Trying to manage a structural decline in a terrible industry.
Shares of Harley-Davidson (HOG) dropped 10% in the morning after the company reported second-quarter earnings and were down nearly 6% at the end of the day. Almost everything was bad.
Retail sales by its dealers in the US fell 9.3% in Q2, compared to a year ago, to 49,668 motorcycles. They were “down more than we anticipated,” the company said. And with “soft sales across most markets,” sales by its dealers globally fell 6.7%.
“Industry new motorcycle sales deterioration continued,” the company said in its presentation, lamenting “weak industry sales on soft used bike prices.”
In addition to the industry woes, its market share in Q2 in the US dropped 1 percentage point to 48.5%. Shipments in the quarter fell 7.2% to 81,807 and are down 10.8% year to date.
The 30-day delinquency rate on its $7.5 billion in motorcycle loans outstanding rose to 3.25%, from 3.16% a year ago, and from 2.7% in Q2 2015. The annualized loss experience on those loans reached 1.71%, the highest for any second quarter since 2010.
Total revenues fell 5.6% to $1.58 billion. Net income fell 7.7% to $258.9 million. And despite blowing $163.2 million on share buybacks in the quarter to lower the share count and thus prop up earnings per share, earnings per share fell 4.5% to $1.48.
Its dealer inventory is bloated, so it offered incentives on its 2016 bikes to clear them out, and that didn’t help its 2017 models, but it said bravely that it is “targeting significantly lower year-end US dealer inventory.”
H-D has at least three fundamental problems. One is relatively new, and two have been with it for a few years and it cannot seem to escape them:
1. More of its customers are getting financially distressed, hence rising delinquencies and losses on its loan book. This issue has also raised its ugly head once again for automakers and other consumer lenders.
2. A Hog is the iconic motorcycle for baby boomers, but they don’t make baby boomers anymore. The younger generations have other things to spend their money on. H-D has come out with lighter and less expensive models to appeal to the younger crowd, with some success, but not with enough success to make up for the baby boomers who’re approaching the end of their riding years in ever larger numbers.
3. H-D is selling motorcycles. Motorcycle sales in the US have been a nightmare since the peak in 2005 when the industry sold nearly 1.1 million bikes of all sizes. By 2006, sales were falling. In 2008, sales plunged, bottoming out in 2010, down 60% from the peak. But unlike auto sales, motorcycles never recovered from the Great Recession.
By 2015, industry sales in the US had crept barely past the half-million mark, still down 54% from their 2005 peak, only to fall nearly 3% in 2016. And in 2017, they’re heading further south. Here’s what that nightmare looks like.
A fourth problem, some potential customers say – the problem that keeps them from buying – is the price tag of a Harley. It ranges from a little over $6,000 for a smaller entry-level bike to around $27,000. The average revenue per motorcycle was $15,530 in Q2. Might those bloated price tags be one of the reasons why the number of bikes sold is spiraling lower?
H-D cut its full-year shipments forecast to 241,000 to 246,000 motorcycles globally, down from 262,221 shipments in 2016. It said it expects to ship 39,000 to 44,000 bikes in Q3, which implies a 9% to 20% plunge year-over-year.
Shipments peaked in 2006 at 361,656 bikes. The projected global shipments for 2017 indicate a decline of 33% over 11 years!
“Given U.S. industry challenges in the second quarter and the importance of the supply and demand balance for our premium brand, we are lowering our full-year shipment and margin guidance,” CEO Matt Levatich said in a statement.
“Not only are things bad, but it appears to be bad in such a way that management is really struggling to keep up with how bad things are,” mused James Hardiman, an analyst at Wedbush Securities.
And then there’s the inevitable: layoffs. H-D has to cut production, and implement as Levatich put it, “hourly workforce reduction” at some of its plants in the US. Affected workers would be notified starting Tuesday, he said.
On May 25, the company announced that it would build a plant in Thailand. This “will allow us to be more responsive and competitive in the Asean region and China,” Harley-Davidson PR manager Katie Whitmore told CNBC. “Increased access and affordability for our customers in the region is key to growth for the company in total,” she said. “There is no intent to reduce H-D US manufacturing due to this expansion.”
She knew what was coming. And that little phrase – “due to this expansion” – is supposed to give the company plausible deniability. But some of these bikes built in Thailand for the Asean region will replace bikes exported from the US to this region. Sales in Asia are also declining. So this is not a measure to deal with surging growth. This is a cost-cutting measure to manage a decline.
So let’s see how we can put a positive spin on this. Read… US Auto Sales Sag, Hyundai Meets Carmageddon
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I guess the only way to compare this news is to ask how are other motorcycle makers doing? If their sales are falling it might be an economy wide problem and if not, then the problem is Harley’s alone.
Have a look at the chart in the article. The industry is in a terrible condition. 2016 was another down year for the industry. In 2017, H-D has been losing market share, so it’s losing ground in a terrible industry.
Good point. Ducati sales are up. I think it’s a combination of both the economy and competition. How do you buy a 25k dollar bike when wages are at 1990s levels. It’s a joke. 15 bucks an hour is considered a living wage now
That’s only if you live on the street. On the West Coast you need at least $25-$30/hr just so you can afford to pay half of that in rent.
You’re right–you do need that. But no one wants to pay that on the west coast!
Thank Bill Clinton for that. Welcome to the new Venezuela. Soon we will be migrating to Canada for food
Adjusted for inflation and disposable income, it’s at 1967 levels for the middle class.
Well, I guess the war on the blue collar is advancing.
Ah, the secret sauce cauldron of creeping inflation, stagnant wages, and inflating asset prices.
They have always be the highest on the market if you look at readjusting the price per sold unit there would sales down to 10 to 15 thousand dollar rage. There would be sales all day long, but they wanted to there coustmers loyal and the biker gangs comming back for more. But now the sales is going to chock rockets and thing like that which under 10 thousand dollars out the door.
Insurance costs for new and old riders have soared.
I hadn’t ridden for years and got an insurance quote–$5000.
I live in Ontario Canada and you only have a few months of good riding weather. I have friends who never stopped riding and their insurance rates have soared, so it isn’t just newbies who are getting hosed!
With the price of a new bike and insurance, I said forget about it.
Plus, after riding for around 15 years, I know how dangerous it is on a bike.
Wow, that’s a lot of cash to say the least. I am in my mid-fifties, live in MPLS and have a ’02 Kawi ZRX 1200 sport bike (which I bought new in ’02). My full coverage is $347 this year.
