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The Indian Demise

Once More The American Icon Dies

By Albert Mroz with photos from author
6/10/2010 1:59:41 PM

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indian w 
Photo by Silvermoon of Bandit's 1946 Chief captured with a beautiful woman's form accenting the lines of the classic motorcycle.

Factory liquidations have an atmosphere of nervous agitation. Call it vultural reality, as in "the vultures are circling." Just as the Grateful Dead reminded us that "One man gathers what another man spills," closures, bankruptcies, liquidations; these are the things of misery and grief, except for the few who are able to tear away what's left for a bargain, sometimes pennies on the dollar. The vultures. The Indian Motorcycle Corporation had just such a factory liquidation at the beginning of March, 2004 at their location just off Highway 101 in Gilroy, California.

All over the front of the building there were signs such as "Cheap," "Make Offer," "Store Fixtures," "Walk In" and "Liquidation." In the yard at the back guys wrangled over a company truck, which could not be sold due to California DMV regulations. Even the motorcycles couldn't be sold in California.


The 100 "left-over" Indian motorcycles inside the factory warehouse were not for sale. About thirty of them were the last amazing 2004 models. The DMV would not allow them to be sold in California. The motorcycles being liquidated had no VIN numbers, while some bikes disappeared. One hundred motorcycles may not seem like much, but that's about $2 million in rolling inventory.

These motorcycles are bound to gain collectible value.

All company motorcycle production equipment and company vehicles were shipped out by the liquidators. Tired of being away from home, the executives longed for a quick return to Grand Rapids, Michigan. A few Gilroy ex-employees cleared out their desks with somber faces. The portrait of going out of business, lost jobs, and even lost their reputations. Indian employed nearly 400 people at its peak in 2002.


There were high hopes for a true resurrection of the Indian Motorcycle, an icon of American motorcycling transportation--at least to some. Indian had a scattered truculent past, even from the beginning and this attempt was mired in bad deals, cheated dealers and lies to American Indian tribes. Coming back to life made its dance several times since 1953, when the company attempted restarts, in Ohio, Albuquerque, then Toronto, Canada. To follow this twisted trail of events decades need scouring.


The early years for Indian and Hendee Mfg. made headlines, announcing astounding growth, along with the introduction of technical and aesthetic innovation. The year was 1901. Bicycle racer extraordinaire, George Hendee, and Swedish immigrant Oscar Hedstrom teamed up in Springfield, MA. to begin building the Indian "Motocycle" as it was called for many years. Sales for 1902 were 143 bikes. These were essentially motorized bicycles, and the name "bike" had its origin established.

In 1906 Indian introduced the V-twin, and production took off with large investors in tow. By 1913 a for-then very advanced pivoting rear suspension was offered, albeit briefly, and the next year a full electrical system was standard equipment, including a combination electric starter/generator unit. (The electric starter motor was invented in 1912 by Charles Kettering, founder of Delco). The Hendee Specials were recalled and refitted with solid rear end and kick start due to poor maintenance, weak batteries and generally being too-far-ahead of their time (the very first motorcycle recall). Only a couple of such complete original Hendee Specials still exist as of this writing (see below).

Before W.W. I the popularity of motorcycles exploded in Europe and the U.S., and there were literally hundreds of manufacturers. Indian was the most popular and the biggest winner in racing for years. Racers such as George Holden and Cannonball Baker set speed and distance records on Indian bikes. By this time the Indian factory was one million square feet in size with 35 departments.

In 1912 Hugo Young patented the flexible coupling for sidecars (creating the Flxible Company) paving the way for safe and sound three-wheel applications for motorcycles, expanding their use and popularity. (Hugo Young was awarded a patent in 1916 for this coupling device).

During World War I, Indian motorcycles competed with Harley-Davidson for military contracts. Harley-Davidson became a formidable competitor, partly through contracts awarded by the U.S. Army.

The Indian Scout was introduced in 1920. As cheap cars like the Ford Model T flooded the market, motorcycle production began to slow in the U.S. during the 1920s. The Indian Prince was introduced in 1925, and in 1927 the top-of-the-line Ace-Four was unveiled. So many police departments bought Indian bikes that the company created the Police Scout especially for law enforcement.




Indian survived the Great Depression of the 1930s, and Indian motorcycles, again in neck-and-neck competition with Harley-Davidson, were bought by the U.S. Military during World War II. However, after the war, management changed again, and Indian sales begin to drop even though the Indian Chief 80 was arguably the largest motorcycle in the world with plenty of style to spare. Even though a new model called the Warrior was introduced, by 1950 the company began to lose huge sums of money. The last Indian of this era was manufactured in 1953 with the company having bled $6.5 million in just four years. Part of the problem included motorcycles sold (such as the Scout) at nearly half the cost of manufacturing for "promotional ventures". Indian motorcycles became out-of-date technically, and the necessary dollars to develop a new motor did not arrive from stingy investors. The vicious circle of "No sales without new technology" and "No new technology without sales" turned into a deadly downward spiral. At one point a deal was cut to install high-performance Vincent engines in the Indian chassis (Vindian). Philip Vincent returned to England to ramp up engine production but failed to raise raw materials funds. Vincent went out of business at the nearly the same time as Indian.


