Bill Taylor and Ray Malzo are riding their hogs into the sunset.
The business partners and cousins recently sold their longtime Harley-Davidson dealership in Irvine to Mark Smith, who owns and operates two Texas Harley dealerships in Burleson and Fort Worth. Terms were undisclosed.
They’d owned the business for 27 years.
“We’re getting up there in age, and it sounds weird, but it was just time for us,” Taylor said. “When you run a business, there’s all sorts of details [that] wear you down.”
The 22,000-square-foot location is one of the largest Harley dealerships in Orange County offering shoppers new and used motorcycles and men and women’s apparel and accessories. But Taylor and Malzo may be getting out of the business at a good time.
The past three years have been a bumpy ride for the Milwaukee-based motorcycle company as sales have slowed because of an aging consumer base and difficulty attracting younger riders. Harley’s global revenues fell 6.8% last year to $4.9 billion. Domestic business sputtered even more.
Sixty-two percent of Harley’s riders are in the U.S., where 2017 unit sales slid 10%.
It projects a U.S. retail sales drop this year and announced plans to close its assembly plant in Kansas City, Miss., cutting about 800 jobs.
“We got overall headwinds,” Chief Executive Matthew Levatich said in its earnings call. “The industry is still very weak, and we expect that they [will] continue to be weak in the United States next year.”
Taylor and Malzo declined to share dealership sales but said the business was profitable and growing when it sold in December.
Malzo said the iconic motorcycle company isn’t the same but that a turnaround is possible if Harley introduces new models at lower prices.
“Most of my customers that were baby boomers like me would spend $30,000 or $100,000 on motorcycles because that’s all they did,” he said. “The next-generation rider, whether they’re 18 or 34, can’t afford a $30,000 motorcycle, and even if they could, I don’t know if they would spend that much money, because they like to spend their leisure time doing more than just riding a motorcycle.”
The Milwaukee-based manufacturer said it plans to expand its appeal to young adults, including more women and minorities, and one step toward that strategy is the planned 2020 launch of its first electric motorcycle.
Burning Rubber
The Irvine dealership was originally in Santa Ana, where it opened in 1974. Taylor and Malzo bought it in 1990 after running a chain of one-hour photo processing stores throughout OC for a decade.
Malzo wanted to get into the motorcycle business, but Taylor wasn’t so sure. For one thing, he knew nothing about bikes.
“I turned him down twice,” he said. “I was intimidated by it. It was one thing fighting with the rich ladies in Newport, but bikers that are mad with you—I don’t know if I wanted to deal with that.”
But Taylor came around—it helped that Malzo was knowledgeable about bikes.
After nine years, they moved it to the Irvine Spectrum area at Harley’s request in order to better serve the South County market, and sales got a boost. For example, monthly merchandise sales tripled after the move to $90,000.
Taylor said sales grew every year for 17 years until the 2008 recession, when it started losing nearly half of annual sales. The partners had to sell a second dealership they added in 2003 in San Juan Capistrano to stay afloat.
“It was a struggle for a few years, and it’s never been as good as it was,” Taylor said.
Malzo said the company used to sell about 800 new bikes a year but that that dropped to 400. He said the dealership made up the loss by selling more used bikes.
Taylor said that though customers aren’t as quick to purchase at the “big boy’s toy store,” the dealership has managed to grow a dedicated customer base, one that new owner Smith hopes to take to the next level, according to a statement.
Smith, a motorcycle enthusiast since 1992, when he built his first Harley Sportster, has been looking to expand into Southern California. He also recently purchased a Harley dealership in San Diego, according to George Chaconas, head of the National Harley-Davidson and Powersports Division for Performance Brokerage Services. Chaconas brokered the Irvine and San Diego deals.
Taylor said the business partners are now adjusting to a life in retirement but that a part of him misses walking into the dealership each morning.
“There wasn’t a day where I wasn’t impressed by the motorcycles. They’re art on wheels, [and] to be surrounded by that all the time and be in that business is a privilege.”
