From: car377@cbnewsj.cb.att.com (charles.a.rogers)
Newsgroups: rec.motorcycles
Subject: Re: Harley Outperforms ZX11, Film at Eleven
Summary: Business trends
Date: 14 Oct 92 07:09:41 GMT
Article-I.D.: cbnewsj.1992Oct14.070941.22881
Distribution: usa
Organization: AT&T

In article <1992Oct13.192721.16355@husc3.harvard.edu>, zeleny@husc10.harvard.edu (Michael Zeleny) writes:
> 
> >>If they [HD] make more bikes, they can sell more bikes.  If they sell more
> >>bikes, they can make more money.  If they make more money, they can invest
> >>it in new production facilities and hire more workers.  If they expand
> >>their production facilities and hire more workers, they can make more
> >>bikes, sell them all, and make even more money.  Generally speaking, this
> >>is how capitalism works.  Film at eleven.

Yaah, but they make *more* more money by selling products with higher
profit margins, not lower ones.  They'd be pretty stupid to divert
scarce resources like production capacity into the cut-throat sportbike
market where margins are low, when they already *know* they can sell everything 
extra they could build at much higher margins just by building more of what
customers are screaming for now.

> Harley's current market share in
> cruisers is very likely as high as it can ever get, so without having that
> particular market segment grow numerically, they may not be able to sell a
> lot more of the same bikes.  

Reality check.  I've been seeing this argument for about five years now,
but Harley's demand just keeps going up and up.  This time last year, they
were just barely meeting demand.  Now all of 1992 production is sold and
a good chunk of '93 is pre-sold with back-up buyers in queues hoping the first
bidders back out.  Also The international demand is ferocious and growing, 
according to several British magazines I read.  

As far as absolute sizes of market shares goes, the current motorcycle
business is a shadow (no pun) of its former glory, a glory that was
generated largely by Japanese manufacturers in much the same way that
Harley is now generating its enormous demand.     Who is to say it won't
rise to those levels again?  How can you predict a falling-off of HD
sales when the demand-delta continues to increase?

> On the other hand, diversification into a
> different, yet fundamentally similar high-performance racing V-twin would
> get them a prestigious foothold in a different area, which already contains
> a substantial customer base with a lot of brand loyalists they can count
> on.  

"Prestigious"????  Harley has been building XR750 race bikes and doing
lots of winning for years, but when the XR1000 street bike was introduced 
(complete with Jerry Branch custom-ported heads) it grew roots on the 
showroom floors.

Yamaha has gobs of prestige from KR & Co., but they still have non-current
FZR1000s in the warehouses.  Who is going to buy these HD sportbikes?  Not
the high-revving warp addicts.  Not the squids who can only afford a 600
in the first place.  Not the Ducati or Guzzi fanatics.  To which "different
area with a lot of brand loyalists they can count on" are you referring?
"Performance" discriminating sportbike riders are like moths attracted to 
the latest mostneon flame.  The CBR900RR offers convincing evidence of that.

> In any case, they have been claiming that
> such efforts are underway for as long as I can remember.

R&D is like that.  Sales & Marketing calls the shots, though, and when
they're right (like they *are* at HD), they get to keep doing it.

Chuck Rogers
car377@druhi.att.com
Newsgroups: rec.motorcycles