| Author | Message | ||
     Blake |
From the 2004 Annual Report...
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| Brotherbuell |
My guess is that the growth rate will continue overseas and the gap between foreign and domestic growth will be significantly narrowed in'05. This will be due primarily to the introduction of the XB12X. Now that "large" Americans (like me) have a bike that they fit on, it will be a lot easier for them to get their wallets out of their pockets. Great strategy! | ||
| Daves |
Wasn't Buell supposed to be out of business about 2 years ago? Bwwwahahahahahahahahaha | ||
| Cataract2 |
Only problem I see is for 03 to 04 domestic sales are down slightly. I'd like to see 04 to 05 sales to see if it changed for domestic. (Message edited by cataract2 on December 03, 2005) | ||
| Dbird29 |
I am glad I purchased a Buell XB9S instead of the Moto Guzzi V11 Sport. It was a coin toss between them. Moto Guzzi N.A. sold 870 USA bikes in 2004! http://www.v11lemans.com/forums/index.php?showtopic=4536 Looking at used Guzzi prices is scary also. They are giving the new ones away and killing the used market. | ||
| Court |
Watch the blue bars. | ||
| Lovematt |
Court is correct...that last year is the first one in which more Buells were sold outside the US than inside the US. In my travels to Europe and Asia...when I tell people I have a Buell they know what I am talking about and have the details in mind. That is hard to find in the States....just an observation I have made. | ||
| Blake |
Keep in mind that these are shipments to dealers, not unit sales to end customers. I'd expect to see the green bar rebound. Consider this is probably the direct result of an increase in foreign dealerships and a reduction in domestic dealerships. | ||
| Blake |
Let's see, in round numbers $79M/9,900 = $8,000/unit. Not bad. Not bad at all for wholesale. | ||
| Blake |
Will be very interesting to see the 2005 report. Should be out soon.  | ||
| Buellgrrrl |
However, shipments have still been stuck at the 10,000 or so units/year plateau for years while the market has grown. | ||
| Blake |
Right, but revenue is steadily increasing. Probably as a result of fewer Blasts and more XBs and the introduction of the higher priced XB12 line too. Will be very interesting to see the numbers for 2005. | ||
| Rocketman |
In round numbers, it costs Buell $5000 to build each unit. That's a $20 million profit + clothing, accessories, trinkets etc. How are Buell shares divided? Rocket | ||
| Blake |
Where did you get the $5K number? Seems low to me. | ||
| Rocketman |
Seems high to me. Look at it another way. You can buy any number of goods on the open markets of the world from digital cameras to wrist watches to washing machines to household furniture. You name it and somewhere somebody is selling it for rock bottom prices. Do you think those same products are sold at a loss? What makes you think Buell motorcycles are that expensive to manufacture? Broken down into its component parts, I'd bet you there's a significant number of parts less than there is in an equivalent priced motorcycle manufactured in Japan or Italy. I'd also bet you the quality of components used is higher for the Japanese and Italian manufacturers on a per item basis. That means a Buell should cost less to build than a Japanese or Italian bike of similar retail value, therefore allowing larger profits, so a better stronger investment for Buell. That though does not malign me sympathetically to Buell as a company. No, hang about, that's not right. It's better to say it puts me off Buell as a company as I see the product as way over priced. To say the same for Ducati for example, well at least Ducati go racing and that is a massive pleaser to the person buying the product, even if or when the product is over priced. Racing, if you like can be seen as the company giving something back. That of course was never the intention of the Japanese. They have always been in it to win it, using racing to showcase their skills and talent, and that has and still does sell motorcycles for them. Even if they're not winning, like Kawasaki for example, it still sells them motorcycles. So what do Buell do with their profit margin? Pay out the shareholders? Rocket | ||
| Blake |
