Harley’s big un-American growth bid

Despite the cult status of ‘Easy Rider,’ Harley’s sales are shrinking

In the 1969 film Easy Rider, a leather-clad Peter Fonda and Dennis Hopper mount their Harleys and hit the road. Forty years later, few things are more iconically American than speeding down the highway on a Harley Davidson motorcycle—but thanks to a struggling U.S. economy and soaring gas prices, the big bikes that made Harley famous aren’t selling like they used to. The motorcycle manufacturer’s now looking to other countries, including Canada, to boost its flagging sales.

Harley Davidson, which depends on the American market for nearly three-quarters of its revenue, saw U.S. sales of heavyweight bikes fall over 10 per cent in the first half of this year. In April, the company announced it would cut its workforce by eight per cent and reduce bike shipments by the thousands. (It shipped 330,619 bikes in 2007, five per cent fewer than in 2006.) With its deep penetration of the U.S. market, Harley’s been “a victim of its own success,” says Craig Kennison, senior analyst with Robert W. Baird & Co. “If the U.S. market slows, there’s little it can do to change that.”

Canada, though, is a different story. Thanks to a strong dollar and less penetrated market, sales here have spiked. The company sold 10,870 bikes in Canada in the first half of 2008, up 13 per cent from last year, Kennison says (Canada accounted for four per cent of Harley’s revenue in 2007). Internationally, Harley’s retail sales grew by 14 per cent last year over the year before. And the company recently expanded into China.

Outside the U.S., “the Harley brand resonates very well,” Kennison says. It recently placed among the top 50 global brands in Interbrand’s annual ranking. Easy Rider, then, may be the quintessential American road film—but if Harley has its way, riding a Hog down the highway won’t be so quintessentially American anymore.

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