Wheels

New Mexico Business Journal, June, 1994 by David Grenham

There are a lot of ways to turn an investment into more dollars, but what can you buy for $13,000 and sell for $18,000 the next day?

Try a Harley-Davidson motorcycle, the two-wheeler Boss Hawg.

And if you own one of the old special editions in top condition, you may be sitting on a small fortune.

"What else do you have to wait a year and a half to buy?" asks Chick Hancock, owner of Chick's Harley-Davidson in Albuquerque.

"You come in here and it can be a year or more wait.

"That's led to some extraordinary events in the Harley-Davidson market.

"If you want a bike today, you pay the asking price for a used one -- or wait."

For potential investors in new or used bikes, the time may be now.

The market is attracting speculators who probably won't be around once Harley-Davidson goes through with some new production increase plans, says Hancock, but that likely won't occur for a year or so.

A new Harley that sells for $14,000 in Albuquerque today could be sold, for instance, for $25,000 or more in California.

Hancock, who purchased the dealership about eight years ago, says he sold a bike to a customer last year for $13,800; the customer brought it back three months later to consign it, but the customer sold the motorcycle to someone in the parking lot who offered him $17,000 on the spot.

"When I bought the business, the problem was too many bikes. Now there's not enough," he says. "The market has gotten so crazy that most used bikes never make it to the newspaper or the dealerships."

The high appreciation trend has been going on for about a year and a half, says Hancock.

"I don't think that supply and demand are that far apart right now," he says, "but if I were going to buy a Harley to invest in, I'd plan on selling it no more than a year from now.

"At some point after that, new ones will catch up. The market will change dramatically in a very short period of time."

The Albuquerque market has gone from about 80 new Harleys sold annually to 280.

In the big motorcycle market (851 cc.), Harley has gone from owning 20 percent of the market to 65 percent.

"Banks are very enthusiastic about the loans we generate for them," he says. "The repossessions tend to be among the lowest in their portfolios.

"They know I'd be hysterical to get a repo because of the market," asserts Hancock, "but I haven't had one in three or four years."

For stock bikes, the numbered editions and limited editions that come out about every other year, Hancock says appreciation is fantastic.

"If someone wants to invest in one, buy a numbered edition," he says. "The most traditional Harleys are the soft-tails, and they tend to retain their value more than the others.

"There are other big Harleys that are smoother, more comfortable," he says, "but the soft-tails have the leather and chrome look that for many is the chief reason to buy a Harley."

As for Sportsters, Hancock says the bike is really a stepping stone to the larger motorcycles.

For the much older Harley market, Hancock advises investors to buy only if they have a strong passion for motorcycles, don't plan to resell, or have someone knowledgeable advise them.

"Harley-Davidson motorcycles are absolutely an art form," Hancock says. "It's the look, the play of the lines.

"The mainstream street bike market has been turned into a cruising market and it's owned by Harley."

David Grenham is a freelance writer based in Belen.