Why are Harley-Davidsons so expensive? │ Full explanation


Harley-Davidson motorcycles are expensive because it’s a premium brand, it has increased its quality since the 1970s by reducing the number of suppliers and implementing strict standards and also because manufacturing and assembly takes place in a country where the demand for labour is higher.

Overview

Harley-Davidsons have been argued to be “expensive”, “overpriced” and “underpowered” for no apparent reason besides profit margins. But by comparing Harley-Davidson models to other brand models and looking into what increases the price, these statements don’t seem to hold up that well. Still, it’s safe to say that Harley-Davidson is indeed a premium brand.

In this article, we dive deeper into the economics of motorcycle manufacturing, supply-chains and selling prices. We also take a look at what the term “underpowered” refers to and why it’s really just a misconception, or lack of understanding, of what horsepower is. For my model comparisons, I’ll deliver the finished calculations, but you can check them yourself with the provided links to the pages in my motorcycle database (which is arguably the most user-friendly motorcycle database to date).

In this post, we’ll discuss the following:

  • How expensive is Harley-Davidson models compared to other brand models?
  • Why do people think Harleys are underpowered?
  • Understanding how Harley’s supply-chains and manufacturing works
  • Understanding how developed industries affects the cost of Harley-Davidson
  • Conclusion: Why are Harley-Davidsons so expensive?

How expensive is Harley-Davidson models compared to other brand models?

Sorry, just saying that Harleys are expensive doesn’t mean all that much without context. The fact is that the word “expensive” has no meaning without knowing what you are getting or how it compares to a similar product or service. And to add to this, it’s also relative to time.

Yes, something can’t be perceived as “expensive” or “not expensive” without the understanding relationship between time and cost. For example, if I were to ask you whether $1,000 is a lot, what would your reaction be? You’d probably respond with a question; “A thousand dollars for what?” or “A thousand dollars for how long?”

Money has no meaning without time, it’s essentially a two-dimensional element.

In this case, we won’t be looking into what you are getting for your money just yet (we’ll get to that soon). For now, we just want to know how much Harley-Davidson motorcycles cost in comparison with other brand models. Below are tables for each motorcycle brand (16) with their average, lowest and highest model price. Each table will also have a positive or negative percentage that indicates how the price compares to Harley-Davidson.

What this data reveals is that some brands deliver a wide range of motorcycles, from the more affordable models to very premium models. And it would be worth noting how Ducati created a separate brand (Scrambler Ducati) for their less premium models in order to keep their premium status for their brand name. Harley-Davidson, like many others, kept using the same brand name but also offers less premium models that are competitive in pricing.

Of course, Harley-Davidson doesn’t seem to be interested in beginner bikes that are comparable to the likes of the Honda Rebel 300/500, but rather intermediate motorcycles which you could call “your first real bike” or “your first big-boy bike”. You could argue that offering models in the beginner segment could negatively affect the status coupled with the Harley-Davidson brand name. It’s an opinion often expressed by current Harley owners.

Harley-Davidson

ModelPriceComparison to H-D
Lowest$7,599.00+0%
Highest$40,999.00+0%
Average (per model)$20,235.36+0%

Source data: https://twomotion.net/motorcycle-catalogues/harley-davidson/

Aprilia

ModelPriceComparison to H-D
Lowest$9,399.00+23.69%
Highest$24,499.00-40.24%
Average (per model)$14,849.25-26.62%

Source data: https://twomotion.net/motorcycle-catalogues/aprilia/

Benelli

ModelPriceComparison to H-D
Lowest$3,999.00-47.37%
Highest$6,399.00-84.39%
Average (per model)$5,091.86-74.84%

Source data: https://twomotion.net/motorcycle-catalogues/benelli/

BMW

ModelPriceComparison to H-D
Lowest$5,795.00-23.74%
Highest$32,900.00-19.75%
Average (per model)$16,792.83-17.01%

Source data: https://twomotion.net/motorcycle-catalogues/bmw-motorrad/

Ducati

ModelPriceComparison to H-D
Lowest$9,295.00+22.32%
Highest$112,370.00+174.08%
Average (per model)$24,571.63+21.43%

Source data: https://twomotion.net/motorcycle-catalogues/ducati/

Honda

ModelPriceComparison to H-D
Lowest$4,349.00-42.77%
Highest$28,500.00-30.49%
Average (per model)$11,020.54-45.54%

Source data: https://twomotion.net/motorcycle-catalogues/honda/

Indian

ModelPriceComparison to H-D
Lowest$8,999.00+18.42%
Highest$38,999.00-4.88%
Average (per model)$21,662.04+7.05%