I do not understand the appeal of a Harley, but one of its attractions is that it’s US made. Having any factory outside the US, for whatever reason will most likely backfire.
Minnesota’s Polaris has aggressively gone after the Harley demographic with the Indian Brand bike, and perhaps that’s taking away some market share. For a performance city-bike that’s not too expensive, I’d go with a new Kawi Z900 though.
I bought my first bike on my 18th birthday (Minnesota law if parents don’t approve, and mine did not), and will ride on two wheels for as long as I can! Riding is dangerous, but the learning curve is steep; half of the deaths on motorbikes happens to those with less than six months riding. Start young and start on a small bike. Then, work your way up incrementally to bigger and faster machines, eh?
A follow up after reading more comments which I agree with: Go to a motorbike salvage/junk yard and you’ll be amazed at how many machines have completely worn out treadless tires. For god sakes, when you’re on two wheels riding at speed, Mr. friction is your friend! Good tires and brakes are damn important.
Maybe they thought of them as racing slicks
… Considering that only rubber the size of a coin touches the tarmac. a bit of sand or oil and – one goes DOWN.
(Am having a midlife crisis and presently 3 big bikes. Honda VFR 800s with gears driven 4 OHC and when I felt apprehensive regarding their weight, a Kawasaki GPX 600 R an old guy with health problems sold for less than $ 880 (with a recent 4-digit dealer’s invoice for synchronizing the carbs and all new tyres etc.)
It is a wonderful way to reduce stress and to clear the cobwebs!
I sold my last bike in 1981, a 750 Yamaha, 3 cylinder (shaft drive) and never rode again. Two friends of mine didn’t survive their riding years. And that hadn’t stopped me. But I had one last close call, and suddenly I got spooked, and after that, it wasn’t fun anymore. Eventually I sold it to be done with it forever… and stuck to it.
The only time I’ve been on one since then was in Africa on motorcycle taxis when there wasn’t any other way to get there.
Dumbest thing I did on two wheels happened in spring of ’98 on my Honda 750F. Power shifting into 2nd gear while accelerating from a stop around a corner in the rain, of course, caused the rear tire to slide out. Got off the throttle abrubtly, and whoops I high sided over. But it happened so quickly that I kept a tight grip on the bars when hitting the ground so my torso took the impact. What the hell, bike was fine and only two ribs cracked.
Regards to your two friends Wolf, and glad you are still with us.
There are only two kinds of riders…
Almost grew my wings back in August 1973…Chrysler New Yorker ran a stop sign, turning left into my bike…Fractured femur, knee, wrist and lots of road rash…Helmet saved me as I landed on my back to the blacktop…Never stopped riding…My wife and I have toured the lower 48 and have savored every mile…
I’m glad you guys still enjoy it!! It’s a wonderful thing to do.
I was a cop in another life and when you join one of those newbie jobs was to man the fatal crash yard at night and pump petrol.
A towie would come in with the bikes with a couple of scratches on one side and a broken mirror and I’d ask what happen here, double fatal, bloke and his missus.
A car came in with the side of it peel hack like a sardine tin and the reply was the back passenger is touch & go but the other five are fine. This happened time and again, would never ride a bike and that’s why they are called temporary Aussies.
With so many people playing with their cell phones while driving, I prefer to wrap myself with as much metal as possible when I’m on the road.
Good point Drango. I am a retired bicycle racer who rides most every day during spring, winter and fall, and being tall, I can see down into most cars. Freakin’ idiots texting and driving maddens me as well as makes me wonder if somebody might run into me. You gotta live though, and not riding my bike(s) is not an option.
I rode my cbr600 through London for a few years, I could clock 7-8-9 building site visits a day, rain or shine. Racing the couriers at 90mph down Euston Road, no problem. Tail snaking out in snow over manhole covers, bliss. Then I totalled it doing 10mph trying to avoid my knee gelling into this guys headlight as he pulled out into traffic without indicating. That was the Sign for me. I had to give up. Same as you Wolf, I lost a few friends to this most beautiful and tempting mode of transport/fun. God bless them all.
My old man had a friend that broke his neck on one – around the time of early elementary school for me – and would NEVER let me ride four wheelers and the like.
We fought over the years about it – but by the time I was out of highschool I lost the interest in biking/four wheeling/jet skiing and all that stuff that looks REALLY fun when you are a teenager.
The only time I have ever really been on a bike (since a couple rides home in highschool on a friends bike) was in Vietnam on the back of my wife’s bike (that was formerly her fathers). A horribly old Honda. She had to walk it to get it going enough to haul my fat ass (I am well over 6 foot and not so skinny any more). Once it got up in 1st gear, it was good. We only broke down twice – once a cool down was the fix, another time a side of the road mechanic replaced a spark plug and sent us on our way.
We got lots and lots and lots of looks – she was packing around a long haired viking in her old man’s helmet (and trust me – you see crazier on VN bikes), but usually livestock or cargo.
No way I am interested in bikes – this is a boomer/generational thing – I think they are cool, but ain’t buying one.
Your on-the-back-of-an-old-Honda-in-Vietnam experiences sounds like fun, though!
Here is my two wheels, I mean cents. Harley is not that good and never was although it was fun to have one. The original Indian was said to be better but the factory closed in 1953. Since Harley has “betrayed” U.S. riders, it deserves to be finished.
The bikes from Japan are ok but when work needs to be done, the cost goes up very quickly since the parts structure is that in order to replace a 10 dollar item, a complete set of what ever needs to be bought. Example: replacing the diaphragm in a carb; can not do that per se, only if the entire carb is bought.
Have noticed that scooters are not so a negative transport these days. A large one can be considered as a motorcycle in some countries.
As for Brit bikes, there are so many parts that are made in Japan one may as well by Japanese.
Yeah but my Brit bike a 12 Tiger 1050 has 115 hp liquid cooled triple.Full luggage heated hand grips etc… It took HD 5 more years to go liquid cooled and has about 90 hp if that, and a street glide by comparison weighs about 350lbs more lbs. The only thing I like about Harleys are their belt drive
All bikes should go to belt. Forget shaft , too heavy and not responsive enough. chains don’t last and needs adjustment lubrication etc..Belts are quite last forever Kevlar and will handle alot of torque
There two kinds of motorists, old ones and bold ones, the latter category end too often up pushing up lilies ….
