| Author | Message | ||
     Conchop |
IMHO HD has made 2 huge mistakes. MV Augusta should have never been purchased. HD had Buell and the Porsche motor. There was no need to spend that money so recklessly. It could have been better spent on some good homegrown engineering at Buell. But no. They had to go off thinking they were going to be some exotic Italian manufacturer. How much money and time has been wasted with this foolish effort? Time will tell, but it is obvious it was a blunder. I understand that the genius behind this is no longer there. I think the entire management team needs to be examined for this. HD is a business. If there is good, then there is a payoff. Otherwise, heads will roll. Apparently there is not enough heads on the floor. Sell MV. The next huge mistake is the complete closure of Buell. I know the dealers were not fond of them. They didn't come back for chrome and hop-ups. They didn't have the gross margin. The Buells did not need to be in HD shops that didn't want them. The Buells needed to be in the smaller shops with easy dealership development policies, proudly backed by Harley Davidson. Now the management team have exposed themselves as weak. Superior engineering has been hindered by accountants instead of being furthered by quality management engineers. It is now better to cut the future engineering excellence and to deny a new market and dealership segment so the HD brass can embrace a business model which relies on branding and cheap Chinese labor and relics of the past. While there is certainly a success story in HD and the heritage and the resurrection of the their brand in the 80's, they have just blundered their future by completely stopping production of Buells. This will cost the company dearly. This is a mistake of epic proportions. Future buyers will be aware of this foolish business move. They cannot be trusted to make the right business decisions ; ie purchasing MV, closing Buell, not to mention denying Buell the use of the Porsche motor. Why in the hell would I want to invest in the HD company much less buy a bike from them when they cannot handle their success much less handle hard times. They have left us Buell owners in a ditch. Their corporate words and explanations are bullshit. Their numbers suck. THEY ARE FAILING! IMHO, the entire HD management team and board of directors need to be replaced. Their lack of decision making abilities, lack of future vision, and recent financial and overall business performance are more than ample proof of their overall incompetence. With their credibility ruined by these two unwise decisions, it is now time to demand accountability. I can only hope that somehow, the Buell brand can come out of this, much the same as HD came out of its mess in the 80's. | ||
| Gater |
This is a raw deal. This just bites my @$$. | ||
| Moonrunrs |
I read this in an article about Buell's end. It seems what's killing HD and led to the end of Buell is the same cavalier attitude toward credit and greed that destroyed the banking industry. That foolish mentality led to chaos on Wall St. and the end to American sportbikes. So sad for America. -------------------------------------------------- ------------------------------ http://hellforleathermagazine.com/ "Indeed, Harley isn't killing Buell because it's unprofitable, it's killing Buell because it wants to invest every last penny back into Harley to save that brand from possible failure. It's not actually sales that are Harley's biggest problem -- although they can't help -- it's the troubled finance wing. Harley's practice of giving sub-prime motorcycle loans to unsuitable candidates has bit the company in its proverbial ass, forcing Harley to borrow $1 billion in operating capitol at 15%. That's only enough money to see it through to the end of the year. So far this year, revenue at Harley is only down 17 percent, yet net income has fallen 71.4 percent. The decision was made to shutter rather than sell Buell because it's product range and distribution network are so heavily dependent on its parent company, that there's relatively little value in the company that could be transferred to a new owner." | ||
| Black |
Thanks Moonruners, I think you hit the nail on the head. I think you found an excellent article and an excellent explanation for what Harley has done. It is called doing the same thing over and over and expecting a different result. They must think that the Boomers will be riding motorcycles in their nursing homes! | ||
| Saxon59 |
conchop according to a story in the finance section of my local newspaper HD is selling MV as well as dumping BUELL. | ||
| Lastcyclone |