Source data: https://twomotion.net/motorcycle-catalogues/indian/

Kawasaki

ModelPriceComparison to H-D
Lowest$4,999.00-34.22%
Highest$55,500.00+35.37%
Average (per model)$14,311.35-29.28%

Source data: https://twomotion.net/motorcycle-catalogues/kawasaki/

KTM

ModelPriceComparison to H-D
Lowest$3,999.00-47.37%
Highest$19,999.00-51.22%
Average (per model)$12,849.00-36.50%

Source data: https://twomotion.net/motorcycle-catalogues/ktm/

Moto Guzzi

ModelPriceComparison to H-D
Lowest$8,490.00+11.73%
Highest$18,490.00-54.90%
Average (per model)$13,640.00-32.59%

Source data: https://twomotion.net/motorcycle-catalogues/moto-guzzi/

MV Agusta

ModelPriceComparison to H-D
Lowest$13,290.00+74.89%
Highest$47,650.00+16.22%
Average (per model)$23,720.00+17.22%

Source data: https://twomotion.net/motorcycle-catalogues/mv-agusta/

Royal Enfield

ModelPriceComparison to H-D
Lowest$4,960.00-34.73%
Highest$6,490.00-84.17%
Average (per model)$5,689.50-71.88%

Source data: https://twomotion.net/motorcycle-catalogues/royal-enfield/

Scrambler Ducati

ModelPriceComparison to H-D
Lowest$7,995.00+5.21%
Highest$15,495.00-62.21%
Average (per model)$11,261.67-44.35%

Source data: https://twomotion.net/motorcycle-catalogues/scrambler-ducati/

Suzuki

ModelPriceComparison to H-D
Lowest$4,599.00-39.48%
Highest$17,999.00-56.10%
Average (per model)$11,595.00-42.70%

Source data: https://twomotion.net/motorcycle-catalogues/suzuki/

Triumph

ModelPriceComparison to H-D
Lowest$7,995.00+5.21%
Highest$22,600.00-44.88%
Average (per model)$15,202.65-24.87%

Source data: https://twomotion.net/motorcycle-catalogues/triumph/

Yamaha

ModelPriceComparison to H-D
Lowest$4,499.00-40.79%
Highest$26,999.00-34.15%
Average (per model)$12,651.17-37.48%

Source data: https://twomotion.net/motorcycle-catalogues/yamaha/

Why do people think Harleys are underpowered?

Video: FortNine

As Ryan explains it, “torque can’t do anything that horsepower hasn’t already done, and vice-versa”. So this essentially means that the amount of maximum horsepower your bike has no value unless you know at what RPM this horsepower is generated. It might explain why Harley-Davidson always chose not to provide metrics in horsepower, but instead only torque figures.

In a fairly recent interview with the makers of the 2021 BMW S1000R, they basically said the exact same thing: “horsepower, by itself, is an obscure metric…”

But this is nothing new. Engineers have known this since forever… And that’s why you’d find a gearbox in almost every internal combustion powered vehicle that can keep the RPMs in the optimal range that the engine was designed for.

So to answer the question, “Why do people think Harleys are underpowered?”: They simply don’t understand what horsepower is. And that’s okay… For a long time, I didn’t either.

Understanding how Harley’s supply-chains and manufacturing works

Harley-Davidson Inc directly employs around 5,900 employees. But when considering workers that are employed within the supply-chain, the figures go up by another 2,269,546. Keep in mind that suppliers rarely provide their products and/or services to only one client. Source: https://csimarket.com/stocks/suppliers_glance.php?code=HOG

You may have heard all the talk around vertical integration and SpaceX. Vertical integration is when a company starts manufacturing their own parts or provide their own services where it would otherwise have been done by a supplier or a contractor.

Horizontal integration is when a company buys another company in order to access their manufacturing, suppliers or contractors. A good example of this is how Volkswagen bought Audi, Porsche, Lamborgini and many others. Many of their models share the same platforms which make it less costly to produce. It doesn’t always turn out this way; in many cases, it could be something as simple as having access to washers or bolts at a reduced cost.

The reason SpaceX is able to perform vertical integration is because they use highly specialised parts in low quantities. This means that the manufacturers of these parts would need a very high-profit margin just to make it worth doing business. For industries, like motorcycle manufacturing, there is an abundance of manufacturers, suppliers and contractors. This makes the market for suppliers very competitive and it would rarely benefit a company to vertically integrate its supply chain.