Good advise. I’ve been riding since I was 15 started on dirt bikes my first was a susuki ts 125 purchased it new in 1971 at age 16. After that I moved up to a 1972 Suzuki TS 250 then a 1973 Suzuki TS 400. First street bike 1974 HD Sportster what other bike would a 19 year old want! Still riding at 62 Honda VTX 1800, Suzuki DR 650, my old Sportster and my 1976 Kawasaki KZ 900.
5k???? In Wisconsin with a clean driving record you can get full coverage for between 500 and 700 dollars a year
With no NCB, I pay about 125 € for the 106 hp VFR 800s and less than 100 € for the 600. Third party only. The Porsches cost 10 x as much in the UK (bought those half price as RHD)
You must have a terrible accident/ticket problem. I only pay $265 per year (FL) for a HD Ultra Classic.
You better check your deductible
Probably 1k. Plus no way is your bagger brand new for that price.
Point of reference- 2008 Suzuki DL650 (v-strom) with basic insurance is 125 per year in eastern WA.
I wonder if there’s been a decrease in motorcycle riders overall.
With what I assume is an increase in available safety data, maybe younger people are less willing to take the chance on riding and purchasing a motorcycle?
HD never expanded into the moped and scooter market, which I assume is growing due to increased urbanization.
Is this market in any way correlated to the RV market? Recreational vehicles.
Younger people are just too busy playing video games to care about actually doing something in the real world.
Could it be that parents are doing a better job raising their children? I helped a LOT to support my son’s love for mountain biking and thoroughly discouraged him from his puppy love infatuation with motorcycles. Is biking risky? Absolutely, but your life is not in the hands of the 99% of the others on the roads. I came close twice, VERY close, before I sold it in 1991.
Even back then, Harley Davidsons were regarded as mechanical crap, heavy, and overpriced.
– Moving the production to Thailand does make perfect sense in one regard. Because demographic developments in SE Asia are much more favourable for motorcycle sales than in North America.
– Declining sales in some asian countries (South Korea, Japan, Taiwan) are also due to “unfavourable demographics” in those countries.
Harry S. Dent has done some excellent work on the democraphic metrics.
I was in Thailand recently and noticed the overwhelming amount of motorcycles and mopeds and scooters. I live in China, and I think the Thais drive like maniacs. They have the second highest rate of motor vehicle fatalities in the world, second only to Libya.
Harley might do well there.
Try Saigon. I’ve never seen motorcycle madness like I saw there.
Or São Paulo… the motorcycle delivery boys (of which there must be tens of thousands) drive like absolute maniacs around the highways. Of course the traffic is so bad there, they are often the only ones moving.
Done it in Hanoi – I call it “a school of bike-fish” because when the light flips, there is this roar, and everyone is moving all over, all around. It really feels like being in a school of fish – the way things flow – not necessarily orderly – but in a “school”.
We never had an accident – but I heard two of them while we were tooling around over several different visits over the years – the unmistakable crunch of metal stuff hitting metal stuff hitting metal stuff. I didn’t rubber neck – wanted to get that Honda moving so it was stable …
Mmm, have you ridden in VIETNAM? Got almost killed when a speeding bus hit me, going the wrong way of the road. Pain was hell. The doc wouldn’t view the x-rays on the viewer :–((( but then the bill was only $ 90.
The driver claimed I sort of “fell off” although the bike was crushed and there were reports of a frightfully loud bang.
He left the scene and the owner of the bus company paid my hospital bill. No Police, of course.
=> Thromboses, pulmonary embolism, … fear of some brain damage. Was it worth it? I was on the job, riding the ratty company 100 cc Chinese copy of a Honda Wave.
Life’s cheap in Vietnam, where one has to get the hell outta their way when they honk and flas their lights. Your lane becomes their lane that instant…
At Thai schools, 10 year olds wobble along without helmets and the traffic cops look on.
Saw a cabby hit a girl on a bike – she couldn’t have been 10. He got out – yelled at her (I started to get pissed – it was his fault) – and she tucked tail and boogied off. Happened about that fast. She was OK – but it could have been bad.
Don’t get me started on buses there – do a couple hundred click ride through the mountains … bring a flask … you will need all of it.
All that said – they don’t regulate. So, if you don’t like regulations – you will like VN – the bribes are cheaper than the fees/taxes.
Just sayin’ ….
Harley could sell about 50 million Thai type Rickshaws in the US. Think 3-wheel motorbikes with a light roof. Great for commuting and they only use 1/2 a parking spot.
Trikes are the new thing – BBoomers are losing their balance.
While they are holding on to their market with that approach – I think they need to figure out a new customer base at some point – probably what Wolf is hinting at …
As I read this article I wondered why it took so long? The article listed all the reasons, for sure, but missed out on the trend factor. It was ‘trendy’ for a retired dentist to buy a Harley, or for someone who wanted to feel special as in, “I ride a Harley”, as if that is supposed to mean something. I remember walking into my Dentist’s office for an appointment with the ‘new hygenist’. She spotted my bike helmet and got all excited because ‘she rode’ too, and wanted to know what my bike was? I told her that I used a 500 Honda during summer months for my town runs. I could feel her sniff and snort just before she informed me that she rode a Harley. It was pretty funny, actually. I just smiled.
I live on Vancouver Island in a place supposed to be one of the great island ‘rides’. Every summer we get groups of Harley riders coming up for an excursion. They are always clad in full leather gear; assless chaps, gauntlet gloves, wearing leather coats with an insignia stiched across the back that almost mimics a biker’s colours, but lacking just enough detail to keep the owner from getting beaten up. It’s kind of like those stories you hear about weekend paint-ballers wearing cammo gear and talking about ‘tactics’. Anyway, they come up here 10-15 strong, and have lunch. Then, they ride back home on their $30,000 Harley.
I’m almost 62. I bought my first bike, a Honda 175, when I was 12 years old. I used my paper route money to buy it and kept it hidden in my friends basement because mt parents forbade it. I have ridden motorcycles ever since. Harley? Not likely. They are over-priced, of dubious quality, and trendy. Not only does my hygenist drive one, so does the retired school principal who used to live behind me. He retired, let his hair grow long enough to wear a braid, and used his sick-leave payout to buy a new Harley. He probably went out and got a scary tatoo as well. ’nuff said.
