Irene Kim: You don't have to be a biker
to know about Harley-Davidson.
Harleys are big, loud, fast,
and inherently American.
Commercial: Until you've been on a Harley-Davidson,
you haven't been on a motorcycle.
Jake Holth: You get some of that instant respect
just riding one alone.
Kim: And for decades,
that iconic American brand worked.
In 2006, the company's US sales peaked.
It sold over 260,000 bikes in the United States
and reported a profit of $1 billion.
But after the recession struck in 2007,
Harley sales plummeted,
dragging the stock price down with it,
and the company still hasn't completely recovered.
Matthew DeBord: In decades, they could wind up
just disappearing.
We'll all still associate Harley-Davidson
with being the greatest motorcycle brand in the world,
but there won't be any motorcycles.
You won't be able to buy one.
Kim: So, what happened?
Harley-Davidson got its start in 1903
out of a shed in Wisconsin
where William Harley and Arthur Davidson
made their first motorcycle.
But the company didn't really take off
until World War II.
And, in a way, if it weren't for the war,
Harley-Davidson may not exist today.
During World War II, Harley-Davidson
produced about 60,000 bikes for the US military.
DeBord: This was when you really had people
who'd never experienced serious machinery
that can deliver.
I mean, it's a machine of war,
but it's also a h--- of a lot of fun.
Commercial: A terrific test for men and machines,
they take the bumps in high gear.
Now they're real veterans of the saddle.
Kim: After experiencing the atrocities of war,
soldiers returned home
and saw America in a different light.
And out of that, they created a counterculture
that would become the building blocks
for the Harley-Davidson lifestyle.
DeBord: America is a very conservative place at the time,
and a lot of guys came back from that,
and they said: "Uh-uh, I'm not interested in that.
I'm gonna get me a Harley-Davidson motorcycle,
and I'm gonna go live on the road.
I'm gonna live my life on my terms
with freedom, mobility, attitude."
Kim: Between 1945 and 1970,
the number of registered motorcycles in the US
jumped from 198,000
to 2.8 million.
But it was Hollywood
that set Harley-Davidson motorcycles
apart from the rest,
with films like "The Wild One"
and "Easy Rider" featuring Harleys.
Billy: All we represent to them, man,
is somebody who needs a haircut.
George: Oh, no.
What you represent to them is freedom.
Kim: By the end of the '70s,
Harley-Davidson wasn't just selling motorcycles anymore;
it was selling a lifestyle,
with jackets, vests, and T-shirts.
Harley-Davidson even had its own club,
called the Harley Owners Group, for devout customers.
In short, if you owned a Harley-Davidson, you were cool.
And baby boomers took notice.
DeBord: The core baby boomers, they're the ones
who really built Harley up into the juggernaut
that it became in the postwar period.
Kim: By the '80s, baby boomers were prospering,
and so was Harley-Davidson.
The Harley Owners Group
grew to more than 90,000 members.
In 1984, the company made a profit
of $2.9 million.
Just two years later, profits hit
$4.3 million.
Harley-Davidson went public in 1986
and continued to rake in cash into the millennium.
In 2006, as its core customer reached middle age,
the company's stock price peaked,
and it reported over $1 billion in profit.
But then, in 2007, the recession hit.
Like many companies during the Great Recession,
Harley struggled with its sales.
Its stock price plunged by 60 points
from its peak in 2006 to 2009.
The 86% drop marked a 13-year low.
Before the recession, Harley had been trying to reach
emerging markets, like women and young adults,
with marketing events, beginner bikes,
and smaller, more fuel-efficient models,
but it had little success.
And at the end of 2009,
the company reported $55 million in losses.
So, to survive the recession,
the company refocused on the kind of bike
it knew its core customer wanted,
which were big, loud models.
And it worked.
Profits rode back up
to $844 million in 2014,
but not everything was as good as it appeared.
Those profits just masked the brand's long-term issues.
DeBord: If you looked at a chart, what you would see
is not, you know, this kind of thing,
where it goes [makes crash sound] like that,
but more like, you're looking at
this kind of slow erosion.
Kim: The first issue is that
Harley's core customer is aging.
In 1985, a motorcycle owner's median age
was 27.
By 2003, it was 41.
And by 2018, it rose to 50,
which means Harley-Davidson's customer base
is only getting older.
And right now, no one's taking its place.
The second factor is the price.
Harleys are expensive.
According to The New York Times,
the average cost of a Harley is about $20,000.
They're also not practical vehicles for commuting
and usually end up becoming pricey toys,
which leads to the third and final problem:
Harley-Davidson's brand just hasn't captivated millennials
the same way it did baby boomers,
and the baby boomers that helped the brand thrive
also burdened the company with the reputation
that Harleys are only for middle-aged white men,
trapping the company between brand loyalists
and future growth.
But Harley-Davidson isn't going down without a fight.
The person tasked with solving these issues
is Harley's CEO, Matt Levatich.
DeBord: He has the most difficult job in the world.
He has the choice of just sitting there
and riding out this slow erosion,
but he has decided that he's gonna take this opportunity,
I think wisely, to try to ensure a better future.
Kim: One way Levatich is doing this
is with Harley-Davidson's buyback program.
Holth: That is a program that Harley offers
on their entry-level bike, known as the Sportster,
where you can buy a newer Sportster
and trade it in within a year and get every dollar
you spent buying that bike on an upgrade.
It's a great way to kind of get your feet wet
and then upgrade to something that's better suited to you
after you kind of figure it out.
Kim: Under Levatich, the company is focusing
on reaching out to new riders.
When Business Insider reached out to Harley-Davidson
for comment, a representative sent over a release
about the company's current strategy,
which focuses on expanding its global market
and launching new products,
like electric bikes and smaller models.
But right now, there's another obstacle
standing in Harley's way.
Donald Trump: We will have a 25% tariff on foreign steel
and a 10% tariff on foreign aluminum
when the product comes across our borders.
Kim: Which means it's now more expensive
to produce motorcycles in America.
In response, the European Union introduced
a retaliatory tariff on US goods,
including bourbon and motorcycles,
which The New York Times reported
would have made the bikes about $2,200
more expensive in Europe.
To avoid the tariffs, Harley continued
to shift manufacturing to other countries,
which Trump and some of Harley's core customers
didn't appreciate.
Trump: Harley-Davidson,
please build those beautiful motorcycles
in the USA, please, OK?
Don't get cute with us.
Don't get cute.
DeBord: In contemporary industrial economics,
you don't build the bikes in the US
and put them on a boat and send them
where you want to sell them.
You manufacture them at the point of sale,
and that way they can be properly aligned with the market.
Kim: With all these factors in play,
can Harley-Davidson grow its business
while protecting its brand?
DeBord: They are stuck, but they're stuck
with a not unappealing problem,
which is that, even though they're stuck,
they can still make a lot of money on the stuckness.
They still control a huge percentage of the market,
and they're able to use that market control
and the products that they sell in it
to generate very substantial profits
and share those profits with their investors.
Kim: And Harley-Davidson can then use those profits
to reinvest in the business and try new things.
DeBord: The brand equity that Harley has
is infinitely valuable.
It's amazing.
Kim: But who knows if that'll be enough?