In the 1970s and 1980s, Harley-Davidson had a huge problem with the quality in their supply chain. It was concluded that they needed to reduce the number of suppliers and implement strict quality requirements in order to sustain competitiveness and not just to improve performance for immediate gains. This is, of course, good in the long term but it does however reduce profitability in the short and medium terms. The only way to keep profits at a healthy margin is to increase the price of the final product.

Any project manager (and most likely operation managers as well) would tell you that cost can be directly correlated with time, quality and quantity. This triangular ratio will always be consistent, increase quality and you’d either have to decrease time or quantity to keep the costs the same. Since time is mostly consistent throughout the manufacturing process, you’d have to reduce the quantities of the product resulting in a higher price per unit.

So this partly explains why Harley-Davidson motorcycles aren’t as affordable as they used to be back in the day; because of the increase in quality.

Understanding how developed industries affects the cost of Harley-Davidson

If you haven’t been living under a rock your entire life, you probably know that profits are equal to selling price minus cost. So let’s take a look specifically at cost.

(Profits) = (Selling Price) – (Cost)

We’ve already looked at the supply chain of Harley-Davidson and concluded that the increase in quality has an impact on the cost of production. But another thing we haven’t looked at yet is labour. Labour refers to the factory workers as well as administrators, designers and basically anyone who is employed by the company apart from the CEO.

Just to quickly clarify; a CEO is technically also an employee, just like a factory worker. But in a capitalist economy, a CEO’s pay or salary is usually based on the company’s profits and performance, whereas any other employee is paid according to the job market of that particular industry in that country.

And this brings us to the phrase that arguably contributes to many of Harley-Davidson’s sales:

“Harley-Davidson, Inc., H-D, or Harley, is an American motorcycle manufacturer founded in 1903 in Milwaukee, Wisconsin”.

https://en.wikipedia.org/wiki/Harley-Davidson

The fact that Harley-Davidson manufactures/assembles their motorcycles in the US makes it more expensive. This is widely thought to be because the US is considered to be a developed nation. But in reality, it has less to do with how developed a country is and more to do with how the supply meets demand for labour in that particular industry.

This means that if someone is willing to do the same job for less because of a scarcity of work in that industry, labour cost will be less. The exact same goes for when someone is not willing to do a job for the offered amount because they can be paid more elsewhere, the labour cost increases. These are the principles that a free market runs on.

In a country like the US, the industries are developed enough to have a sufficient demand for increase in wages. This makes labour costs in the US more expensive than in other countries where there is a scarcity of work. This also allows countries with undeveloped economies to produce or manufacture goods at a lower cost. In other words, it allows those countries to develop.

You could argue that if a country with an undeveloped economy tried to increase the quality of life for their citizens by implementing a minimum wage, it could hinder the natural development of that counties economy. The same could be said for countries that import workers from undeveloped countries. It might allow the companies in a developed country to produce their goods at a lower price, but it arguably takes away the opportunity for an undeveloped country to enter the particular industry.

With this said, it doesn’t mean that Harley-Davidson should move all their manufacturing and assembly lines to undeveloped countries; any nation has a sense of pride towards products produced within their own country. The Germans love driving their Volkswagen, the French love driving their Peugeot and an American certainly has a love for their American products, like a Harley-Davidson. But you should know that it comes at a price relative to the development of each country’s industries, respectively.

To tie up some loose ends, you should remember that when labour costs become too high in a properly functioning economy, it drives innovation and technological advancements (like robot assembly lines). This advancement is impossible without high wages in the industry, because why would you buy a multimillion-dollar machine to do the work of someone who is willing to work for $15 an hour?

People who fear that machines will take their jobs, forget that the reason those machines were built is because there is a high demand for labour. For some reason, I felt it would be worth mentioning here.

Conclusion: Why are Harley-Davidsons so expensive?

Harley-Davidson motorcycles are expensive because it’s a premium brand that doesn’t cater for the beginner class motorcycle segment, it has increased its quality since the 1970s and 1980s by reducing the number of suppliers and implementing strict standards and quality checks and also because manufacturing and assembly takes place in a country with developed economic industries where the demand for labour is higher.

In addition to this, the common belief that “Harleys are underpowered” doesn’t hold since horsepower, by itself, is an obscure metric when referring to the performance of a motorcycle.

Final words

I always try to keep my articles interesting and informative. And I’m always thankful when they are shared on social media platforms or Pinterest.

Two Motion

I don’t see myself as an expert in every topic of motorcycling but my articles usually relate to new experiences that are relevant at the time of writing.

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