One of Harley-Davidson's (NYSE:HOG) biggest problems these days is producing motorcycles that don't resonate with today's buyer. Most are big, heavy touring and cruising bikes that are outfitted with equally throaty engines at a time when bikers are look for smaller, lighter-weight machines that provide more runabout excitement.

It's part of why Harley's sales have fallen for four straight years, and if Polaris Industries (NYSE:PII) isn't careful, it just might succumb to the same malaise that's afflicting its rival.

Rider on an Indian Motorcycle Limited Edition Chieftain Elite, with cityscape in background.

Image source: Indian Motorcycle.

A premium experience

Polaris unveiled earlier this month its latest Indian Motorcycle model, the Chieftain Elite, a new, limited-edition, ultra-premium bagger that comes tricked out with every bit of muscle and convenience you could want on a motorcycle. Yet like Harley's motorcycle lineup, it's cutting across the grain of what the market wants.

The Chieftain Elite is gorgeous. It sports a custom silver paint job that Polaris says is a tribute to the silver mines in the Black Hills of South Dakota. Containing glass flakes to reflect light, each motorcycle requires nearly 25 hours to complete finishing, meaning no two bikes will look the same due to the level of human input involved in each one.

The bike features a 19-inch, 10-spoke, contrast-cut front wheel, a 200-watt audio system, LED lights, handlebar-mounted fairings, hard lower fairings, a Thunder Stroke 111 V-twin engine, six-speed transmission, a telescopic fork front suspension, single shock rear suspension, and a push-button power flare windshield. It also comes with a starting price of just under $31,500.

The bike is big and looks to be worth every bit of its sticker price, but is it the motorcycle Polaris should be building right now?

A shrinking market

The motorcycle market is still in decline. In its fourth-quarter earnings release, Harley-Davidson said the overall bike market fell 6.5% in the period as its own U.S. sales plunged 11.1%. Polaris itself said the bike market for motorcycles with engines 901 cubic centimeters and larger was down high-single-digit percentages in the fourth quarter, even though Indian Motorcycle sales remained brisk.

Although Polaris isn't anywhere near as forthcoming as Harley is on its sales information, providing only percentage numbers rather than unit data, it has suggested over time that it has been able to drive growth higher by moving Scout and Scout Sixty motorcycles, its smaller, cheaper bikes designed more for today's new rider demographic. These big, flashy bikes like the Chieftain Elite might not be what Polaris needs to keep sales moving in an upward direction.

Indian Motorcycle's Limited Edition Chieftain Elite.

Image source: Indian Motorcycle.

Exceptions to the rule

With that said, there are a couple of caveats. First, this is just a limited-edition bike, so presumably the production run is going to be relatively small. Polaris isn't necessarily staking its quarterly numbers on this bike alone.

Second, it has had some great success with other limited-edition bikes. Two years ago, Polaris Industries introduced its first Jack Daniel's Limited Edition Indian Springfield and Chief Vintage models. They sold out in eight hours. Last year, the bike maker again partnered with distiller Brown-Forman and unveiled a Jack Daniel's Limited Edition Indian Chieftain, which sold out in 10 minutes. This year they're back at it with a Jack Daniel's Limited Edition Indian Scout Bobber. But don’t think about buying one: Polaris started taking orders on the 177 motorcycles they’re producing for the run on March 13 and it sold out in less than 10 minutes.

Polaris' Scout Bobber is an aggressively designed urban bike for today's rider, and it shows the bike maker still has its eye on the changing market. So although it's gone to the other extreme with its Chieftain Elite, it may not be blind to the need to produce smaller, more versatile bikes.

As long as Polaris Industries doesn't go whole hog into building mostly big, pretty bikes that look good on the showroom floor but which buyers aren't willing to pay big money for, it may just be able to avoid the downfall that Harley-Davidson is currently experiencing.