With the end of Indian motorcycle manufacturing in America, the amputated Indian sales department continued, and the brand name was franchised to English bike fabricators who slapped the Indian badge on their products for export to the U.S. Americans were not only suspicious; they were reluctant. To the horror of aficionados hurt by the first demise, the Indian name even showed up on imported Italian mini-bikes in the 1960s. The ownership of the Indian trademark and brand name became muddled and murky during the company's slow expiration. The company was essentially cut in half, with the manufacturing section out of business altogether.


Much effort was made to restore the good name of Indian, including the acquisition of the Indian name by Indian tribes, then exodus to Canada and various attempts at legal ownership of the registered trademark. In 1998 the Indian Motorcycle Company, parent to the Indian Motorcycle Corporation and IMCOA Licensing America Inc., cobbled together a prototype of the new Indian motorcycle. In October of 1998 the Federal District Court of Colorado granted the makeshift company all trademark rights to manufacture and distribute Indian motorcycles, provided production immediately started. That materialized a month later. The legal aspect of this resurrection involved the merger of nine companies, at the top of which was the Toronto-based Indian Motorcycle Company with the name stolen from Indian tribes and previous promised Indian dealers.

Wilson Plank, owner of the restoration shop called American Indian Specialists in Fullerton, CA, said: "We call them the Pretendians."


When new Indians were compared to the last ones produced in the early 1950s, there are obviously major differences in design. The new Indian had H-D design performance that the original did not have by any stretch of the imagination. Many more horses, electronic ignition, with a five-speed tranny, and smooth, quiet belt drives, even if some of the styling was classic or even retro. Good styling can be timeless.


The Indian Corporation offices and factory moved to Gilroy, California, about 30 miles south of Silicon Valley with $30 million in seed money, according to the San Jose Mercury Business Journal. It was a smart move because cheap labor was fairly abundant with plenty of good technical know-how and support industry (machine shops, painters, platers, motorheads, etc.). Although Gilroy is better known as the Garlic Capital of the World, it also presently has a population of 40,000, with plenty of able bodies, and south of the border work force. The factory was 150,000 square feet, not enormous but worthy of 4,000 units per year. There was also a good customer base in the pricey San Francisco/San Jose Bay Area, although the company boasted 200 dealerships across the nation.

A little seed money of $30 million was a faithful start.

With Rey Sotelo as company president, manufacturing ramped up, and the first Indian Chiefs were available in 1999 for $24,000 a pop. The bikes' graphics details were reminiscent of the Indian Chiefs of the 1940s and early 1950s. The first motor was a 1,442 cc S&S, 45-degree V-twin generically called the 88-inch. The Chief weighed in at 650 pounds and was 102 inches in total length. It was true to its heritage. About 1,000 Indian Chiefs were sold the first year to the tune of $20 million in sales.

2004 Indian Chief

For the year 2000 Indian used advertising such as: "What to Ride on the Road to Riches. Made by Hand. Built by Heart." There was no doubt that the price tag was targeted for a select group. But that group had a membership of 2,000 buyers by the end of the year 2000. That summed up $40 million in sales. To say it was in competition with Harley-Davidson was laughable. Harley-Davidson posted sales of $1.22 billion in the same period.


The Scout and Spirit models were introduced a year later. Now an Indian could be bought for as little as $16,995. That included the 88 cid S&S, Super Stock V-twin motor with a 5-speed constant-mesh transmission, belt drive on a 67-inch wheelbase, weighing in at 606 pounds. It was still no lightweight. The styling was exceptional, albeit retro, and various trim levels were available such as Deluxe, Roadmaster and Springfield.

By 2003 the Indian Chief was available in trim levels called Deluxe, Springfield, Roadmaster and Vintage. The Roadmaster and Vintage in full dress and weighed in at 716 pounds dry. The motor was the Powerplus 100, which was very close to 100 cid, or 1,638 cc and was the largest stock motorcycle OEM motor ever offered, period. The Chief ranged in price between $20,995 up to $24,995. Color schemes, some emulating the original red rock, Renault gray, vanilla cream and chrome yellow colors from the previous century were truly eye-popping and the details very tasty. Advertising shouted, "The chief does things few other motorcycles can do, it seduces you." Sales hit over 500 for some months in 2002. Business looked fairly rosy with $100 million in investors' clams clogging the coffers. The year 2003 saw a production of approximately 3,500 bikes, not all of them sold, but nearly all on display at various dealers including six in the Bay Area and seventeen in the state, according to The New York Times.

