The End of the 'Second Wind' for Harley Davidson?

| About: Harley-Davidson, Inc. (HOG)

Harley Davidson (NYSE:HOG) was formed in 1903 by William Harley, and Arthur Davidson, members of FDR's "Rendezvous With Destiny" Generation, which was much like today's Baby Boomers. This "pedigree" information is important, because it explains the company's initial success and recent revival, and predicts a second downfall.

More "freewheeling" than the newly invented automobile, Harley Davidson motorcycles were also more affordable. More to the point, they gave members of the Boomlike "Rendezvous" generation, a sense of carefree exploration, together with a rugged individualism. At the time it was introduced, the members of the Rendezvous ranged in age from early 20s to early 40s, basically prime buying age for them.

Sales peaked during World War I (with its military uses), leveled off in the 1920s, suffered during the 1930s, and enjoyed something of a revival during World War II (but not to the same extent as World War I, because that war was fought on a much larger scale).

The company went into a decline in the 1950s, hard times in the 1960s, and financial distress in the 1970s. The then youthful members of the World War II generation shunned these small conveyances in favor of larger, but standardized "General Issue" vehicles put out by the automakers.

Harley Davidson enjoyed a revival in the early 1980s, just as an idealistic Rendezvous-like Baby Boom generation reached its "sweet spot" in the 20-40 age bracket. It prospered for two decades thereafter, but started to sputter in the third. (And the Persian Gulf War provided a lift to sales, not so much during the war itself, but thereafter, with a younger, military-schooled generation.)

Now, the company is facing the equivalent of the modern 1930s. If (as we believe), there is a major war, it may enjoy something of a revival as a result. Thereafter, however, it is likely to be all downhill for Harley Davidson to past mid-century, during the youth and midlife tenures of the Millennial (new World War II) and Homeland Security (new Silent) generations. It could enjoy its next revival when a new "Idealist" generation born in the 2020s and 2030s occupies the 20-40 age brackets around 2060.

Disclosure: Formerly, but no longer long HOG

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