I suppose a plus is that they still have two wheels, not like the 3 wheeler (2 front/one back) can-ams. By the way, our Toyota Yaris gets better mileage than a Harley and we don’t need assless chaps to drive it. :-)
Well, most seem to TRAILER their hogs in ;-)
30 years ago, I broke down in Geneva. Yamaha RD 350 stroker, 15 kg olive wood for Dad. EVERY biker stopped to offer assistance. Beat that! Times, they are changeing.
I am a motorcycle rider. I agree that it is price and Harley Davidson is image based not a ride performance bike. Too much chrome, too big, too loud and too expensive. You are better off in a car. I have a Honda. Super reliable, very fast and quiet.
I do not see how building a factory will help if they do not want big expensive hogs.
The bikes seem too heavy for the old duffers cranking down I-5 in SoCal at 70 MPH. The wobbling seems really dangerous to me. The drop in sales is going to impact the high-end trending HD gear. I guess for some potential HD buyers it was a HOG or a hip replacement? Seriously, many of the riders I see appear to be close to SS age?
Pretty much all modern bikes are too big and heavy. Everyone wants a 750 or bigger. There are not the 125s, 250s, and so on any more. Light bikes that you can learn to throw around; learn skills that will save your ass on a big bike but you are not really going to learn on a big bike.
The licenses should be in steps so you learn on a smaller bike.
Try 64 years young…Can’t buy a new H-D though…Social Security check isn’t big enough to make payments on a $30,000 Ultra-Classic out the door…
Two groups of boomers those born between 1946 and 1955 roughly 38 million which means the youngest boomer in this group is now 62. The other group born between 1956 and 1964 is about the same number 37 million and the youngest in this group is turning 53. It doesn’t take much to understand the drag that the entire boomers here and throughout the world will have on economic development and growth for the next 30 years. The boomers in general have been big consumer spenders that has come to a slow grinding halt which will impact every aspect of consumer spending.
While I’ll argue, based on life experiences, that I’m an X’er, many will consider me a Boomer, being almost 55. I’ve ridden tons of motorcycles but I no interest in ’em now. 20-something me would be astonished by this. Frankly the only motorized vehicle I have some interest in now is one of these “business” vans like a Sprinter that I can use for business but also camp in, or in a pinch, live in.
only possible tactic that might work for hd:
create a hd ‘venture’ line. one with decent technology, quality, ergonomics.
in other words a modern avant garde bike.
for that hd will have to split the co because legacy will kill any such attempt.
only chance otherwise toast!
This is what they are trying to do with the new (water cooled) Street Family. I have a Street 500 and love it. It’s light, super easy to throw around and a ton of fun to run around town on. It’s also less than $7k new. The new Street Rod 750 is even more fun to ride.
*cough* I believe they were called Buell’s. Those bike were dope. Great entry level and performance bikes.
Owned a Harley when I lived in SoCal and could ride 360 days a year. All us old guys were middle-aging it back in the early to mid 2000’s. We have since metamorphosed (not grown up) and taken on more risk and death defying feats, like getting married. Oh how we yearn for those Harley days.
As your article succinctly highlights, HD’s had become the ‘must have’ lifestyle accessory to scratch the itch of a demographic segment which other motorcycles couldnt get near to. That situation is changing.
HD’s have been a fashion accessory for may years. They have become ‘less a motorcycle’ and more a ‘lifestyle statement’.
But, like any fashion accessory – they can go out of fashion as rapidly as they came in. Demographics are killing HD’s segment.
If your brands appeal is to a fashion conscious market then beware. As you say, its consumer market is not getting any younger. To its ageing consumers, artificial hips and knees will have less impact on which Armani clothing item they next purchase, but will have a major impact on the grossly overweight 700lb HD they might buy.
Maybe the Chinese market will be there saviour?
As a rider of 46 years, I’ve always been surprised that the whole HD ‘thing’ has not been tumbled before (poor value, poor performance, poor brakes, poor handling, etc).
This is an old, but very well done presentation that hits EXACTLY on your point (just on a different subject):
There used to be a better video – but the quality of content is really good. What I learned watching this years ago (going to re-watch tonight) is that things last as long as they are built to last. Fashion is mentioned at some point to highlight that things move in different periods over time. Fashion is by design intended to be short – a building might last longer but eventually fails – so – it begs the question answered (or at least addressed) by the 1+ hour presentation.
It isn’t an easy segque, but if you understand what is being presented – I think it highlights the conversation perfectly:
Nothing is forever – Harley as to re-invent their brand.
Video is old, but it is good stuff. Ol’ Coot says so.
Annoyingly, YouTube “stuck” early in the video – just click on the timeline slider just a bit after the point it stops – seems to go by just fine – else it hangs and youtube pretends it broke.
I am one of those 1955 babies and all the motorcycles I have rode were low cc Honda’s. A HOG is too heavy, overpriced and I’d like to believe just another way to fantasize about lost youth…
I rode for 25+ years and owned a dozen motorcycles, none of which were overpriced Harleys. By ’97, traffic here in Silicon Valley got cutthroat beyond my comfort level so I quit riding and replaced my last bike with a Miata. That’s long gone too, but my Forester is turbocharged!
If motorcycle manufacturers want to stay afloat, they need to build products (beyond boy racer bikes) that attract young people. Whatever happened to meeting the nicest people on a Honda?
My new Forrester is a six-speed manual – the only small SUV you can get without a cvd transmission and dealer says not many of those are coming from the factory anymore.
Poor, poor us old squares …
My dictionary defines the term “slope” as offensive and I agree.
The BBC’s iconic host of Top Gear got canned for using that term as well as general pissed antics.
Unlike a car, you can’t make a bike more atractive by overloading it with tech. Weight and fuel consumption is something that worries Bike owners after all. There is also the fact you can get Asian bikes way cheaper than a HD..And a motor scotter while is never gonna be cool, tends to have more space and is more comfortable to use.
Well the Vespas are kind of cool in Asia…
That’s true indeed. Where in Thailand a new Honda Wave 110 or 125 can be bought from $ 1,100, Vespi cost 4 times more. And still get lusted after and bought! Differentiation!
Never owned a Harley. But want to add a flat depreciation curve. Got my ’98 VFR for 1,200 € (1 owner from new, panniers, new tyres). A neglected Sportster would cost me 5 x that much in Germany!
It’s all about FINANCING anyhow, not unlike cell phones.