The management at Indian looked into the future from a truly proud perspective. They wanted an all-new motor for their motorcycles, not a "kit bike" motor as some would say about the S&S V-twins, even though they have been powerful, reliable and stylish over many years. But they weren't Indian motors, but based on Harley-Davidson technology. And perhaps they were looking at the original technical obsolescence that contributed to the motorcycle's demise exactly half a century earlier. A new motor seemed imperative.

When Frank O'Connel took over as president and later chairman-of-the-board the company, he hired outside engineering to design the latest and the greatest engine dubbed the "Powerhouse 100". Frank O'Connell also brought in another investor called the Audax Group from Boston, MA. They injected another $45 million into the Indian Corporation. A smaller 92 cid Powerhouse was also developed for the Scout and Spirit. This motor was dyno tested and put out 67.4 hp at 5250 RPM with 65 lbs. of torque at 2000 RPM or 76 lbs. at 4250.

That was adequate power but at what cost to the company? The answer is: all of it.

The six-member board of directors voted to close down manufacturing. By this time O'Connell was on the board and Louis Terkar was president and CEO.


The R&D costs for the development of a new motor (always a huge undertaking) gobbled up those millions of dollars like sardines at a sea lion exhibit. People who have worked in the R&D field (the author for example) know that investment for new technology is vital, but it's also colossal and unpredictable in terms of unforeseen expenditures due to design changes, debugging and endless improvements for which every clown in the circus has an opinion. But when the going out of business signs go up, in this case around September 23, 2003, the blame game hits like a shotgun blast at a riot.

Over the previous century U.S. motor vehicle manufacturers have produced the true classics of all time, with the highest reliability and best styling in the entire world. Perhaps it's time to let go of the past. Yet the retro renaissance is more popular than ever before. On the other hand motorcycling draws just a fraction of overall motorvehicle sales, yet biking is more popular that ever. So what's the answer? Good, honest business with integrity and quality products rule. It's the code of the West.

Corrections from a Bikernet Reader

Just found your article about the demise of Indian and would like to point out a few points:

There's a photo of a red Chief that's identified as being an '04 but it's actually an earlier model. I can tell by the hand and foot controls as well as the muffler.

The new 100 cube inch engine is referred to as the "Powerhouse 100" but that's incorrect, it's called the PowerPlus 100. The original Indian corp sold a model called the PowerPlus many years ago, hence the name.

The last photo shows a PowerPlus 100 engine. This was NOT built by S&S....these were all assembled by Power Assembly Solutions of Livonia Michigan. Although for the 2004 there were some S&S built PowerPlus 92 engines. These were cosmetically modified S&S engines that resembled the larger PP engines (round cylinders and heads).

How do I know all of this tripe? I bought a LOT of parts at the liquidation sale and am building a spot on correct 2004 Chief Vintage (I closely noted ALL the changes and updates for the '04 models). Also have quite a number of friends who are former Indian employees so I have access to their first hand knowledge.

Forgot to mention that the actual shut down date for the factory was Sept 19 (it was listed as "around Sept 23" in the article).


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Reader Comments

I just bought a 2004 Chief Roadmaster. It has 500 miles on it. I am being told it has a factory 125cc (2050ci) Indian engine in it. I have the vin, but no one can tell me for sure what it truly is.

I have some interesting stickers on it and a story to go with it. This is a true piece of History if I can get all of the facts. Any help would be much appreciated.

Brooklyn , NY
Saturday, July 29, 2017
Editor Response It definitely is a Gilroy Indian and few were built. From that prospective, it is very historic and if was built for Arnold Palmer, you have a prize.

The engine size is probably from 1250cc or 80-inch to 1,536 or 96-inch. It’s basically an Evo engine.

I’ve reached out to one of the Indian bosses from that era. I’ll let you know what I find. Here's what we found:

There was no 2004 Indians company went out of business in 2003. To my knowledge no 2004 were produced. I know bill Melvin purchased the assets and I know there were motorcycles that were in various stages of completion. Might be one of those but makes no since to be a 2004. Best I can do.--Rey

I just bought a 2003 Vintage Chief...Is there somewhere I can find out how many Chiefs and how many Vintage Chiefs were produced in 2003?

Steve Moore
kelowna , BC, Canada
Friday, November 6, 2015
Editor Response Let me check around. You might look up Ray Sotelo. He was the CEO of Indian in 2003 and currently owns Hollister Power Sports. He'll know the answers. Tell him Bikernet sent you.

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