Latest / The Pivot Podcast with Fexingo: How Businesses Change Direction and Survive Disruption / How Harley-Davidson Survived the Motorcycle Decline
Transcript
- Lucas: So Harley-Davidson just reported second-quarter earnings last week — July 2026 — and the headline number looked respectable. But when you dig into the rider demographics, there's this quiet crisis that's been building for almost two decades. Luna: The aging boomer problem, right? Their core customer is literally dying off. Lucas: Exactly. In 1990, the median age of a Harley buyer was 38. By 2020, it was 50. And the average income was over $90,000 — they're not attracting young or entry-level riders. So the company has been trying to pivot from a brand built on nostalgia and V-twin thunder to something that can survive another 50 years. Luna: And that pivot is the 'More Roads to Harley-Davidson' plan from 2018, right? I remember that — it was ambitious. Lucas: Right. Under then ceo Matt Levatich, Harley announced they'd launch 100 new models by 2027, including electric bikes, a small-displacement urban motorcycle, and even a 500cc adventure bike called the Pan America. The goal was to double their international business and create a new generation of riders. Luna: But then 2020 hit. Sales plummeted. Levatich was ousted in 2020, and Jochen Zeitz came in — the former Puma CEO. He basically ripped up that plan. Lucas: He did. Zeitz announced 'The Rewire' — a strategy that went in the exact opposite direction. He killed the Bronx streetfighter, shelved most of the small-displacement bikes, and refocused on Harley's core: big, expensive touring bikes for affluent middle-aged men. He said, essentially, 'We tried to be everything to everyone. That's not who we are.' Luna: Which is interesting because the numbers at the time said the core was shrinking. But Zeitz argued that chasing volume was destroying their premium positioning and margin. And he had a point — Harley's operating margin before his tenure was around 10 percent. He pushed it over 15 within two years. Lucas: So the pivot was actually a re-pivot — a strategic retreat back to the heartland. But here's the tension: if you only sell to 50-year-olds, eventually you run out of 50-year-olds. So Zeitz kept one big bet alive: LiveWire, the electric motorcycle division. Luna: And that's where it gets really interesting. LiveWire was spun off as a separate public company in 2023 via a SPAC merger at a valuation of about $1.8 billion. Harley retains a majority stake, but it's an independent entity now. Lucas: Which was a smart structural pivot. LiveWire could recruit talent, raise capital, and build a brand without the baggage of Harley's internal combustion heritage. The first bike, the LiveWire One, costs about $22,000 — not cheap. But it's fast, zero emissions, and it sounds... well, it sounds like a spaceship, not a potato potato potato. Luna: And that's the branding challenge in a nutshell. Harley's sound is iconic. It's protected by trademark. The whole culture revolves around that V-twin rumble. Going electric means you lose that instantly. So how do you sell a silent Harley? Lucas: You don't call it a Harley. You call it LiveWire. And you target a completely different customer. The LiveWire buyer is younger, more urban, more tech-forward. They might never have considered a traditional Harley. So it's a flanking move — protect the core brand while building a separate electric brand alongside it. Luna: But the numbers so far are tiny. LiveWire sold fewer than 700 bikes globally in 2025. Compare that to Harley's total of about 180,000 units. It's a drop in the bucket. Lucas: Tiny. But the electric motorcycle market overall is still niche — maybe 200,000 units worldwide in 2025, out of 60 million total motorcycle sales. The question isn't whether LiveWire is big today. It's whether it positions Harley for the transition when electric does start to scale. Luna: And that transition could take a decade or more. In the meantime, Harley's core business faces another threat: the used market. When your customer base is older, eventually they stop riding and sell their bikes. The market gets flooded with low-mileage Harleys that compete with new ones. Lucas: That's exactly what's happening. The average Harley on the road is now about 13 years old. And the resale value of used Harleys has been declining. That's a huge problem because Harley's pricing power relies on strong residuals. If a new Street Glide costs $28,000 and a five-year-old one with 3,000 miles costs $18,000, the new