NEW YORK (CNNfn) -- Manufacturing a product that's jumping out of stores all across the country would normally be considered a good thing, but if you're Harley-Davidson, such runaway sales have a definite downside.
In the 1980s, being a Harley-Davidson motorcycle dealer was not exactly the embodiment of job security.
"We had a bad reputation at that time because of our quality," dealer Michael Lombardi said.
But the bikemaker managed to right itself, thanks to new management, a stock offering and a tariff placed on big Japanese motorcycles by the Reagan administration. Those changes coincided with a surge in interest in Harleys.
"They created a lifestyle for people with the clothing, (and) the clothing got fashionable," Lombardi said. "Everybody wanted to be in that lifestyle."
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Analysts say the American bikemaker has a special mystique.
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The company reported record sales of $1.1 billion through the third quarter of 1996. But, in a sense, Harley became too successful for its own good.
"Most people who want bikes are not able to find Harley-Davidson bikes -- the kind they want -- if they have a specific color or model they're looking for," industry analyst Jill Krutick said. "In general, demand far exceeds supply."
The company's inability to keep up with demand remains true despite the fact that it has tripled production over the last 10 years. Customers are often put on waiting lists, but a Harley spokesman admits many are defecting to Japanese bikes, and the numbers bear him out. Through the first half of this year, while overall motorcycle sales are up 15 percent, Harley's market share is down 1 percent.
Realizing the company is losing even while it's winning, Harley is building a new motorcycle plant in Kansas City and expanding production at its existing factories. The aim is to double production to more than 200,000 bikes annually by the year 2003.
But for now, Harley faces competition from new, highly-touted cruiser bikes like Honda's Valkyrie. Analysts think the American bikemaker has a special mystique, but they also say Harley needs to catch up with demand, or risk losing the customer base it fought so hard to build.
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