harleys: H-D Certified Harleys can be financed through Harley. H-D Certified will be here as soon as next month.
From Reuters:
"We believe this program will drive Harley-Davidson desirability, increase sales and margins, and enhance the overall customer experience while supporting growth," [CEO Jochen Zeitz] told Reuters.
[...]
A booming demand for pre-owned Harleys until now has been a drag on the company's U.S. retail sales, which have declined by nearly 40% since 2014.
As its motorcycles do not wear out or go out of fashion quickly, used Harleys tend to be more in demand vis-à-vis pricey new models.
Zeitz has tried to address the problem in the past year by tightening the supplies of new bikes. Leaner new inventory together with the increased demand for outdoor sports have driven up the prices of pre-owned bikes.
Still, the company estimates there are 3 million unsold used Harleys in the United States, far more than the approximately 80,000 new bikes it shipped last year.
"The biggest competition for a new Harley-Davidson bike is not an Indian bike or a Honda, or a Suzuki bike, but is a used Harley-Davidson bike," said Hardiman.
Reuters goes on to make the interesting point that the rise of certified pre-owned in the 1990s led many automakers to ditch entry-level cars, something I hadn't thought about before but which tracks with Harley's decision earlier this year to discontinue its Street 500, Street 750 and Street Rod bikes, which cost $6,899, $7,599, and $8,699, respectively.
The idea is that buyers of those bikes might now gravitate toward H-D Certified, and presumably a good chunk of those will also finance those purchases, which would be another revenue stream for Harley. Which may very well be true, but I wonder if weight will remain somewhat of a deterrent for younger riders, because a used Harley is still a heavy motorcycle, and, unless you're already into that sort of thing, this won't change the fundamentals of the situation much.
Still, for the short-term, this seems likely to make business sense, since Harley wasn't making a whole lot of money on the cheap bikes. For the long-term, I dunno man.