Okay, so you pulled the number out of the air. That's what I figured. I'll try to educate you on the cost of producing a highly engineered commercial product for the masses. I hope you are right and they are making 60% net margin on their motorcycles, but that kind of margin is entirely unheard of in a competitive worldwide commercial market like sport bikes. Nope, I'd be very surprised if their net margin is more than 20%. Working in the commercial engineering/manufacturing industry for some time, as an engineer/analyst, a marketing manager and a program manager, I've come to appreciate what you and most laymen imagine is simple and easy and cheap to do. The average Joe (no offense to all the Joes here ), tends to imagine that a commercial product is merely comprised of some mass produced parts that just need put together. Wow is reality a whole heck of a lot more complicated than that; way more so than what you might see on the Discovery Channel even. The reality is market research, brainstorming, conceptualizing, market feedback, focus groups, engineering tiger teams, patent applications, design, analysis, drafting, tolerancing, mechanical test, specifications upon specification, redesign, performance testing, re-engineering, standards and regulations, resource management, documentation, government noise & pollution testing, systems integration, EFI/ECM programming/testing, purchasing, inventory management, endurance and environmental testing, safety testing, prototyping, tooling, trial production runs, retooling, quality control, human resources, hiring, firing, over-time, shows, shows, and more shows, meeting with and keeping track of subcontractors, all yes all the way in China, accounting, managing, vacations (HAH!), facilities, overhead, post productio problem resolution, computers, IT, communications, advertising... And surely you don't now imagine all this work goes humming smoothly along, no hitches or hiccoughs, do you? We call them fire-drills. Urgent issues that need solutions asap. They are horrible, stressful, and they happen all the friggin' time! They can dominate and ruin an engineering/production organization if management isn't really on the ball. Should be cheap and easy right, just a few cheap parts? Please, you now know better. Need more convincing? I've saved the best for last. Please take a look at what HDI says they spent on engineering/administrative in 2004... Only $726 MILLION, just TEN times what BMC made in gross sales. Ten TIMES! How many employees you figure Buell has, 100? What do you figure their mean compensation plus benefits and employer paid taxes amounts to? Probably around $50K. Multipy that by 100 and you have... $5 MILLION. How many of them have computers? Who buys and maintains them? How many have to travel as part of their job? Do you think HDMC gifts Buell their engines? No way. Buell pays for them and HDMC makes a profit on them too. Nearly a quater of a BILLION dollars spent!... On just engineering and administrative! Actually, I that last bit wasn't the best or the last. Here's the best evidence you can find, and it is irrefutable. It's all right here. Gross margin is only a little over 40% and that is for all of HDI with their lion's share of the high priced cruiser market. Net margin is very respectable at 17.7% You think BMC is pulling in higher margin than HDMC? I sure don't. If there were 60% net margins out there for the having, there would be a LOT of new motorcycle companies jumping on the band wagon. Instead you have them falling by the wayside or being sold in haste. Iinteresting stuff eh? I hope you have a newfound appreciation for the commercial motorcycle market. "I'd also bet you the quality of components used is higher for the Japanese and Italian manufacturers on a per item basis." I'll take that bet! Let's start with the frame. Then let's go to the swingarm/oiltank. Then the front forks. Then the rear shock. Wanna compare the seats? How about the batteries? You may have a point about the engine. I dunno. The Buell engine finish sure is nice. Hard to beat that detailing. (Message edited by Blake on December 05, 2005) | ||
| Blake |
So to wrap it up, if Buell is making the same 17.7% net margin as the rest of the corporation, the cost of their motorcycles would average around $6,800. But I doubt they are pulling in the same margin as HDMC, so the mean cost of Buell's products are most likely a bit higher. How much? Who knows? (Message edited by Blake on December 05, 2005) | ||
| Court |
Buell also amortizes that R&D, testing and travel (lots of trips, in fact more than planned, to Italy during frame development) over a fraction of the units HD (and others) do. Imagine spreading, a couple years ago, the costs of "touring" accessories over <500 T models. HD's profit margins are amazing and unheard of (ergo, the rush to make "harley like" bikes) in the industry. | ||
| Koz5150 |
When will all the other bike companies realize that Harley sells you a $10,000 bike with an additional $10,000 membership to the club? That is where the profit margin comes from. | ||
