My thoughts on this. I technically fall into the "millennial" age group, even though I don't think I should. I'm 34.
Harley's cost too much for what you get. Import bikes are often cheaper, and require less maintenance. They run better, smoother, and are more efficient. Styling alone isn't enough to justify the cost. Harley is still trying to sell 1940's technology in a 21st century world. Their bikes stopped being competitive with import bikes in the early 1960's. Harley is all image, and nothing else. The majority of the company's profits aren't from selling bikes, but from selling T-shirts. That right there tells you all you need to know.
Disposable income. You have to face it, with the economy being what it is, the younger crowd doesn't have the disposable income that their parents did. They can't afford the same luxury goods. Before I'll drop the cost of a decent used car on a toy, they're going to have to make it something that seems worthwhile to me. I do want a motorcycle. But chances are, when I finally get to buy one, its going to be a Honda or Yamaha cruiser, and not an HD. I want the best value for my money, and Harley isn't it.
If Harley wants to still be making bikes 25 years from now, they need get over their sound, and look at building a better, more affordable bike.
I'll be 33 next month. Completely agree with you on HD being an image and no substance, and it's an image we are not buying. Completely disagree with you on disposable income. The trend for younger folks is shifting away from cars and living in town and the city. If there were bikes that were NOT just crotch rockets and appealed to us, we'd buy them by the 1000s. Look at Japan and the Honda Ruckus. Now scale that up to having a bike you can actually take longer distances. Who makes one that costs less than $8,000 and is actually a nice ride and looks modern? Hint: no one.
However, I am of the opinion that there is 1 thing alone that decreases motorcycle sales: safety. Wake county is 1.1 million people now. Can any of you that live here think of an area, aside from maybe the very fringes, where you could live and work and feel safe riding a bike every day the weather allowed for it? I can't. That means it has to be a "toy" not something that can actually save you gas and be fun. As cars are made safer, bigger, and heavier, the penalty for bad drivers goes down as the likelihood that a biker dies in the accident goes up.