(Am NOT wanting driverless cars or E-vehicles. It’s the Kwntaur-like combination with a bike or a light responsive sports car like a Porsche Boxster which makes driving memorable. Safety, protection, – I guess many people no longer grab life by the horns, missing out on such experiences)
Over the decades, it upset me to read those anual reports where the CEO got incredible stock options (while the “Motor Co.” ran itself or could have. Not good)!
The future? A fashion brand selling upmarket leathers & t-shirts with attached motorcycle production :-(
In Thailand, I HAD TO use a small bike. Salary? $ 700. Got a 10 month’s old Yamaha for that, a reposessed one. Countless people in Thailand have maxed out their credit, make no mistake. A buddy makes $ 5xx and his loans eat up about $ 500. Now feed a family of 3 on < $ 100! But he had to finance a truck while yours truly could save a few hundred bucks a month.
Medical tourism, retirees going to SE Asia where even $ 600 a month mean an okay lifestyle with eating out all the time.
Closing, I see HOG getting taken private and turned into some cool clothes brand.
Tats done in surgeries under local or general anaestethics? People are conformist and even about 20% of females in mixed saunas spot a tat :o
Dream your life – no longer live your dreams :-(((
Of course HD is having a hard time. Nobody needs one. It is a toy that costs as much as a car, and is expensive to own (think insurance and property tax).
I think the average Harley customer is still the blue collar guy, not the rich guy with stock gains. The blue collar guys are getting pinched. Also, the rich guys don’t want the Harley. Ducati and BMW are the preferred status symbols.
You are spot on. Blue collar guys have had their wages decimated in the last 30 years . I worked in a factory for years with good pay and could afford a bike
Now all the people with money are retired or tech guys or hate Harley’s. HE’S are well made fun bikes. People who rip on their quality are misinformed. A fully loaded BMW DUCATI TRIUMPH are just as expensive too. Its an industry wide problem. It’s called stock price and overpaid managers and CEOs
My schwinn bicycle does not leak any oil.
Having owned a Harley, as well as several BMW bikes and a Honda, I can tell you that modern H-Ds are fine machines with high build quality and excellent fit and finish. I consider them to be the most beautiful machines out there. They may be relatively heavy and relatively slow, but they are stable, and comfortable (and fun) to ride.
For me, once I rode a Harley, I understood the attraction. The sound, the vibration, the torque, the look… not to mention the 114-year history. They are a unique brand.
Nevertheless, the expense of buying and operating a Harley is substantial, and the higher-end models are luxury items.
Today Harley tomorrow the inflated stock and housing market. Boomers have just started to wreak their havoc.. where they start spending on golf carts and walkers. Place your bets accordingly.
And to think we thought the millenials were to blame for everything. Lol
Betting on boomers spending based on data sets doesn’t look promising:
It is definitely all about demographics. At these prices it is a middle aged man’s hobby. I always smile at the Harley scene. To show off our individuality, we all ride the same bikes to the same places.
A lot of people look down on Harleys as low-tech and unreliable but I was surprised by the overall quality and ride when I had a Harley Fatboy for a few years. The bike was very reliable, looked great and handled fine for a cruiser. The belt final drive was great. Easy to maintain. I then “upgraded” to a BMW 1200RLC – big heavy cruiser with too much fairing weight on the handle bars, but comfortable. Not bad to maintain, the shaft drive was ok, the dry clutch was less so. Finally, I bought a large KTM Adventure 990 dual sport. Lots of power and the ability to really scare yourself off-road. Dependable but a nightmare to maintain – you essentially disassemble the bike to change oil. Adjusting the valves? Forget it. I sold the last of the bikes when long road trips became a pain (in the butt). Never cared much for group rides. I think I’m done with bikes, probably. Maybe an old classic just for wrenching….
When is Elon starting his electric Hog factory.
Here’s a picture of Harley’s Livewire concept electric bike (the problem is that it doesn’t sound like a hog):
I think Wolf has got a very good point there, a bike without CI does sound puny, after all it is that brup brup sound that makes things right.
Look at Zero Motorcycles. Electric bikes sitting in showrooms collecting dust. If HD goes electric it’s all over. Even electric cars IMO are a fad and will fade fast.
I’m a boomer.
My last bike was a BMW K-75. I never owned a Harley. But I did have a BSA 650 and a Triumph 650, Honda 650 and a Suzuki 500. I really loved the BMW. I named her ‘Whisper’. Never ever ever never had a problem with her. I made a 300 mile trip in….3 hours. Got pulled over just before my destination. But the CHP was kind to me and put down 95 mph. That was my last bike. I believe my reflexes are still fast. It is my joints that prevent quick response. I cannot imagine owning a bike at this point. Yes, demographics are going to be the elephant in the room for all sorts of things. I just bought a largeish sail boat. It is probably foolish but this is my last hurrah. By the time I want to sell it, nobody else will probably want to buy it. Unless…the housing market stays the way it is. The boat is a great ‘live aboard’.
85 K100 here, best motor vehicle I’ll probably ever own, ‘whispered’ straight up to 125 MPH with more wind, noise, and vibration at 55 than 85. Deutschmark exchange was so great I passed on a used HD. I seriously can’t believe HD is still in business after the crap they produced back then. Not sure how or why the Asian market would even consider them as an option but as Wolf says, it’s just plausible deniability bull.
The HD implosion is long over due. HD pushed out too many bikes to wealthy professionals looking to enhance their image rather than to motorcycle enthusiasts. I expect a glut of used bikes to hit the resale market as boomers are carted off to old age homes. Price will plummet. As for the bikes they are okay but you get better value and performance from Japanese and Europeans. Surprise just like the car market.
BMW has done an exceptional job of upgrading it’s entire line. Twenty years I couldn’t stand their bikes now they have 8-10 incredible bikes. HD taded ontheir reputation and the allure of selling cool, they aren’t so cool with gen Xers.
Full disclosed I had a couple hogs, a kawi as a young man but now ride a BMW 1200 GS.
“just like the car market”
Harley, just like the car companies and other manufacturers, is competing with countries like Japan and Germany that have weakened their currencies by one means or another. Without the currency advantage they now have, these companies wouldn’t be able to sell cars or motorcycles here at a profit, and most of Japan’s car companies would have gone belly up decades ago. The fact that people still think these foreign companies are such fierce competitors, when in fact they exist because of artificially weak currencies, shows how much the financial industry has dominated policy over the decades, at the expense of the real economy.