| Bomber |
Court -- the blue bars caught my attention as well -- a very good sign -- Rocket is right, you DO see many products sold at rock bottom prices -- while he seems to think that the component parts for a Big $ scoot are more pricey than those of a Buell (not sure why he things that, nor why he's ignoring the cost of the R&D teams {I would guess that the Band of Elves in East Troy is about the size of Honda's light buld committee}), there's one thing that counts -- HD's products (including Buells) are selling at MSRP (or above) -- this ain't a ripoff, but, rather, the market speaking in the clearest way possible -- you don't see HD's heavily discounted -- there's a buncha other things like that, for instance iPods -- MSRP, dude, or keep on walkin . . . . healthy companies, strong branding, good profits -- they don't have to run give-away pricing deals to generate sales (be sure to ask GM how that whole empoyee pricing routine worked for em) if HD is as smart as I think, the profit margin on Buells is less than their other products, but they write off a percentage of the costs involved with Buell as R&D for the rest of the company -- ever notice how new stuff you see on the lines in East Troy show up in Capital Drive a couple of years later? | ||
| Blake |
"When will all the other bike companies realize that Harley sells you a $10,000 bike with an additional $10,000 membership to the club? That is where the profit margin comes from." Koz, how the heck do you imagine HDI enjoys a 100% profit margin after seeing the actual numbers showing a 17.7% profit margin? Or are you referring to the dealerships while imagining that they sell the bikes for twice what it costs to obtain and prepare them? I just don't get all this overt hostility to any large business that is making a profit. Making a profit is the ONLY reason they are in business in the first place. The solution to such resentment towards profitable businesses like HDI, if you are willing, might be to become one of the 80,000 plus owners of HDI. That puts a whole new perspective on the issue for most folks. (Message edited by Blake on December 05, 2005) | ||
| Court |
>>>>(be sure to ask GM how that whole empoyee pricing routine worked for em) Hurry....Wall Street is already having the headstone engraved. >>>ever notice how new stuff you see on the lines in East Troy show up in Capital Drive a couple of years later? I remain quite amazed at the folks who think HD "partnered" with Buell to learn how to make motorcycles and sell them at a profit. HD, by investing in Buell, wisely and proactively was taking control of their future. The nay-sayers, since the day Dad bought his stick, back in 1987, have decried HD for making a profit and annually (during the time HD was breaking Wall Street records for successive quarters of increasing profits) beat their chests and declared the sky to be falling. Most of the folks who lead HD have stood on the edge of the cliff and saved themselves. Call them whateveer you, to cement your own status, want, but "dumb" they are not. In addition to keenly minding "lessons learned" they've bolstered their ranks with some folks who've learned quite similar lessons in complimentary industries. I'd submit that Harley-Davidson exectuvies are as "smart" as Buell engineers are "intelligent". Buells future has never been brighter . . . see you in Daytona. | ||
| Brucelee |
As Blake so aptly put, if you have an issue with HD, don't buy their bikes. They are free to MSRP any number they want on any bike. Consumers are free to buy, or walk on by. How much better can it get? PS-there is a lot of resentment towards profit being shown on this board. Do these folks feel the same about wages, which of course are profits to the working man? Don't you want your wages to be as high as you can get them? Hmmm, you greedy bikers you! | ||
| Ceejay |
EB comes to H-D and says I have this patent-fuel in frame, I want to build it now, Harley runs it up the flag pole, comes back saying build these, we can help, that will earn you some working capital, get your name out there and help us a little-product development, new markets, etc. we can even give you a place to sell them, and will help you obtain your final goal of building your wildly engineered sport-bike. Buell's a genuis with an end product in mind, Harley-the uber smart folks that they are gave him a way to get there, while getting them many possible things in return. It was a crapshoot on both sides, but I think both have benifited in the end. | ||
| Davegess |
