#46 - The Hard Times Of Harley-Davidson

Lessons from the history of the hogs

Few brands evoke such vivid imagery as Harley-Davidson.

It’s a brand you look at and instinctively know it has stayed true to itself throughout its history.

A 2024 Harley still roars with the same soul as its ancestors—it’s riders reaching up to it’s massive handlebars cutting through the wind, chrome gleaming, the engine's deep, unmistakable rumble typically heard before the bike is seen.

But in the early 1980s, the business was a misstep away from becoming another, forgotten American manufacturing casualty. Today it faces challenges of a new kind.

The business's story is one of multiple transformations. From the challenge of competition in the 1970s to the rise of sustainability-conscious consumers in the 21st century, Harley-Davidson has had to fight to stay profitable and relevant. 

The History

The first Harley-Davidson was built in Milwaukee in 1903 by William Harley and Walter Davidson, but it wasn't until WW2 that the bikes started to hit the public eye. During the war effort, Harley-Davidson built around 60,000 bikes for the US Army, but it was after the war that things started to take off. 

In the years between 1945 and 1970, post-war America was booming and confident, and it valued one thing above all others: freedom. For many, a Harley-Davidson motorcycle was a perfect symbol of that freedom.

A Harley-Davidson wasn't just transportation—it was a declaration of independence. Hollywood amplified this image. Films like Easy Rider and The Wild One transformed them from mere vehicles into cultural symbols of rebellion.

Sales of motorcycles in the US went from 98,000 in 1945 to 2.8m in 1970. In 1969, Harley-Davidson had a whopping 80% share of that market.

However, they were about to face their first significant challenge, and 10 years later, that share had plummeted to 20%, and would continue to fall.

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In 1965, a heavy industry conglomerate, AMF, had acquired the company.

While AMF’s investment was welcomed and primed to take Harley-Davidson to the next level, management decisions soon led to major problems that almost drove (rode) Harley-Davidson to the brink of collapse.

Under AMF’s control, there was a strong push to increase production to meet growing market demand. At the same time, AMF made production shortcuts and rushed processes to cut costs. This focus on quantity over quality led to a decline in reliability, and the bikes started to get a reputation for being prone to mechanical failures. 

The company’s new emphasis on mass production under AMF clashed with Harley’s reputation for craftsmanship and American pride, starting to erode the brand.

At the same time, the company was faced with a new challenge from the East. The popularity of Japanese motorcycles in the 1970s was rapidly eating into Harley-Davidson’s market share. Honda, Yamaha, Suzuki, and Kawasaki offered motorcycles that were cheaper, more reliable, and more efficient than the US offering. The superior technology, smoother engines, and increased reliability started to appeal to a wider audience. 

Harley-Davidson’s collapse in market share followed as it struggled to compete with the modern designs and, particularly, the efficient production methods of its Japanese counterparts.

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Transformation #1 - Back to Basics

In 1981, things weren’t looking good, but a group of executives managed to buy the company back from AMF through a leveraged buyout. 

Through the 1980s, Harley-Davidson—under the new leadership—went back to basics. They did this by returning to a focus on quality and product differentiation and a shift in marketing, launching campaigns that emphasised the lifestyle aspect of the brand. 

For the leadership team, going back to basics meant simple three things:

1. Providing value in products and services

2. Helping dealers get and keep customers 

3. Wanting people to buy motorcycles and use them

Doesn’t get more basic than that.

The recovery was slow but sure. Market share of 13% in 1983 ticked up to 19% in 1986. 

But the first fundamental transformation happened in the late 80s and through the 90s, under the leadership of Rich Teerlink. By 2002, market share had roared back to 47%.

During the 1980s, the turnaround relied on top-down decision-making to navigate the crisis. Under Teerlink, the company shifted from a traditional command-and-control management style to a more inclusive, bottom-up approach. Employee awareness and participation became big things and remain that way for Harley-Davidson today. 

Here is what Teerlink said about employee awareness in a 2003 interview:

Employees had to be aware of what the company was trying to do, and ultimately, they could be a part of that. The organisation should be able to answer four questions for the employee: How should we behave? What’s important? Who do we serve? How do we measure success? We used those four questions as the umbrella for our business because the first one addresses values, the second issues, the third stakeholders, and the fourth is about vision.

Basics. 

This internal transformation of approach is credited with revitalising the company’s fortunes up to the mid-2000s. There were no dramatic changes in direction, just a return to basics, a deep look within and a return to focusing on building quality products.