The information is finally being criticized in the bussiness world. This is a good summation. Harley Davidson Executives, Investors Wear Generational Blinders 9 comments by: Beacon Asset Managers October 16, 2009 | Harley Davidson Inc. (HOG) yesterday reported an 84 percent plunge in third-quarter profits and announced the dissolution of its Buell line of specialty sport motorcycles and the sale of its MV Agusta division in order to focus its resources on its namesake brand. Harley Davidson CEO Keith Wandell said the return from the sale of an MV Agusta or Buell is far less than the return the company gets from a Harley Davidson, and that “we’re going to be able to grow the company more quickly ... by investing in the power of the Harley Davidson brand.” According to the Wall Street Journal, I wouldn't bank on that. The shares rose almost 5 percent on the news, and were up another 3 percent in this morning’s trading, but we wonder if investors have considered how the company plans to generate these greater returns when the Baby Boomer generation that makes up the vast bulk of its customer base is rapidly aging out of the market, and the generations following do not seem to share the same affinity for the iconic brand. On a price to sales and price to book ratio one can see from the chart below that Harley Davidson is back to the levels of the late 1980s. With the average age of a Harley owner at 47 years, the difference now is that unlike the period 1990 to 2002, the company is no longer mining the demographic growth market of the large Baby Boomer generation. So, not only is the company’s potential market base growing smaller due to the smaller size of the oncoming Generation X, its growing smaller because the oncoming market base has displayed little inkling that it even likes the product. Source: Ned Davis Research } And Harley Davidson’s earlier success was built on a brand, the branding of the outlaw biker. In the 1960s and ‘70s the Harley Davidson logo was signature wear for the “Hells Angels,” other biker gangs, and bad-boy wannabes–relatively rare and thus “cool.” Today the logo seems almost ubiquitous on middle-aged and elderly bikers, who wear far more black leather and sport shinier chrome on their Harleys than any Hells Angel ever did. The once cool, outlaw-style logo has been homogenized, and is about as outlaw and cool as the Walt Disney (DIS) logo. Harley Davidson has been seeing significant sales declines since 2006, and the CEO reported that it will “bump along the bottom through 2010,” but suggested that the company’s “strategy,” cost-cutting efforts, and overseas opportunities position it for future growth. We believe that a rebounding economy will help Harley Davidson for the short term, but feel that demographic headwinds will prove detrimental to the company’s long term future unless it accounts for the younger generations (please see our July 17 Seeking Alpha article). With the boot Harley is giving to Buell and MV Agusta it appears that executives aren’t giving full credence to younger generational tastes quite yet, but at least they still have a bit of hope with the V-Rod model. Oh, and speaking of overseas opportunities, Harley Davidson executives believe that India and China represent great opportunities and plan to significantly boost the company’s presence in both countries. Let’s see, Harley Davidson primarily makes big, in many cases really big, production motorcycles. People in China, and even more so, India, on average are among the world’s shortest people. There’s just something not right about this picture. Right on! In short, we feel that the company is making a big mistake in divesting itself of two brands that have far more appeal to younger generations than the Harley Hogs, and that company executives, as well as investors, have blinders on with regard to the multi-generational earnings power–or lack thereof–of the Harley Davidson brand. Source: Wikinvest http://seekingalpha.com/article/166998-harley-davidson-executives-investors-wear-generational-blinders (Message edited by lastcyclone on October 17, 2009) | ||
| Steveford |
Their entry into trikes for the elderly who can't hold up a Geezer Glide should give you some idea of what Harley is basing their future sales on. Money won't be coming from me any more, that's for sure. | ||
| Court |
Hahahaha . . . good move . . . this must be another "focus". . . making 700# motorcycles for 120# people? I'm a bit fuzzy on this whole "focus" thing. | ||
| Ferris_von_bueller |
In all fairness, HD should continue to milk the aging boomers ( they have what's left of the wealth in this country) but they also should be taking the profits from those sales and putting it into products that attract younger buyers ( dirt bikes, sport bikes) and products for foreign markets. | ||
| Daveswan |
Maybe they can expand with a line of elderly scooters in black and chrome as an upscale alternative to those ugly beige things driving through shopping centers and amusement parks across America. Milk the boomers literally until the last input for motion ceases. | ||
| Moonrunrs |
Dave, the way HD puts their logos on everything, I wouldn't be surprised if we really did see those scooters being marketed as the "HD edition." Then those aging boomers can use their HD walkers to hobble to their HD bed commodes and tuck between their HD sheets in the HD nursing home. | ||
