On the other hand, the entry of so many new players could create excitement and fuel the already-hot cruiser market. "There's certainly room in the market for all of us," Victory general manager Matt Parks says. "What we're doing is growing the motorcycle market as a whole. The pie's just going to get bigger."
Demand for cruisers has never been stronger. Overall U.S. cruiser sales increased by 31% between 1994 and 1996. They should jump another 9% this year, to nearly 134,000 bikes. Excelsior should benefit from those trends. It needs to sell only about 5,000 motorcycles to break even, one analyst estimates.
The company hopes to produce 400 cruisers by late next year. By 2003, it plans to annually manufacture 20,000 motorcycles, including a touring bike, in several different models. There are already waiting lists for the Super X. "I have more than 60 people who've given me deposits of over $1,000," says John "Butch" Donahue, the first Excelsior dealer. "I could get a couple thousand deposits if I wanted, but I couldn't supply the motorcycles." Similarly, sales of Excelsior accessories--leather jackets, T-shirts, and vests--have taken off. In 1996 the company had apparel sales of $100,000, including orders from Japan and Singapore.
The Super X will feature a sophisticated V-twin engine boasting four valves per cylinder, dual overhead cams, and electronic fuel injection. The fine craftsmanship of the Super X may elevate it to Harley-like prestige, but it will also raise its price. In fact, the Hanlons are trying to dethrone Harley with a more expensive bike. The Super X's projected price of $17,500 will actually exceed the cost of a comparable Harley, albeit only slightly. "People always think we're going to sell for less, like we've got to do that to get the sale," CFO Rootness says. "As a marketing strategy, we're saying, 'No, no, no. Ours is a higher technology. It's got a better engine, better brakes, and a better suspension. It will be a premium-priced bike.' "
The high price of the Super X could drag down sales. Despite its promise, the motorcycle remains largely untested and unknown. Given the choice between an Excelsior and a less expensive Harley, many bikers might opt for the hog. "The performance of the motorcycle is going to make or break Excelsior," says David Edwards, editor-in-chief of Cycle World. "If it outperforms Harley on all fronts, it will do well. But if styling is the only difference, it will be a tougher sell."
V. Cruising into the future
A Harley rider named "Doc" walked into the cavernous Excelsior-Henderson tent at Sturgis with skepticism, wondering who these upstarts were. With a shaved head, a white beard, and a badass attitude, this 48-year-old member of a Vietnam veterans' motorcycle club wandered over to the Super X. He studied the bike, examining its engine and stroking its seat. A smile crossed his face. He liked what he saw. "I think the styling's unique, and I appreciate the technological advancements," he said. "I'd buy one. As a matter of fact, I'm gonna put my name on the list right now."
Moments later, Jim Shadwick sauntered into the exhibit. Dressed in a Harley hat, a Harley shirt, and a black-leather Harley belt, the 55-year-old pipe fitter and welder from Sand Springs, Okla., was a walking Harley billboard. Nevertheless, he bought an Excelsior-Henderson T-shirt for his granddaughter. "I think their bikes look real nice," he said. "I think if anybody can make it, they can make it."
It was like that the entire week of the rally. More than 25,000 people visited the Excelsior tent between August 4 and 9, snapping up $45,000 worth of merchandise. For the second year in a row, Excelsior-Henderson shined at Sturgis. "Last year we went looking for exposure for our unveiling, and we obtained that," Dave Hanlon says. "This year we came for acceptance, for people to walk up to us and tell us they like our product. That's what we left town with--acceptance."
Acceptance from hard-core Harley riders like Doc and Jim Shadwick means everything to the Hanlons. Bikers love to talk. The warm reception accorded the Super X will presumably translate into word-of-mouth sales and street credibility for a reborn American classic. Says Dan Hanlon, "When you purchase an Excelsior-Henderson, you're buying a piece of American history, a piece of the frontier, a piece of freedom, and a piece of individuality."
Marc Ballon is a staff writer at Inc.
Executive Summary
THE COMPANY: Excelsior-Henderson Motorcycle Manufacturing Co., in Belle Plaine, Minn.
COFOUNDERS: Dave Hanlon, 44; Dan Hanlon, 41
MAIN COMPETITION: Harley-Davidson Inc.
CAPITAL: Raised $3.6 million in private equity capital in 1995, $11.5 million in an oversubscribed private placement in 1996, $27.6 million through an initial public offering in 1997
COMPETITIVE ADVANTAGES: A brand name with historical cachet, a made-in-the-USA marketing appeal, strong management with some motorcycle-industry experience, support among biking enthusiasts
HURDLES: Getting to the production stage, building a dealer network, selling bikes at a premium over Harley