In 1983, Reagan became very protectionist and saved H-D (which was on the edge of going under) by ordering a tenfold increase in tariffs for imported heavyweight motorycles. This was aimed squarely at Japanese bikes that were dominating the market and driving H-D out of business.
In the 80’s the Yen was 125 to the dollar, and Japan thought it could take over the world. When the Yen was 90 to the dollar, Japanese executives woke up in a cold sweat every morning. The natural exchange rate for the Yen is probably somewhere in the 90’s, but the Japanese government won’t allow that to happen.
Yes, but it was displacement based for bikes over 700 cc. So Japan made motor bikes of 700 cc and smaller and flooded the market to avoid the tariff. I loved my non-current 1983 Yamaha 650 Seca which was ridiculously affordable in 1984!
Wolf…Many thanks for the motorcycle feature follow-up and research…It seems Harley and other bike manufacturers glory days are destined to pass into the night along side us boomers…Pittsburgh riders salute your hustle in penning this piece…
I’m gonna rant here although this is only about “things with two wheels” rather than Hogs.
Yesterday, I left my bike headlight clipped onto the handlebars while I shopped in Target. When I came out, it was gone. I’ve always been really good about putting the lights in the top bag of my bag and pannier set, where I keep things like a pump, Wet Ones, odds and ends, and my lock and cable. But yesterday I’d left it on and I decided not to worry about it. And someone else worried enough about it to take it.
No problem, I thought, I’ll go back into Target, and buy a light. Well, Target had junky lights at non-junky prices, $30-odd for a cheapo Schwinn branded light set? No, thanks.
Today I tried two shops, La Dolce Velo which had lights starting at $60-odd, and some little bitty ones that didn’t interest me. No problem, I’ll go to Bicycle Express, which seems to have everything. Except a good, inexpensive light set, it seemed. I did buy from them a Cat Eye brand clip on light for $20-odd, but when I got it home I tried it out and it doesn’t put out much light, is pretty light-duty, and since the only color it comes in is white, it emits more “fashion statement” than useful light.
I’m going to try to get it back into its packaging OK and see if I can return it tomorrow.
My good ol, fuddy-duddy Blackburn light set was about $15, maybe $17, at Performance Bicycle on El Camino Real a bit further up than downtown Mountain View, but I don’t want to hassle with going up there.
But what I don’t get is, this big, flat, valley is home to tons and tons and tons of bicyclists. Why is something as simple as a bike light so hard to get? How is Target getting away with charging $30 for junky Schwinn lights? (And their stock was really picked over too.) Why is this so hard?
So, just now, I went onto Amazon and Lo and behold, there’s my Blackburn light set, offered with different levels of lumens I guess, and I was able to order just the front one, and the price, well, OK. $17 and free shipping because I decided to try the trial Prime membership.
If people are wondering why Amazon is eating their lunch, this is why Amazon is eating their lunch. In a bicycle town, not being able to find a simple, functional, bike light. As we’re into Spring and the hot weather’s coming, not being able to walk into the local 5.11 clothing seller and buy a pair of shorts.
I’ll go further than that. My dream trumpet is a Kanstul 700. Kanstul is a great brand, made in Anaheim, California. If you played any brass instrument when you were a kid that was made by a company called Olds, that’s Kanstul. But in my area there are no Kanstul dealers. There may be one or two up in SF, but for me that’s $20 in train fare plus whatever other things, bus, etc I have to mess with to get to ’em. Meanwhile I can order a Kanstul 700 for any of a number of online places, and yes, on Amazon, and it’ll be in my hands in a week and if I don’t like it I can return it.
And people wonder why Amazon is eating their lunch …
Look on eBay for Chinese stuff. Otherwise, Flashlights are just expensive all around. Dive lights that are $1,000: It’s a battery, a wire, a switch, and a bulb. Some might use ballasts and HIDs or LED arrays and PWM drivers but all that stuff is cheap to make.
Maybe look into importing good bike lights and selling them! Could be your new business.
And I thought all the high end brass players liked to test out the pro instruments to find the sweet one. Even though they’re made on the same production line they’re not all the same? I know places like WWBW will let you try out mouthpieces and return them on the woodwind side.
Harbor Freight gives these away with a coupon:
The put out good light, are handy, and for free you can stash them everywhere (kitchen, garage, bedrooms, bathrooms, etc.). The batteries that come with them are garbage, though.
Now take the godsend farther afield: In the mountains of West Virginia (pickup truck, not biker territory) I can get that same Blackburn light and thousands of other products not even available in brick and mortar stores within a reasonable driving distance, if at all.
BTW, I think you will find your discovery of Amazon Prime to be quite a money and time saver.
(P.S. my son plays a Bach Silver.)
And, the light just got here in the mail. Same ol’ light, same ol’ puzzling way of installing the batteries, same ol’ same ol’.
I think I could get one locally from a place called “Performance Bicycle” in Mountain View but it’s a real hassle to get there.
I hope these bastards go into bankruptcy, which is inevitable.
Chrome, LOUD, JUNK. I have no sympathy for all the people who’ve crashed or got into an accident. It’s absolutely ridiculous if only for the noise. But there are so many other factors too.
Are any of these bikes electric. Quiet electric? Japan has created electric motor bikes, but still, it’s pointlessly dangerous.
No doubt pool table and hot tub manufacturer’s are facing similar numbers.
Hollywood may have to do a remake of ‘Easy Rider’.
If I’m not mistaken, Triumph make their bikes in Thailand now.
Moto Guzzi are still made in Italy.
You want a great bike for nothing, find a 2001-2003 Harley Sportster with no miles on it…. (they’re everywhere). Had Nortons, several Triumphs, then a great 2001 Sportster I’m still driving (37,000 miles, completely dry, and 58.5 miles per gallon several times on trips (both the 883 and 1200 Harleys can get that mileage on the road !!).
Try to find that performance and mileage and class at $2,000 elsewhere-you won’t. Talking used Sportsters here, with the 3.5 gallon tank universally regarded as beauty incarnate. I’m 67.
I have a 2007 HD StreetGlide. 920 lbs gassed up. I get 55 mpg in 6th gear at 75 mph running up and down the highway. Of course I get like 32 mpg around town. My Honda Civic beats my HD around town.
The Problem Facing Harley-Davidson
The charts they show are from here
Kids today have different desires which don’t include fancy and expensive cars and definitely not motorcycles. I see the dopey car commercials all over the tv around the news in the morning and I think “what neanderthals do these expensive hunks of steel with four wheels on them appeal to?”
