Monday, July 29, 2013

Harley Davidson vs Indian vs Victory

If you follow motorcycles or at the very least, you follow my blog, at this point you should know that Indian motorcycles is about to be reborn, again. I frequently hear and read comments about the renewed Harley Davidson and Indian rivalry, more specifically that "Harley better watch out, because Indian is going to hurt their bottom line."  While this is possible, these commentators are missing one obvious alternative outcome. Indian hurts its sister brand, Victory.  Keep reading to find out why I think the Indian brand will affect Victory motorcycles more that Harley Davidson.

If Indian returns to the public as another full sized, classically styled, v-twin powered cruiser, then there is more potential for stealing sales from Victory then there is from Harley Davidson.

I have three reasons as to why I believe Indian will do more damage to Victory than to Harley.
1. Dealer network
2. Brand loyalty and name recognition
3. Resale value

1. Lets start with number one, the dealer network.

Harley Davidson has over 800 dealers in the United States. Indian is starting from scratch.  Victory is somewhere is between.  Indian is opening the sale of their vehicles to any dealer, that includes Harley Davidson dealerships. While this sounds good for Indian, HD has spend more than a lifetime building the mystic of Harley Davidson name and brand. It is hard to imagine, with the success that the Harley Davidson Motor Co. has had over the last 100 years that they or any HD dealer would want to risk having a direct competitor in their stores.  Having a secondary brand sitting next to their own would risk the dilution of what HD has worked so hard to develop. One has to look no further then the discontinuing of Buell and the cutting of Aprilla as proof of Harley Davidson Motor Company's commitment to what it believes are "core Harley Davidson values."

So if Indian motorcycles are unlikely to be found at HD dealers, then they have two options.  They can be stand alone dealerships, like HD, or combined with other motorcycle brands, like most other motorcycle manufacturers.  The upfront cost of a stand alone dealership, combined with the lack of models, is a limiting factor for the stand alone dealership choice.  The second option more likely, however it places Indian and Victory sided by side in the same store and most people are only going to buy one bike.

2. On to number two, brand loyalty and name recognition.

There is no argument that Harley Davidson is a more recognized brand.  Harley Davidson is in the top 100 most recognizable brands in the world.  Check box HD.

What about brand loyalty?  I am going to go out on a limb and say that the name, logo, and/or bikes of HD, have been tattooed on more people than any other brand in the history of tattoos.  It is the first or second most tattooed brand in the United States and the most in Australia.  Permanently, branding yourself screams loyalty.

3. Lastly, motorcycle resale value.

 I am not saying that one should buy a motorcycle as an investment or strictly for resale value, but it is something that can not be ignored either.

For whatever reason, Victory motorcycles do not come close to the resale value of Harley's. The days of buying a Harley and selling it used for more money are long gone, but the value will typically only drop a few hundred to a few thousand dollars in a couple years.  A quick look at craigslist or a trip to a Victory dealer and the deprecation from the new to the used bikes can be striking. Some bikes are a third to almost half the value they were new.  I know, I know, I read the forums and hear "I tell guys that , HD riders are concerned with resale because their riders don't keep those POS's. VICTORY builds bikes that people want to keep."  Fine that works for you but not everyone.  And "I wonder where people get their ideas about resale. Take a look on ebay and see what the Harleys that have sold fetched. It's not uncommon to see a bike that's had about $30k invested in it go for half a couple years and a couple thousand miles later." Again the same is true with any bike.  Only someone who is naive pays more for the accessories someone else put on.  The value of the bike is the value of the bike.  If you don't believe me, I have a couple of motorcycles in my garage that I would like to sell you.   

So where or to whom does resale value matter?  Well, it matters for those shopping savvy bike buyers.  It matters to someone who wants a new American made v-twin every so many miles, or as the warranties expires.  Currently, HD motorcycles have good resale value.  If Indian motorcycles do too, then those individuals wanting an HD alternative will probably buy an Indian, again resulting in less Victory's sold. 

Although if you ask me.  A drop in resale value is not always a bad thing.  It just depends if you are the buyer or the seller.    

I truly hope that all three brands will grow and thrive domestically and world wide.  However, I would be very surprised if Harley was effected greatly by Indian.  Victory on the other hand, I get nervous about.  I really like Victory motorcycles and hope they continue to survive.

Polaris is a very smart company and I am sure they have thought this through.  So, if Indian is your big, full sized, classically styled, v-twin powered cruiser, how about a sport bike, dirt bike, or sport touring bike Victory?  America rules the heavy cruiser market, how about giving the Japanese big four and Europeans run for their money in these markets?

Let me know what you think.


Anonymous said...
This comment has been removed by a blog administrator.
Anonymous said...

I feel you had so good argument about why Harley will keep its ranking against its competitors. Indian has some good ideas, which I believe will give Harley a good run. What did you think about the New Indian unveiling?