Here are some more insightful quotes from that 2003 interview with Teerlink, emphasising the subtle nature of the changes they instilled.

The biggest challenge was reality.

The challenge was recognising we couldn’t change overnight.

We could not get the perfection we wanted, but we could certainly improve.

This focus on improvement, not perfection was what got Harley back on track.

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Transformation #2 - New Normal

It isn't just Harley-Davidson that has been faced with numerous, unique challenges from 2008 to today. From the financial crisis, a complete re-draw of global politics, climate change and a global pandemic, there isn't a business out there that hasn't had to adapt and change.

Each of these crises hit Harley-Davidson hard.

The financial crisis cratered demand. The re-draw of politics led to a Trump presidency, whose tariffs whacked Harley's supply chain and exports. The global pandemic did both of these things at once. Climate change has led to a new wave of sustainability-conscious consumers looking at a Harley-Davidson bike and seeing nothing more than a loud, dirty pollution machine. 

Current CEO Jochen Zeitz (the company's first non-American CEO) joined the company in March 2020. Having turned Puma around from a languishing shoe company to a global powerhouse after being made CEO aged 29, Zeitz could have done anything. He took on the challenge to improve the falling fortunes of an iconic brand that "was not doing very well".

He faces one of the biggest questions any business leader could face.

How do you preserve the authenticity of an iconic brand while simultaneously reinventing it?

In the early 2020s, Harley-Davidson faces competing risks: the risk of innovating versus the risk of not innovating.

The risks of not innovating are obvious. The average age of a rider of one of these bikes is getting older, and Harley-Davidsons have never been as appealing for Millenials as they were for baby boomers. This is an existential dilemma: How do you keep the fire burning for a new generation without extinguishing the passion of the old guard?

This is the risk of innovation. Moving away from what made the core customers fall in love with the brand risks leaving people behind. Reading into forums and various commentaries, you can see that these whispers are building as Zeitz seeks to change the company.

Ultimately, Zeitz believes that no brand or person can stand still. 

Harley's newest leadership team seeks to make an American icon into a global one. Zeitz has made it clear he wants to bring Harley-Davidson into the future, with a necessity to change and adapt. He refers to doing so with a "great legacy to build the future on." He says:

Harley-Davidson is about the look, sound, and feel. We won't compromise on that, but we will evolve it. 

Zeitz is currently trying to transform Harley-Davidson with a delicate balancing act: keeping an eye on the past while bringing the brand into the future. 

They continue to build their unmistakable machines while leaving unprofitable markets. They are seeking to build their apparel business, giving them breadth but building on the brand identity they've built up rather than moving away from it. Perhaps most interestingly, they've recently launched a range of electric bikes.

These machines look and sound incredible. They can reach 100kph in 3 seconds and have 140 miles of range. But they aren't Harley-Davidsons—they aren't even called Harley-Davidsons. A sub-brand has been created called LiveWire. 

Harley-Davidson is moving into the future, while doing everything not to water down the brand and everything associated with it. 

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Over the decades, the company has navigated numerous challenges - competition from new entrants, financial crises and a changing world, including the rise of sustainability expectations.

There are some interesting lessons one can take from the history and multiple transformation journeys of Harley Davidson. Here are my top three:

• Avoid complacency at all costs: Even when you're at your peak—commanding 80% of the market—external factors can quickly change your position. The moment you think you're untouchable is precisely when you become vulnerable.

• Authenticity over everything: In times of uncertainty, return to your base identity. When times got tough, Harley-Davidson didn't reinvent itself completely but reconnected with its fundamental values—craftsmanship, freedom, and American spirit.

• Innovation without betrayal: Growth and tradition are not mutually exclusive. You can push boundaries while preserving your essence. Evolution doesn't mean abandonment; it means thoughtful, strategic transformation.

Who knows what the future holds for Harley-Davidson, but it’s sure to be an interesting road.

I’m rooting for them. Live to ride, ride to live.

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What I read this week…

This, rather nuts breakdown of marketing in Minor League Baseball by

Angus Merry

in his publication “Ballsy Branding”.

Marketing promotions include one team inviting international fans to compete agaisnt homegrown, American fans. The prize? Funding citizenship applications…

‘merica.

Minor Leagues, Major Promotions: The Wild World of MiLB Marketing

What I watched this week…

Because I wanted to depress myself.

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Thanks for reading, see you next week. ✌🏻❤️