The Rumble Heard Round The World: Harleys

Katsumi Abe fell in love with Harley-Davidson motorcycles just after World War II, when as a small boy he was awed by the American soldiers powering their big bikes through Tokyo's rubble. Today, at 53, he heads a Harley riders' club that goes out touring once a month in military-style formation. Takehiko Shibazaki's fascination with Harley is different. In the 1970s, as a young mechanic, he scrimped to buy a Low Rider to take apart. Now, he is Tokyo's unofficial guru for rebuilding and restoring Harleys, and young leather-clad bikers flock to his Sundance Motors shop.

Middle-aged nostalgics or Hell's Angels wannabes, Japanese Harley fans aren't alone. Across the Australian outback, on roads winding through Germany's Black Forest, on Mexico City's crowded streets, scores of riders are discovering the thrill of hopping a Harley. These bikers, mostly professionals who can afford the up-to-$25,000 price tag attached to Harleys overseas, have been won over by the company's aggressive marketing during the past four years that capitalizes on Harley's classic American image. Harley-Davidson Inc.'s bike sales abroad are expected to hit $285 million this year, or 24% of the company's $1.2 billion total, up from $115 million and 14% of sales in 1989. Says Harley Motorcycle Div. President Jeffrey L. Bleustein: "There's just tremendous opportunity for us overseas."

It's an opportunity Harley had to let lie fallow until fairly recently. In the early 1980s, poor quality and Japanese imports drove the company to the brink of bankruptcy. Its share of the U.S. super-heavyweight market--motorcycles with engine capacity of 850 cubic centimeters and up--collapsed from more than 40% in the mid-1970s to 23% by 1983. But Harley fought back. After winning tariff protection against heavyweight bike imports, it worked to eliminate oil leaks and excessive engine noise.

It overhauled its marketing, too. The strategy: Package a lifestyle, complete with Harley Owners' Groups (HOGs), magazines, clothing, and biker rallies. Sure enough, the company attracted aging baby boomers trying to feel young. By 1989, its U.S. market share hit 63%.

The comeback complete, Harley began to focus on overseas markets. While it had been exporting motorcycles from its Milwaukee headquarters since 1903, foreign sales remained a neglected stepchild. Little effort was made to build a dealer organization overseas. And Harley's idea of international marketing consisted of translating U.S. ads word for word into another language.

CULTURE GAP. In the late 1980s, Harley began to recruit more dealers in Japan and Europe. More important, it decided to customize its U.S. marketing package for different cultures. "As the saying goes, we needed to think global but act local," says Harley's vice-president for worldwide marketing, Jerry G. Wilke.

For Harley, that meant creating HOGs overseas so customers could exchange tips and talk biker talk. It meant publishing Harley magazines in foreign languages and staging beer-and-band rallies. But it also meant changing ads and tweaking its tried-and-true methods of building customer loyalty.

Take Japan. Until 1992, corporate headquarters had insisted the Japanese division use the U.S. print-ad campaign. But Toshifumi Okui, president of the Japan unit, worried that desolate scenes and the tag line "one steady constant in an increasingly screwed-up world" wouldn't win over Japanese riders. Last year, he finally got permission to run a separate ad campaign juxtaposing American images with traditional Japanese ones: American riders passing a geisha in a rickshaw, Japanese ponies nibbling at a Harley motorcycle. "Harley wasn't very internationalized," says Okui, "but they're eager to listen." It's too soon to pinpoint the new campaign's effect on sales. But waiting lists for Harleys in Japan are as long as six months.

Sometimes the changes have been more subtle. Last summer, the company sponsored its first rally in southeastern France, where people tend to keep later hours than in the U.S. Harley supplied beer and rock-and-roll until midnight, then turned off the lights. "People asked why we were ending the rally just as the evening was starting," says Wilke, who was in attendance. "So I had to go persuade the band to keep playing and reopen the bar until 3 or 4 a.m."

At the same time, Harley wants to make the most of the Americana boom that has fueled overseas sales of Coca-Cola, McDonald's burgers, and Levi's. The company makes sure foreign customers can achieve the complete biker persona. In Tokyo, where appropriate gear is considered a fashion must for motorcycle riders and people like to customize their bikes, Harley has two stores that sell nothing but its clothing and accessories.

FAST GERMANS. There's one lesson learned in the U.S. that Harley is applying everywhere: Success comes from getting close to the customer. At home, most Harley executives ride motorcycles, belong to their local HOG, and travel around the country to speak with Harley riders. Wilke does the same overseas. Last year, he biked through Germany and France, and now he's planning a trip to Britain. During the 1992 trip he learned that German owners often ride their Harleys at more than 100 miles per hour. That's leading Harley to look at ways of creating a smoother ride and to emphasize the sale of options that offer more rider protection. And with biker rallies less widespread in Europe than at home, Harley encourages dealers to host open houses and lectures.

Some dealers worry that Harley's overseas boom may be just a fad. But Wilke believes the marketing program and customer ties Harley is building will ensure long-term growth overseas. Next year already looks like a sure thing: Most overseas dealers have sold out their 1993 models and are taking orders for 1994. And the company won't be able to meet demand for years, says Wilke, because its factories are already operating at capacity and U.S. demand remains strong.

The shortage has given U.S. riders some interesting arbitrage opportunities. Last year, Dallas-based TV-commercial director Rocky Powell took his Harley to Europe and rode through Germany, France, and the Netherlands. When he reached Amsterdam, he sold the beaten bike to a dealer, reimbursing himself for half his vacation. As more motor-cyclists around the world catch Harley fever, other enterprising Yanks will no doubt find ways to make a quick buck. And no one will be happier than Harley.

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