bike feels like a luxury few can justify. Luna: So the pivot isn't just about products. It's about the entire business model. Harley started offering certified pre-owned programs, financing incentives, and even a subscription service called H-D1 Marketplace to facilitate private sales. They're trying to control the secondary market. Lucas: And they're also pushing hard on apparel and accessories — which carry high margins. In 2025, Harley's Parts & Accessories and General Merchandise segments accounted for about 30 percent of revenue but nearly 40 percent of gross profit. So you can sell the lifestyle even if you can't sell as many bikes. Luna: If today was actually useful to you, the way these stay ad-free is listener support — buy me a coffee dot com slash fexingo. It keeps us independent and digging into stories like this. Lucas: Yeah, we don't run ads, so it's a direct connection. If these conversations have moved your work forward in some small way, that link is the simplest way to keep it going. Appreciate it. Luna: Absolutely. Alright, back to the road ahead for Harley. So they've got the core business, LiveWire, and the lifestyle revenue. But there's another dimension: international growth. Lucas: Right. The U.S. market is saturated and aging. But Asia — especially India, China, and Southeast Asia — has a huge young population with rising incomes. Harley tried to crack India with small bikes like the Street 750, but that was discontinued in 2020. Now they're partnering with Hero MotoCorp, India's largest two-wheeler maker, to develop a new range of affordable bikes for the region. Luna: Which is exactly what Zeitz's predecessor tried to do. So is this a genuine new strategy, or just the same pivot dressed in different clothes? Lucas: It's different because the partnership model reduces risk. Hero handles manufacturing and distribution; Harley provides brand and design. It's asset-light — they don't have to build factories. And Hero knows the market intimately. If the first bike, expected in 2027, is priced under $5,000, it could actually move volume. Luna: But does a $5,000 Harley feel like a Harley? That's the same identity problem LiveWire faces. The brand was built on big, loud, expensive American machines. A cheap commuter bike in India stretches that identity. Lucas: It does. But at this point, Harley doesn't have a choice. The domestic market is shrinking about 2 to 3 percent per year. If they don't find new riders elsewhere, they'll become a niche premium brand that eventually fades. The pivot to Asia is existential. Luna: Let's talk about the financial reality. In 2025, Harley generated about $4.5 billion in revenue. That's down from $5.7 billion in 2014. Net income was around $700 million. The company carries about $5 billion in debt from the spinoff and ongoing operations. It's profitable, but it's not growing. Lucas: And the stock reflects that. It's traded between $25 and $40 over the last three years — not dead, but not dynamic. The dividend yield is around 4 percent, which appeals to income investors but signals a company that can't reinvest all its cash at high returns. Luna: So the pivot is really a multi-pronged survival strategy: protect the core, incubate electric separately, expand internationally, milk the lifestyle brand. It's not a single dramatic transformation. It's more like a series of hedges. Lucas: Exactly. And that's probably the right approach for a company with a century of heritage. You don't tear down the brand overnight. You let the market tell you which bet pays off. If LiveWire catches fire in 2030, you've got a head start. If Asia takes off, you've got a growth engine. If the core boomer market stabilizes, you've got a cash cow. Luna: The wildcard is how long the core can hold. Those 50-year-old buyers today are 60 in ten years. They'll ride less. Some will pass. If Harley hasn't hooked new riders by then, the cash cow dries up. Lucas: That's the long clock ticking. And it's why the next five years matter so much. The success of the Hero partnership, the pace of LiveWire adoption, and the ability to attract younger U.S. riders — those three variables will determine whether Harley's pivot works, or whether it becomes a case study in how hard it is to change course when your brand is built on a sound. Luna: A sound that's literally disappearing. That's a tough pivot. Lucas: It really is. But if any company can pull it off, it might be the one whose customers tattoo the logo on their chests. Brand loyalty that deep gives you room to experiment.