Return Of The Native

Dec. 21, 2004
Indian Motorcycle aims for a classic comeback.

Imagine trying to revive a brand that has been extinct longer than DeSoto, Hudson or Packard. That's the challenge Frank O'Connell took on two years ago when he became CEO of Indian Motorcycle. "This brand had been out of business almost 45 years, yet its heritage of innovation, styling and romance has gone on," says O'Connell, former CEO of Gibson Greetings Inc., HBO Video and Skybox International; and former president of Reebok Brands, North America. O'Connell joined Indian after a group of investors that had secured the rights to the Indian name hired a Gilroy, Calif., company, California Motorcycle Corp., to manufacture new bikes. Refocusing to leverage Indian's classic brand, including expanding into products beyond motorcycling, O'Connell earlier this year assumed the role of chairman. (Succeeding him as CEO is Louis F. Terhar.) Owner of both old and new Indian bikes, O'Connell is trying hard to establish the Indian marque as representative of a total lifestyle -- not just a single product. Brand experts point out that the potential for growth is great in Indian's market, not only for motorcycles, but for accessory lines as well. For example, Harley-Davidson Inc., which also makes apparel, had sales of $3.4 billion last year. The company is embracing the classic styling that distinguishes the brand as well as marketing a high-end line of clothing. Also, a pair of restaurants operate under the Indian Caf name. "The apparel may have a life of its own apart from the motorcycle," says Tim White, managing director of the Boston-based Audax Group, the lead investor in Indian Motorcycle. Indian, which is privately held and employs about 400, has not released sales figures for last year. However, the company, which had sales of $93 million in 2000, sold 2,042 motorcycles that year, compared with sales of 3,656 cruiser bikes in 2001. Of total sales, apparel and parts represent about 10%, according to a spokesperson. Making It Genuine For O'Connell, trying to put new life into the Indian Motorcycle name hasn't exactly been a smooth ride. For one thing, there was criticism that the resurrected Indian was nothing more than a clone -- a $20,000 bike put together with off-the-shelf parts. Then, some riders complained about excessive engine vibration and wheels from a supplier that were not true. (These problems have since been fixed, reports O'Connell.) Finally, Indian continues to bump handlebars with the giant in the market, Harley-Davidson, which sells about half of all the luxury "cruiser" bikes worldwide. Despite the challenges, sales of Indian motorcycles were up 61% in the first half of 2002, with the growth largely due to demand for the company's new 2002 Chief model with a new engine. "We're designing our own engine, chassis, frame and entire bike," O'Connell says, adding that even the suspension was redesigned. "We're designing all our components from scratch." An early sign that this latest issue of the Indian is destined to become a classic came when the Petersen Automotive Museum in Los Angeles asked to include the new Indian Powerplus engine in its permanent collection as an example of landmark styling, technology and design. The new Powerplus, whose twin cylinders have combustion chambers with a total displacement of 100 cubic inches, is the largest engine manufactured by an American OEM motorcycle company. "Having their own engine is a huge difference in terms of being genuine," says Alex Bogusky, partner and creative director at Crispin Porter & Bogusky, a Miami advertising firm that worked on the BWM Mini Cooper automobile account. "With the Mini, we had a great old brand, but we found that awareness of the brand was just 4% to 7% in the U.S., which is pretty much zero." By contrast, with the Indian brand, Bogusky says there is a "very high awareness within the community of motorcycle enthusiasts, so they would be wise to lean on their heritage. What you stand for today should be what you always stood for." And, in the case of the Indian -- America's first motorcycle and a favorite of actor James Dean -- the brand had traditionally depended on its distinctive styling to lend it cachet. Something Old, Something New But a nostalgic name alone doesn't guarantee success in today's market. Marketing experts say the product in most instances must be updated to today's technological standards to meet current consumer expectations of performance. In Indian's case, the company also has striven to distinguish its products from those of Harley-Davidson. For one thing, Indian has had to overcome the initial stigma of being an assembler of bikes using other maker's parts, especially the engine, which had been supplied by S&S, a Wisconsin manufacturer that also makes Harley-Davidson aftermarket parts. "If you're reverse engineering components and using someone else's engine, they're going to classify you as a clone," O'Connell remarks. It also meant taking the bike's reputation among some enthusiasts for excessive vibration down a notch or two. "I took the [new Chief] out again over the weekend, and it is unbelievably stable, and we have significantly reduced vibration," says O'Connell. The price also was reduced, to $21,000, down from about $24,000 for the same model in 2001. One reason Indian's sales are revving up despite an economy that's stuck in neutral is that prospective buyers of the large "cruiser" motorcycles generally aren't easily deterred from pursuing their pastimes. "No product is recession proof, but the cruiser market is more recession proof because of the lifestyle and passion of the customer," observes White. When it comes to design, though, Indian's team is laboring to strike a balance between harkening back to the old while embracing the new and stylish. Some of the classic design features of the original Indian Chief model -- skirted fenders, spoke wheels, teardrop headlight and the Indian head emblem that graces the front fender -- are carried over to the 2002 model. Adding to the classic look, the new model is lower-slung and looks sleeker. In sum, the Indian retains its timeless style and romantic image while humming along on today's mechanical technology. "We've done our Indian DNA design work," O'Connell says. But even the best of anything -- and especially something that was popular half a century ago -- can benefit from some 21st Century tweaking. To that end, a year ago the company hired a leading automotive designer, Darrin Caddes, formerly with BMW, to head up Indian's product design team, and Swedish automotive designer Ola Steingard, formerly with Saab. "That is a very smart strategy for Indian to use great design to capture part of their heritage," says Kim Rendleman, senior partner at Lippincott & Margulies, New York consultants specializing in brands and corporate identification. She adds that expansion of the Indian brand to other products "almost sounds like they are taking the Harley brand as a bit of a model. Harley has a caf in New York and a clothing brand that has very broad appeal. They've extended the brand very successfully." Adds advertising executive Bogusky, "These are definitely lifestyle brands. The Harley dealers make an awful lot of money off clothing and accessories. "Having a line of clothing also is a way to bring people into the dealership more often, so that they don't feel they always have to buy a motorcycle. It's a nice indoctrination to the brand." O'Connell, who owns 14 motorcycles in all (See "Leader Of The Pack"), thinks he is ideally suited to resurrect the Indian brand. "My background is in turnarounds, in taking companies and making them very demand driven and in bringing them in touch with the consumer," he says. "With Indian, I want to create a new-product development approach that stays very close to the consumer." Indian's chairman points out that because Indian motorcycles were not built for more than 45 years and then the brand was resurrected, "We have a chance to create something new as well."

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