I recently overheard a woman telling her friend that her new car was “so pretty”! “So pretty”? A car” Really?
I’m 61 and still ride. Harley Davidson appealed to me in my teens, but in my adult years I grew an affection for European and British bikes. There’s a whole culture to Harley Davidson that’s just not my scene. As I live in Pennsylvania I hate to see the loss of jobs, but the upside is less loud bikes on the street!
I gave it up sixteen years ago after riding for nearly 25. All Japanese but I have test driven just about every make. My neighbour two doors up and probably forty years my junior has a double garage full of super bikes. Damn fools accelerate those machines to 100 mph in one block. Good thing they all have double drilled disks and abs…
I see a lot of my age peers who bought a Harley as part of a retirement bucket list, having never driven a bike before or who stopped riding in their twenties when they started having families. I see just as many of these older riders splattered all over the place as I do the young crazies.
When I learned to ride it was graduated by economic constraints. There were no bike loans in those days. Started on a friend’s 250 street/trail, went to a 400 for a couple of years, then a 750 for four years. My last machine was an 1100 which I had for almost twenty years. The most fun I had was on the RD 400 two stroke. There was nothing with four wheels that would out accelerate that bike from stop light to stop light. I had some close calls, a few falls and brushes with the law but nothing serious. Then I started doing insurance claims work and saw some really terrible outcomes between car and bike. The worst were the young people whose lives were forever altered due to spinal cord or brain injuries.
Today anyone can borrow money and acquire twice the horse power I ever rode on without much if any experience. Three deaths in my area in as many weeks can be directly attributed to this. A mandated, graduated licensing system would go a long way to reducing these accidents.
There were less cars and less bikes on the road when I started riding. Do fellow motorcyclists still wave at one another in passing? Anyway I had a huge amount of fun and acquired some caution habits that are with me to this day but I would not go back to it for all the money in the world.
I left my youthful riding days without any scars. I still ride a Harley, but I don’t ride in heavy traffic. I live about an hour south of Daytona where the population density is fairly low (for Florida). I wouldn’t consider riding in Orlando traffic. Los Angeles would be unthinkable (how could it even be fun?).
Last weekend, the cops started chasing some clown on a Suzuki Huyabusa doing 120mph down SR 528. New cops took over 50 miles down the road when he was doing 170. Racing up I95 with cops on his tail he attempted to turn off onto SR 46 and didn’t quite make it. Went straight into a concrete power pole at about 120 mph.
Fortunately, my 900 lb Harley with its 86 HP engine only gets up to about 95 mph. And it takes a long time to get there.
I live in the Silicon Valley. I once saw a ‘kid’–I presume–on one of the fast Jap bikes outrun a CHP cruiser on I680 in Sunol. The biker took an offramp, apparently, and the CHP didn’t see him because I passed the biker riding timidly in the slow lane a few miles later.
Side note: Lane-splitting is legal–and controversial–in CA and for the most part bikers and ‘cagers’ get along OK (if for no other reason the drivers don’t want to get side-swiped). They usually split the #1 and #2 lanes on the freeway, and as I usually drive slightly left-of-center in my lane I give them room. Sometimes, I envy them but then remember how much they’re risking to get home 10 minutes sooner (though it can be MUCH sooner on bad traffic days, which is pretty much everyday around here).
These rider’s stories are of great interest to me.
Although I follow a different road, I have experienced your feeling of independence and freedom, another way.
Every summer all over the town I live in there are signs saying “watch for motorcycles.” But it’s the motorcyclists who are always speeding, driving recklessly, and being a general nuisance.
In the state I live in the gov’t eliminated the mandatory helmet law. All of the riders say it’s their liberty right to ride w/o one. But when they get into a bad accident, and require million dollar hospital care and disability payments, they expect everyone else to pay for their foolishness. I’m all in favor of a 400% increase in motorcycle insurance premiums.
The typical self-centered motorcyclist can be illustrated by their demand for loud bikes, which the mendaciously claim is for “safety” but simply demonstrates their care for anyone else as they rev up their bike at 11:00 PM, racing down the rode, forcing all to listen to their juvenile plaything.
Few days ago, resting on the road in my car, I heard a Harley tank battalion starting
their engines, pressing gas, testing RPM for about 10 – 15 min, before proceeding their linear ways.
They look so powerful, ready for battle.
I became jealous when they put helmets on and flagged a lady in the back.
Their bikes are so shiny with nickel & chrome and the gas tank camouflage with sparkling stars to catch your eyes.
The driver is not laying down, but sit straight up, erected, searching obstacles on the road.
Finally, this unchallenged unit exerted power and their noise have faded.
Every time I see/hear a Harley, I think of South Park…… “The F Word”. LOL
Before retiring I had many power sports dealers as customers. The Harley dealers depended on the older boomer taking out a home equity loan to finance the bike. I understand these loans have tanked and no retail consumer loan will amoritize at 20 years to keep the payments low.
Just too many used bikes on the market. Why buy a brand new HD when you can get a steal from someone who just lost another job like half the workers in this country. 12 bucks an hour is considered a good wage now
That’s like early 90s wages.
Cut 2016 bikes by 3k and clear your inventory. Cut 17 bikes by 10%. You may take a loss for awhile but you will get sales started again. The problem with HD is, is they think they are a Premium motorcycle company. They are not Bugatis or Ferrari. They are mass produced toys. The u.s. car companies are feeling the same pinch.
If Harley’s get made in Thailand do they also qualify to be called “rice rockets” like the other Asian bikes?
I miss my old Kawasaki LTD-750. Sadly, they don’t make bikes like that any more. Even their two-cylinder LTD-440 was a popular around town bike.
Old cars end up at a junk yard. Old Harley’s never do. So each year the number of old Harley’s grows…and grows…and grows. There is such a huge selection of older bikes, which are just as good or better than new ones….why buy new… the majority of Harley’s are meticulously maintained making buying a used bike easier. As a life long Harley owner…I will say this again….and again…old Harley’s never die….so if the management at HD thinks they can keep making more and more bikes…..well I guess they will just have to go bankrupt once again and learn a hard lesson.
The growing number of Old Harleys that people have (and treasure) in their garages is an interesting consideration, to say the least.
