Harleys = Two-Wheeled SUVs?

Harley-Davidson (HOG) is getting hammered. The company just announced that it will lay off an additional 1,000 workers as the heavy motorcycle market continues to erode. But should we be surprised?

After nearly going out of business in the 1970s, Harley bounced back in the ’80s and ’90s. But it’s not hard to see in its ups and downs a parallel with the U.S. auto industry. Just like Detroit, Harley got nailed by Japanese competition in the ’70s and ’80s. So it pushed for dominance in the big bike market, becoming the king of heavyweight, 700cc-plus motorcycles with outlaw attitude.

It’s not like these big Harleys are gas, um … hogs. A 2009 Fat Boy can get around 40 mpg. However, competition in the motorcycle market is diverse and demographically intense. Harleys project an image that’s uncompromisingly retro. A lot of younger buyers aren’t interested in the brute thwap of the legendary Harley V-Twin—they prefer the sonorous wail of a sport bike from Honda, Yamaha, or Kawasaki. All that Harley bulk fails to interest them—they’d rather zip around on a BMW enduro bike, roll in Eurotrash style with a Ducati, or even drop back to a freeway-legal scooter from Vespa.

Just as the Big Three bet on SUVs and got pounded when gas prices spikes, so did Harley gamble on big bikes. But it wasn’t gas prices that really nailed the Milwaukee company. It was an inevitable change in consumer preferences.