| Carbonsteel |
After a few months of trying to purchase a Harley, I went with A BMW instead. Recent events had much to do with it, along with the high interest rates offered by Harley Credit, dealers that still won't come off the MSRP even in a recession, and the high price of used bikes. Oh well, I did't need a cruiser anyway. After the the way Harley has done Buell, it will be a looooong time before I buy another Harley product. (No more T-shirts either) | ||
| Mrbear |
Here is an anecdotal example supporting many of the points you guys are making above. I started riding in 1995. I gravitated to sportbikes because I love performance (I do track days in a 1999 C5 Corvette - it's getting its 570HP engine this winter). Cruisers were invisible to me. Really, I don't know why I didn't run into them on the street. And I'm 52 today, and technically a "boomer". I bought my S2 in 1995 as well, and it was the only thing in the Hardly-Ableson (sorry - still a bit snipy over all of this) showroom with any appeal to me at all. But there is one exception when it comes to retro bikes and H-D, and that's a street tracker. I still have a 1995 copy of Cycle World with a Street Tracker project on the cover. Building one is on my long list. I simply love the look. So when Harley came out with the new XR that used this as its inspiration, I was pretty excited. Perhaps I could buy a factory bike for half what a project would be. Nope. Not at all. Looks good in the magazine, but then I finally got to throw a leg over one. What a cow! A Fed-Ex DC-10 with dreams of being an F-22. An XR-750 inspired street tracker should be light and agile. Imagine if they had given Erik this project; XB12R motor, tube frame, dry weight of 360 or so. Light, lithe, quick, agile. I'd live in a tent if I had to to own one. So H-D has absolutely nothing to bring me into the store at all, and I'm at the old end of the market. And they won't have anything for me or younger people, ever, because they just dumped the innovation department. The bureaucrats who are left will spend their time churning over how to milk all they can from a contracting market. Well, not really. They'll leave and get jobs back in investment banking, etc.; Micro chips, potato chips, what's the difference, right? When H-D was saved by the employee buy-out, they had it right. But they've bought into too much conventional wisdom over the years, and have atrophied as a result. Reminds me of that saying about institutions being challenged by new ideas, which are then accepted and eventually turn into institutions, which are challenged by new ideas... Unfortunately, sometimes the institutions lynch the new idea guys, and the cycle of renewal is delayed, with painful consequences. Now don't get me wrong; I don't want them to fail. I'm tired of seeing US company failures. I believe we're winners. But they needed a house cleaning for sure, and unfortunately, what they jettisoned was what they needed to keep. I don't think the long-term prognosis is good. (Message edited by mrbear on October 18, 2009) | ||
| Moonrunrs |
Mrbear, that's a great post. I'm below the Harley median demographic age, and I actually do like cruisers and was considering one to add to my Buell. But after what HD did, I'd be seriously averse to buying a hog. | ||
| Mrbear |
I love the comment above on Harley scooters for the elderly. Imagine what the Screaming Eagle edition will be like! You will be able to out-drag your roomy on the way to the Salisbury steak. But, that's not the end of the road for the H-D demographic, no sir! H-D caskets! Imagine what the Screaming Eagle edition will be like. Maybe they can copy some Ducati terminology and call the H-D casket the "FE" (Final Edition). Now that's cynical even for me. I'm beginning to sound like John Burns (whom I always enjoy reading, so there ya go). I really am in a bad mood over this. | ||
| Daveswan |
I did put HD caskets but deleted them. Sometimes I try not to hit rock bottom all at once. They made golf carts - or maybe they still do? An "FE" would be sweet! I began in motocross. My last bike was a CR500 and my friends wanted street bikes when they got their drivers licenses ... could of been maybe in our 20's so not RIGHT at 17yrs. So these guys pull up at my house with a V-Max one day, another in a GSXR, then a Sporster, Virago, GS1100, TT-500 etc. My dad had streett bikes for a long time so I had some influence. A 47' Indian Chief, Harley foot clutch something, BMW from the 50's? then Finally a triumph, no another BMW R900s and a Moto Guzzi EV1100. My friends beg me to ride the street bike. I drive the V-Max up the street and think it's gross, goofy, heavy, low... I told my dad, "If they can make a street bike comfortable to ME, like a motocross bike, I would LOVE it. But at the same time I didn't want an on-off bike. (what a b*tch!, I think my 6 year old girl old that gene.) I essentially think the bikes of the 70s-80- beginning of the 90s are sort of just not terribly good looking to ME so I get into drag racing for like 20 years a sound Jap. inlines just doesn't appeal to me. So for kicks years go by and I end up looking at bikes. I can't fit on Ninjas, hated that riding position and then I see my first Buells. By that time there were S1's. Holy Crap! I think we found a winner! I looked at the Ducati's too, but nothing quite sounds like the mildly modified Harley engine plus I like all of the quirks. Well, I have an older M2 that I plan on keeping forever and maybe adding to someday once I get this one in the shape I want. And the TORQUE! it's just made for me until I get my FE! | ||