Expand this comment to include RVs, travel trailers, 4 wheelers /UTVs, “weekend” cars, bicycles, restorations, musical instruments, farm equipment, etc….
I loved the Honda 400-4 Super-sport that was many moons ago. More than likely if I wanted big and bad today, it’d be a Boss Hoss as opposed to a Harley.
Every time I think about taking up motorcycle riding, seems like one or two people I know get badly hurt/killed on one. Nine times out of ten, they were involved in a “Old driver didn’t see them……” incident.
(I’d have to buy a GSX-R or ‘busa. If I’m going to kill myself, I’m going to do a thorough job of it. Or let people BELIEVE I was going 150mph. Better “……wiped out at 150….” than “ran into side of soccer mom Honda minivan at 30mph on a suburban street…..”
Started thinking about again this spring. Sure enough, my best buddy’s little brother was killed on one a couple of months ago. Left a bar, after a bar fight (about a woman)……..alcohol involved. Basically drove off the road, thrown headfirst into a tree.
What a freaking mess. Left behind four kids, no life insurance, $20K in back child support. The brothers/sisters are trying to put some plan together, to keep them out of the homeless shelter.
But ask Harley: “Go ahead, we’ll loan you the money……….You Deserve It”
Ironically, the bike wasn’t damaged very much. Harley Finance repossesed it.
When HD production was limited, your used bike never depreciated. This caused HD to be a good investment. Then they expanded production. Too many used HD bikes on the market now. One with a sale sign on it on every other corner… Over production caused the problem. They depreciate quickly now… HOG on the other hand was brilliant. It produced a cult like following amongst HD riders as they snubbed riders from other brands. Branded clothing and the whole 9 yards was the cult fashion. Then tattoos became popular.
I am a baby boomer. Road 200,000 plus miles in my life… Never had a HD. Never wanted one. Don’t like the attitude. Quit 4 years ago due to the texting / distracted millennial drivers issue. Lots of close calls in my life, but never got a scratch. Thought I would retire riding without one.. I miss it a lot!
Best bike I ever owned was a Kawasaki Nomad!
Like many, I went from minibikes to 1970s Japanese bikes. After I got out of college in 1980, I thought a Harley would be just the thing to demonstrate a “different breed” lifestyle. I got a 1980 Sportster. Utter junk. I had to carry extra fuses. The dealer acted like he was doing me a favor to service it. I sold it a year later and soon after the starter and alternator failed.
The HD resurgence in the early 1990s helped HD create better quality machines, but the machine remained the same. Overpriced, underpowered, and obsolete. In many troubling ways, a metaphor for America, an illustrative icon.
My experience for the last 20 years has been Ducati superbikes. But I am aging out of the Ducs. I could not do a Pagnale justice.
My wife wants me to buy a big cruiser and ride two up. I would rather wear a catheter than slob around on a Goldwing pulling a trailer.
On a closing note, early to mid 1970s Japanese bikes are making a muscle care like resurgence. Prices are insane, especially for well reconditioned two-strokes Japanese bikes from that era were generally ridden to death and do not sit in every other garage. And barn bikes are hard to find these day.
I know that it all has to do with perspective, but you’re very luck to have a partner that WANTS to ride two up.
Way, way fewer bikes on the road now and here where weather is perfect riding weather most of the time. There is an annual toy ride and 100’s (maybe thousands at hey day) of riders participate. At the peak the ride would go past for probably solid 10-15 minutes at 30/40mph or so with a steady stream of riders and often 2 or 3 abreast. Last one went by in just a few minutes. It still sounds like thunder and is fun to see but participation is way lower then it once was.
Aging riders sure has to be one aspect but the overall general lack of skills of those driving cars now is shocking. Very few seem to understand the basic rules of the road anymore. And then you get these idiots that think they’re doing everyone a favor by stopping to let cars out of a parking lot or they are directing traffic from inside their cars at a 4-way stop, etc. Not realizing they are making conditions less safe and impeding the flow that the traffic engineers have designed/implemented.
Plus the txting and videos while driving is deadly combo.
Don’t forget the biggest change is simply the huge number of cars on the road now compared to 1970/80’s and all so powerful and fast in unskilled hands.
Just had a look on craigslist too, if I did want a Harley I have so many choices and many have low miles and really are better than new.
Perfect conditions to kill new bike sales. Although have you looked at some of the new Triumphs? Wow! Too bad I don’t ride anymore. But what fun it is to ride and feel the cold spots and smell the chaparral or the pines, etc.
With soaring U.S. auto prices in a slowing economy, I often wonder why more people don’t turn to scooters and other small-engine bikes. Videos from Asia suggest at a low enough price there could be substantial demand.
But since weather in much of the U.S. effectively makes motorcycles impractical for much of the year, perhaps HD should start building/acquiring very small cars, perhaps like Smart cars. Ironically, if produced efficiently, they’d be no more expensive than two-wheeled HDs.
HD afficionados are a special breed.. baby boomers who have bought into the HD brand and lifestyle.. Budweiser, Jack Daniels, outlaw look, HD branded leather fetish…etc. etc.
They are willing to pay big bucks for inferior quality motorcycles… sorry but true… the Japanese bikes offer far more bang for the buck.
There is no chance of the company being saved by Asian market penetration. The brand will die off with those who buy into it.
I’m not a baby boomer, and I ride a motorcycle. But it’s not a Harley. I’ve never understood the appeal of a machine intentionally tuned to sputter and run poorly.
Did I read that right, they make $15,500 dollars per bike on average? Maybe just a little too much price gouging!
What is the profit on a pick up truck, a few years back I saw one marked down $20,000 dollars. how can they loose that much and still pay the bills?
That’s average revenue (which means “sales” not “profit”) per bike and includes other things they sell. To get average profit per bike, divide their total net profits by their total shipments. So based on this calculation for the first six months of the year, they made $3,263 in net profit per bike shipped globally. That’s still a lot.
The sounds fishy a 20k discount unless it was a 2016 Screaming Eagle bagger they couldn’t unload at the msrp of like 38k. Which is the biggest rip off on two wheels. How they sell those is beyond me.
Firstly, cars are so cheap in the U.S that bikes don’t really make sense as to most people.
Secondly, in countries like Taiwan and Malaysia where bikes are THE primary transportation tool, people only buy cheap but reliable <200CC machines that takes forever to die. As a guy with an unlimited bike license I can't imagine me buying and riding a Harley in those countries with zillions of vehicles scrambling around me.