Harley-Davidson (NYSE:HOG) might not have anything to worry about yet from Indian Motorcycle, but those objects in its rearview mirror are getting closer than they appear. The big bike rival from Polaris Industries (NYSE:PII) crossed over into double-digit market share in September, and there doesn't appear to be many obstacles in its way to continue gaining ground on the industry leader.

A patch of rough pavement

There's no doubt the U.S. motorcycle market is in decline, something both Harley-Davidson and Polaris agree on. But whereas Harley's sales are stuck in a continuous downward spiral, Polaris has been able to notch substantial sales growth quarter after quarter.

U.S. sales for Harley-Davidson tumbled 8% in the third quarter, the 11th quarter out of the past 12 they've fallen (and the one quarter it did gain was a negligible 33 more bikes in the period than it did the year before).

A man next to a Polaris Indian Chieftain

Image source: Indian Motorcycle.

In contrast, Polaris saw Indian motorcycle retail sales rise 16% over the year-ago period. Indian has not had a single quarter where sales didn't rise by at least double-digit percentages since Polaris reintroduced the motorcycle after buying the Indian brand out of bankruptcy in 2011 (the first bikes were released for the 2014 model year).

While Polaris is much more tight-lipped with its numbers than Harley -- which is exceptionally forthcoming about sales and shipment numbers in each of its markets -- and it started from a nonexistent base, the early gains were going to look astronomical. However, the fact that it has been able to build on those sales year in and year out is a testament to the brand's strength.

Too far, too fast

That's partially a result of Harley-Davidson being a victim of its own success. In the early 2000s, strong demand led to difficulty in getting enough bikes to the market. Then Harley kicked production into overdrive and in 2006 shipments hit a record 349,000 units, making its motorcycles ubiquitous on the roads.

It's quite possible that alone would have caused Harley-Davidson to suffer a drop in sales afterward as they were no longer quite so unique, despite the mystique the brand still carries with it even today. But then the financial markets imploded and wiped out its core customer. The weekend warrior could no longer afford to purchase Harley's big, expensive bikes. By 2010, shipments had fallen to 210,500 bikes.

While Harley-Davidson has since built its numbers back up from the depths of the recession -- last year, it shipped 262,000 bikes worldwide -- they're down once again from their post-recession highs.

Chart showing Harley-Davidson quarterly sales growth

Data source: Harley-Davidson quarterly SEC filings. Chart by author.

Rise of a legend

It may be no coincidence that the decrease occurred with the resurrection of the historic Indian Motorcycle. While Polaris Industries had its big bike Victory brand, it wasn't until the launch of Indian that sales really picked up, with motorcycle segment sales doubling that first quarter they hit the market.

Sales grew to $708 million last year, a threefold increase since those first bikes hit the market. While that's not all Indian, because Polaris also introduced its three-wheeled Slingshot motorcycle, the gains are mostly the result of Indian. Earlier this year, Polaris shut down production of Victory to focus all of its attention on the historic motorcycle brand.

Polaris reported Indian crossed over the 10% threshold for market share in September, and though Harley-Davidson also says its market share increased to 53.1%, they're not quite analogous. Harley measures its share on bikes with engine displacements of 601 cubic centimeters and above whereas Polaris looks at bikes 900 cc's and higher.

Although a lot of the market share gains may have come from foreign big bike makers like Honda Motors with its Gold Wing line of bikes and Suzuki, if we were able to examine Harley-Davidson's share of that much narrower subset, we'd see Polaris Industries and Indian Motorcycles are narrowing the gap between them and Harley-Davidson much more quickly than it appears.

Harley-Davidson may own more than half the market now, but it may not be that way for very long. And despite its stock losing a quarter of its value from recent highs, investors may see shares skid even lower.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.