Ceejay, most of what you say is true but most of it was Eriks idea in the first place. In the beginning he was able to convince a very few key players that this all sorta made sense and wouldn't cos tthem a tonm of money. Lately he has been able to convince a whole bunch HD folks that it not only makes sense but that it will make money. Rocket, I think your Buell cost number is low. First the motor is expensive relative to the big four. Part of this is that is costly to put together and had a lot of cosmetic costs in it. HD has been working hard to reduce the cost of assembly so I suspect the penalty is a lot smaller than it was back in the day. Second I don't think parts are of any less quality than others like Honda or Ducati, may actaully be higher. They buy many of the same components and use the same suppliers as everyone else. The biggest cost difference is having to spread R&D over 10000 bikes instead of 40000 (Ducati), 330000 (H-D), 1000000 (Honda). What costs Honda $1 a bike costs Buell $100 a bike. You also get this in piece price costs, Setting up the molds to run 10000 airbox covers propably cost almost as much as actully running the covers. If you can run 30000 you can get them for 1/2 the cost. Then you have to include a couple of thousand dollars for the dealar profit and overhead. Sales guys like DaveS have to eat (actaully he could stand to lose a little weight, maybe he is charging too much  and the light shave to stay on. The dealer expects MSRP to give them a simailar profit to what a Sportster 1200 does. Now as far as saying the Ducati runs a better business than Buell and give the customer better value 'cause they spend more racing, well they are broke, again, and trying to put together a deal to keep themselve in business spending investors money racing. Buell would go racing if it made any financial sense but for them it does not. Duacti sells a racing heritage, Buell sells street bike funtionality. Racing at any level really doesn't help that image. | ||
| Court |
>>>while getting them many possible things in return. And so much more than you can imagine. Look past the motorcycles to see the sunrise. >>>It was a crapshoot on both sides, but I think both have benifited in the end. It was NEVER a crapshot. Neither Erik nor Harley would have anything to do with that. Don't get me wrong, they may not have known precisely HOW they would be getting there, but they damn sure knew where they were headed. Don't let the motorcycles cloud your view of what's happening here. If racing sells motorcycles, ergo produces profits and makes the wheels of commerce turn, Ducati had best get their asses racing....again. The dealership in NYC, that is the . . . "flagship factory US Store". . . due to iffy parts delivery and TPG has, once again, headed to meet the Immobliare folks with a suitor, pending the banks approval...that will get Texas Pacific off the hook. Don't get me wrong, I love their looks and am a big fan. But, all things considered, I'm glad Dad opted to buy that HD stock at $9.00 and passed on the TPG. | ||
| Ceejay |
Court, maybe reading too much into it, but looking past two wheels into the sunrise, could my son possibly be crawling on a Buell/HD derived redneck dirtdemon soon? to me, a crapshoot is a good thing and all business ventures are a crapshoot-while knowing where they are heading getting there is often times 90% of the battle, I often end up at Step N with little to no idea how i got there but usually with the understanding that I forgot something along the way  | ||
| Jlnance |
When will all the other bike companies realize that Harley sells you a $10,000 bike with an additional $10,000 membership to the club? I'm sure they know. It's just that it's difficult to recreate the Harley club. | ||
| Ceejay |
meaning that I think Harley had little to lose-and tried to make sure of this, and much to gain, while EB had better make sure his ducks were in a row/not forget any steps on his way to Z, and while there were a few glitches can I put my M2 up for exibit A  he did a damn fine job of hitting all the letters while keeping an eye on the end-an excellently designed product, that nets a decent profit-even 5% is hard to get nowdays. I think while I am only a psuedo scientist/laborer, that this will become an excellent business model for later generations to study... | ||
| Arbalest |
Brucelee, I don't have a problem with profit on any consumer good. And wages are most certainly NOT profit for the wage earner. Profit is what is left AFTER you have paid all your expenses. I have to pay taxes on all my wages, less the piddling "standard allowance". I would love to pay taxes only on what is left after I have paid all my expenses for the year. |
