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Here Are the 2 Motorcycles Harley Should Have Made

By Rich Duprey - Oct 13, 2018 at 10:17AM

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These are the types of bikes customers want to buy now.

Harley-Davidson (HOG -2.20%) is bringing its LiveWire electric motorcycle vanity project to completion sometime next year. But in the meantime, motorcycle maker Royal Enfield will deliver two new bikes in the weight class and price range that Harley should be aiming for if it wants to turn sales around.

The INT 650 and Continental GT 650 are the first twin-cylinder motorcycles that India-based Royal Enfield has produced since 1970. And because they're priced at $5,800, they're bound to find a market of motorcycle enthusiasts waiting to ride these affordable, middleweight bikes. Harley investors should worry that the sales decline that's beginning to pick up speed will only worsen once these rival motorcycles hit the market.

Two men standing by two motorcycles

Image source: Royal Enfield.

Missing an opportunity

Harley-Davidson says it understands that the motorcycle market is changing and that the core customers it had once counted on to deliver record sales growth are no longer buying motorcycles at anywhere near the rate they once did. As middle-aged males age out of the market, the big, heavyweight motorcycles they prefer are not moving off dealer floors. Instead, younger riders -- who are more likely to be urbanites and female -- are looking for smaller, lighter bikes.

In its More Roads to Harley-Davidson strategic road map released in July, Harley pays lip service to the need for smaller motorcycles, saying it will enter two new markets, the adventure touring and streetfighter categories. Those classifications typically are middleweight bikes, but Harley's planned bikes push the boundaries of that definition.

There are expected to be two Pan America adventure-touring models (at 975 cubic centimeters and 1,250 cc), while the nine streetfighter models will span the 500 to 1,250 cc range. The lower end of that streetfighter range is well within the bounds of a middleweight bike, but the upper end stretches the limits. 

No pricing has been announced for Harley's bikes, but history suggests it will slap a premium price tag on them. Its Street 750 bike has a base price of $7,600, while the Street 500 starts at $6,900. Moreover, the new bikes aren't scheduled to begin production until 2020.

Royal Enfield, on the other hand, is already producing motorcycles right in the sweet spot of size and price. And it's a market position it is quite comfortable occupying.

Ready to roar

Despite Royal Enfield's much smaller footprint in the U.S., it remains the world's largest and oldest continuously operating motorcycle manufacturer. In its last fiscal year, which ended in March, Royal Enfield's sales volume jumped 23% to over 8.2 million motorcycles. In comparison, Harley sold fewer than 243,000 motorcycles worldwide in 2017.

Most of Royal Enfield's bikes are really small and light, and are not comparable to what Harley manufactures. Even the Himalayan that Royal Enfield introduced last year wouldn't be the same as the two new bikes it is offering because it was equipped with a low-power 410 cc single-cylinder engine. The INT 650 and the Continental GT 650 will have twin-cylinder engines, making them much more attractive to buyers seeking some power, too.

These two new bikes won't necessarily be the performance monsters Harley produces, but they should appeal to different types of riders. The Continental GT 650 is a sporty cafe racer, while the Interceptor INT 650 is more of a stylish roadster. Even more important, perhaps, the average age of a Royal Enfield owner in India is between 26 and 32.

Harley needs to check its rear-view mirror

No one is expecting the India-based bike maker to swipe enough market share from Harley to catch up with its outsized lead in the U.S. market. But while Harley-Davidson is dreaming of converting millennials to its nameplate with its quixotic plan to force-feed a market for electric motorcycles, Royal Enfield is producing the bikes that young buyers want today.

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