Anonymous said...

I feel you had so good argument about why Harley will keep its ranking against its competitors. Indian has some good ideas, which I believe will give Harley a good run. What did you think about the New Indian unveiling?

Lucas Thomas said...

I agree only partially that Indian will take away from Victory. If you take a look at the 2014 models, the lowest price motorcycle that Indian offers is about 19K (Indian Chief). Victory goes all the way down to 12.5K (Vegas 8-Ball). Victory's higher priced bikes are strictly touring or custom Ness bikes. At this point, then it would be up the rider to decide which style and brand they want. I can see Victory losing some sales to the Indian favored riders.

Harley has prices stretching from below 10K to 30K+. I think the combination given to the US by Polaris will definitely cut into HD's market share. Either way, it's only good for the consumer. HD will definitely stay; however, they will have to step up their game if they want to compete with the designs of Victory and Indian.

As far as dealerships are concerned, I think both Victory and Indian can be combined with other types of bikes. I stopped by a Victory dealership on the way back from Sturgis that sold only Victories, but worked on Harley's. There are some dealerships in KC that sell all types of foreign bikes along with Victory motorcycles. I think that's a great business plan for Polaris. Adoption is key when you're going up against a company that already has their dealerships laid out. This is very similar to Google vs. Apple in the mobile OS wars.

Nathan Corbin said...

I thought the unveiling was very well done. The planners were able to block off main street, they brought in a band, and used other gimmicks to really get the crowd into the party. It seemed to work. Everyone I could see had a great time. Well done Indian.

Nathan Corbin said...

It will be interesting to see what direction the management at Indian decides to take with their brand. I would assume they will continue to expand their lineup and introduce both higher end and lower cost models. This was allow them to be more competitive with all other motorcycle manufactures.

I agree that Polaris will make a dent in sales of Harley Davidson. To them it doesn't matter if an Indian or Victory model is sold, they win either way. However, I wonder if Indian specifically will take more sales away from Victory than it would from Harley.

I think a good analogy would be the automobile manufactures. For years and years they purchased brands, like Pontiac, Oldsmobile, etc. But, eventually they had to consolidate.

Then again, this year at Sturgis the only demo rides available were from Star (yamaha), Harley, Victory, and Indian, no other metric bikes were there. Maybe it is not Harley and Victory that should be worried, but everyone else.

Anonymous said...

'Dealer network' issue is huge, especially for the touring rider/couple. Not because any of these brands are unreliable, but because sh*t happens on the road. If a rock from a dump truck takes out the headlight of my Harley in the middle of Montana, I'm pretty confident I can a replacement within a day if not in hours. Victory ... probably needs to be ordered (the dealers I've seen seem very poorly stocked with parts) or perhaps borrowed off a showroom bike. Indian ... who knows, at the rate they are producing bikes I doubt they even have spare parts available yet.

Beyond that, when travelling with my wife, she enjoys stopping at the various dealerships and shopping. Yeah I know it's not hard-core rider attitude, but it's something she enjoys and it makes her feel more connected with the ride and the trip. I think Indian is trying to address this aspect. Victory, no.

Availability is also key. Unit sales of Indian and Victory are pretty low compared to HD. I'm not sure that either has the stock to really hurt HD YET.

Overall I don't think Harley has much to worry about for the time being. I do think the competition is great for all of us consumers tho! We will be the winners in all of this :)

Anonymous said...

One other thing ...
I think Victory might be hurt by this just a bit. There is the possibility that Vic will be seen as the unwanted /poor brother. With two mc brands, I think Polaris will need to position them so as not bleed themselves of sales. Perhaps make Vic more performance oriented and Indian more heritage oriented or something. Seems silly to compete with yourself in the model class. Same reason the auto manufacturers reduced the number in-house brands.

reg7 said...

It is also noteworthy that HD has a 2yr warranty vs Victory 1yr. But,
I dont agree Indian & Victory buyers are the same. Indians are a big retro-looking/name bike. It is also spendy with an entry of almost $20K. Victory is for those who want a modernized cruiser with several models/price. I am considering a Vic but not Indian. My wife is the opposite. As for dealer network you are forgetting that both can leverage the Polaris network. However, they are being choosey over who gets Indian. I dont think you will see them at many HD dealers unless it is geographically advantageous. As for resale, where are all these cheap Vics? Seriously, I have been looking. I see HD's 100 to 1 and the Vics arent marked down any more than the HD's. Gone are the days of HD limited supply which drove the market up. There arent that many Vics in comparison to HD but it seems those who like them keep them. So still looking for a good price on one (or a Super Glide for that matter)...

Nathan Corbin said...

Thanks for the comment.

