As I've said in a few other places, I don't think the problem is with the bikes, it's with the customers and the marketing.
The M8 Softail is a good motorcycle, not just good for a Harley.
The bikes runs well out of the crate, so don't need all the Stage 1 nonsense to remove all the features needed to allow it pass noise regs. The braking, handling and suspension are good (as long as you avoid the ones with daft rear tyres), and the build quality seems pretty much spot on. In a world where full on sports bikes are falling out of favour and being replaced by bikes suited to a more comfortable and restrained pace of life, the bikes seem like a good fit.
Price-wise, with careful shopping, they are on a par with the likes of BMW and Triumph (when I was looking, a Harley Street Bob could be had for the same price out the door as a Triumph Bobber).
I suspect the image of the existing customer base isn't helping them much (unless you're an "outlaw" or an "accountant" and love obnoxiously loud pipes it's not the bike for you), and Harley are big on "lifestyle" which, whilst likely helping their merchandise sales, feels like it segregates HD from mainstream motorcycling.
I ride with the folks I ride with whoever made their bikes.
I could be way off the mark, but I think that Harley would do a lot better if they started selling their products as motorcycles rather than as a lifestyle.