Millennials
apparently are not interetested in motorcycles, particularly Harley,
and identifies the company as the "old white guy" brand.
Wow.
+7
Harley-Davidson bikes have a long history of appearing in Hollywood films, including the 'Terminator 2: Judgement Day' and the 'Captain America' franchise
Wow.
- A research firm downgraded Harley-Davidson's rating from 'outperform' to 'market perform' on Wednesday
- The iconic motorcycle brand's sales fell in the US and abroad in 2016
- Harley-Davidson's stock is down 12.6 per cent since 2017 started
- Millennials are not expected to increase purchases of motorcycles anytime soon
- Recession-raised millennials may see buying motorcycles as a waste of money
Millennials might be heading out on the
highway and looking for adventure, but they're not doing it on
motorcycles and that's really hurting America's most iconic bike brand,
according to a new report.
Investment
management and research firm Alliance Bernstein downgraded
Harley-Davidson's rating from 'outperform' to plain 'market perform' in a
note it sent to investors on Wednesday.
The
downgrade was due to the fact that the firm's survey predicted flat
growth in motorcycle sales among millennials — 18-to-35 year olds.
Millennials, aka Gen Y, became the largest living generation in the US
after surpassing baby boomers in 2016.
Research
shows sales of Harley-Davidson motorcycles are falling due to a
generational gap. Popular among baby boomers, who recalled when the
bikes were featured in movies like 'Easy Rider' (above), new research
shows millennials aren't interested in motorcycles
Research firm Alliance Bernstein
downgraded Harley-Davidson's rating from 'outperform' to plain 'market
perform,' after research showed decreased millennials interest in
motorcycles
Harley-Davidson is hoping new models, like 2017's Street Rod, will appeal to millennials
Alliance Bernstein analyst David Beckel said in the report, obtained by CNBC, that data showed millennials just weren't developing a passion for motorcycle riding the way previous generations have done.
Beckel
added that, 'Gen Y's are aging into the important "pre-family" cohort
of riders and Boomers are increasingly handing over their keys to the
smaller Gen X population.'
The 'pre-family' age group was defined as age 25 to 35 and is Harley's target demographic.
Alliance Bernstein also lowered its previous 12-month Harley price target from $62 down to $55, reports Barron's, which added that the stock is down 12.6 per cent since 2017 started.
Harley-Davidson
bike sales in 2016 were down 1.6 per cent overall, compared to its 2015
figures, while the company's US sales fell 3.9 per cent, according to Business Insider. A significant drop, since Harley sales represent about about half of the American big bike market.
Harley-Davidson bikes have a long history of appearing in Hollywood films, including the 'Terminator 2: Judgement Day' and the 'Captain America' franchise
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Alliance Bernstein estimated that
bike 'rider growth has declined from a 3-5 per cent annual growth pace
pre-financial crisis to close to 0 percent today,' Beckel said, adding
that the firm expects that 'rider growth will dip into negative
territory in 2017 and stay in negative territory for at least the next
five years.'
This, despite the firm's
original optimism that Harley-Davidson would receive a bump following
President Trump's election, which came with promises of infrastructure
spending and middle-class or corporate tax cuts.
Analysts
suspect that one of the reasons why millennials are slow or reluctant
to buy into motorcycles is that the generation was heavily impacted by
the recession period they grew up during.
Describing
that recession period as a 'very significant psychological scar' that
'severely negatively impacted' one out of five US households at the
time, Morgan Stanley analyst Kimberly Greenberger told Business Insider
that, 'If you think about the children in that house and how the length
and depth of that recession really impacted people, I think you have an
entire generation with permanently changed spending habits.'
Charlie Hunnam developed a passion for Harleys while playing a biker on 'Sons of Anarchy'
Greenberger backed up sentiments
expressed in 2015, when Harley-Davidson's market share began to slide
and the almost 115-year-old company announced that it was cutting jobs
and dialing back production.
'Unless
you ride a motorcycle or scooter in a city as your transportation,
motorcycles are a splurge millennials can’t afford and have no interest
in – especially Harley-Davidson, which seems like a old white-guy
brand,' Michelle Krebs, an analyst for Kelley Blue Book told The Guardian in 2015.
In
an effort to appeal to the younger demographic and encourage them to
take another look at Harley-Davidson bikes now, the company revealed
earlier this year that it aimed to launch 100 new models within the next
10 years.
The reasoning behind the volume of new bikes, Harley-Davidson's CEO Matt Levatich told The Street, is 'the impact these bikes have and how they make a difference for an existing rider or inspire a potential rider.'
Levatich
pointed to one model in particular, the Street Rod, which retails for
$8,700 and was released in the first quarter of 2017, as being a bike
that is 'more inspiring to the urban population around the world, and
people that are looking to enter the sport.'
Harley-Davidson
was founded in Milwaukee, Wisconsin in 1903. Over the years, it's built
tremendous brand loyalty, counting celebrities including P!nk, Kid
Rock, Brad Pitt, Pamela Anderson, Katee Sackhoff, George Clooney,
Charlie Hunnam and Tricia Helfer among its fans.
Harleys
have also been featured in many iconic, Hollywood films over the years,
including 'Easy Rider,' 'Terminator 2: Judgement Day,' 'Rocky III,'
'Pulp Fiction' and the 'Captain America' franchise.
Read more:
- Millennials don’t like motorcycles and that’s killing Harley’s sales
- Millennials are destroying America's most iconic motorcycle brand - AOL Finance
- Business Insider
- Little Hope For HOG: Bernstein Cuts Harley Davidson To Hold - Barron's
- Harley-Davidson's reputation as an 'old, white-guy brand' may be its downfall | Business | The Guardian
- Millennials May Not Like Motorcycles, but Here's How Harley-Davidson Will Entice Them to Try One - TheStreet