Firstly, I could be wrong about resale value. Victory motorcycles could sale for more than equal to their Harley counterparts. It has not been my experience but is it possible in different geographical areas. Even though there are a significantly larger amount of HDs roaming around I have found their resale to be higher. Take for example the Kelly Blue Book retail values of a 2004 Harley Softail Standard and a Victory Vegas. They are valued around 8000 and 5000 respectively. Additionally, I have personal seen V92 Victory’s listed for just over $3000 which is about the same as 883 Sportsters. I actually don’t see this as a bad thing for the buyer because Victory’s are great and reliable bikes. A guy who goes by the name RoadKill put over 200,000 trouble free miles on his V92.

My thought is that Polaris will use Indian at least temporarily to compete with HD on the higher end heavy weight cruiser market and allow Victory to continue to innovate and expand their lineup. Hopefully this means other completely new models. I think this is of utmost importance considering HD’s resent announcement of their new liquid cooled Speed 500 and 750cc motorcycles which will be modern and relatively cheap.

Funny you should say that you are interested in Victory and your wife Indian because if my wife and I were in the market for a new bike this would be a similar argument in our household.

Barb Shubert said...

I have owned three Harleys. I am on my last if they do not improve performance with the new models. I currently own a 2013 Switchback. It has been in the shop three times since purchase in January for repairs that put me on the side of the road. I just now have 5k miles on the bike. This is not to mention the new EPA exhaust requirements that has caused HD to put the catalytic converter by the shin of the rider - terrible heat issues with no current fix other than replacing the exhaust with aftermarket which then voids the exhaust warranty.
I will be browsing the new Indian as well as the Victory if Harley doesn't step up and help on this bike. Dealership has been awesome and that will be hard to give up - but not worth brand loyalty if the bike won't stay on the road.

Anonymous said...

I think the lower price Harley eg 883cc models cannot be considered in this discussion. The next size Harley's are 1200cc these are priced just under the Victorys which have the big 1731cc motor. If a comparison was done on price we would be comparing the Harley 1200cc range to the 1731cc Victory High Ball, Jackpot and Vegas 8 Ball bikes. Any journalist would find the Victory to be a bigger better bike over the 1200 Harley range. Depreciation the Victory is slightly better than the 1200cc Harley. The Fatboy, Heritage range do have a better % depreciation rate but be mindful they have further to fall so dollar wise you maybe no better off on a Victory. The Indians is wait and see. These bikes are untested in the real world. If any motor or drive line problems did emerge this would soon reserect their old reputation of doubtful reliability but if the Indian shows itself to be a reliable bike and they can produce more good reliable models Harley will have to come back to the field with pricing or face the threat of loosing substantial number of sales in a new very competitive market that is targeting Harley Davidson customers like never before.

Jolie Cameron said...

hmm very interesting discussion.

Anonymous said...

I just purchased a new cross country tour first new bike i ever bought but first I will tell the bikes I have had in order 1. 1976 norton commando(beater) 2. 1985 honda Goldwing (over 100,000 miles when i bought it cuoldn"t kill it) 3.1980 harley flhs (spent more time fixing then riding)4. 1988 kawasaki voyager zn1300(bigest heavyest kaw on the road 1000 pounds but fast personal best 136mph in 4th gear). The kaw was getting old and parts are hard to find for a zn1300 only 4500 made in the first place. So not haveing any real brand loyalty i road the 2013 honda goldwing first very nice bike but it sucked in the twisties and is ugly,then came a demo days at the local harley shop road every bike they hsd i have to say i felt crsmped on all there bikes.but just for kicks i delt on an ultra classic best price i could get was 24999. then a yammaha venture was just a harley with a better for the new kawasaki voyager nice bike but it could not get out of its own way. but when i road the cross country i fell in love and after dealing on it i got it for 17999 with a 5 year warranty, more power more options(ipod dock,cruise,heared seats,abs,heated hand grips,lock and ride tour pack)these were all extras on the harley its a no if you are big guy iam 6'3" the vic is a better fit and out performs the harley in every way but resale. now as for your points about indian victory and harley i have to disagree it is my experience that harley riders are more leaning to a classic looking bike don't walk into any harley shop and look at there bikes nothing wrong with that at all. the bikes victory are selling are much more modern looking bikes picking up most of there customers from the import bike companys (lick me)oh sure some vic riders will come from harley but not many. while indian with its classic style and being american made is going after harley directly. with polaris's money they can pull of the dealership problems i think 10 years from now with a few more models and dealership numbers of say 20-30 per state harley will be looking at a smaller market share. don't believe me,victory only really took of in the last 5 years they been around for 15 years polaris is willing to wait. by the way i bought my brand new victory at a harley/victory/moto guzzi dealer so i think some harley shops will pick up indian

Anonymous said...

Had a road king picked out, saw the indian, bought the indian, pick it up in two days, yep Indian stole a Harley sale

Anonymous said...

Harleys are like belly buttons cause everybody has one! black leather jacket vest chaps tattoo pretend tough guy attitude when wearing your costume LOL! try something new! be an individual.