| Dehartzell |
I will never ever again give HD another dollar of my money. I am even considering spending money to get my HD tattoo removed I am so mad at HD for shutting down Buell. I have the Uly and the 1125r and love them both. | ||
| Conchop |
It doesn't take much of a crystal ball to see that this management team does not understand their market. They are obviously following the proverbial American Capitalism model which has proven to be responsible for the worldwide great recession. Business is business. Bubbles burst. To actively become the sub-prime lender to the motorcycle world is motorcycle business treason. They pumped the hell out of their sales with unqualified customers, borrowed money at 15% to do it, then collected hefty bonuses. This is not good. More layoffs are going to come while the management team wallows in their bonus money. THey better get the attitude they had in 81 and resume the Buell brand with a special emphasis on practical performance oriented bikes [ such as the Uly. ] I predict that the super moto's are going to have a higher market share. Insurance rates aren't as prohibitive as they are on pure sport bikes and they are a ton of fun. Putting bags on them increase their overall practicality. Sport bikes and cruisers will always be there. But with the new need for SUSTAINABLE lifestyles becoming the well spring of the new American Industrial Revolution,comfortable, practical, and efficient motorcycles are the key to the future. American style is the icing on the cake. The excesses of corporate smoke in mirrors, funny money lending practices and Chinese branding, has put HD in a bind. Any business schoolboy would be ashamed to make these mistakes. Short term tactical thinking can overwhelm long term business strategies. So many businesses cannot handle their own success or remember their bravery in past hard times. This management team needs to be replaced with a team that has some foresight and balls. | ||
| Jake318 |
Harley will have to go into the whizzer market soon to suck the last out of the boomer market... Imagine a whizzer 3 wheeled electric scooter with ape hangers lol | ||
| Reepicheep |
The trouble HD is in really hit home for me yesterday... After Jack (my 9 year old and fellow two wheeled enthusiast) was done with his football game, we decided to run up to our local Buell dealer, Aces and Eights in Mason (right by Kings Island) and see if we could get him a Buell t-shirt. I was also going to go in and politely talk to their manager, telling him that I understand that he was even more of a victim of Harley Davidsons ignorance then I am, and that he has my sympathies. And tell him to tell HD that he has at least one customer that was 100% likely to buy another Buell, and is 0% likely to ever buy a Harley Davidson. So in we pull to the parking lot at 2pm on a Sunday... and nobody was there. The lights were on inside though. And on every door and window was quickly slapped together and photocopied note saying "Our apologies, we are temporarily shut down for a management change". I'm guessing "management change" is code for "bankruptcy"... otherwise the new management would not have the doors shuttered on a sunny sunday afternoon... I felt bad for them. Somebody put a fortune into that dealership, and it crashed and burned. There I was to tell him that Harleys business model is going to be the death of him, and he was already dead. Pretty sobering. It really makes me wonder at this point if Harley is even more dead then Buell... the death just isn't public yet. Glad I sold my stock... | ||
| Sparky |
You should have kept your stock and voiced an opinion at the annual stockholders meeting against H-D's poor management tactics. Haven't we learned that every vote counts when it comes to our political landscape? | ||
| Reepicheep |
The only reason I thought to keep it would have been to stay more eligible for the inevitable class action suit. The HD executives work for me, not the other way around. I fired them (sold my stock). I hope others do likewise. | ||
| Goldrush |
HOG stock today is selling for a little over half what it was selling two years ago. | ||
| J2blue |
This thread is a good one for me to opine a bit: My dad used to go on about the Harley's he knew as a kid in the 40s. When I was a kid in the 70s I remember being interested in a small Harley AMF bike that was a lot like the Honda and Kawasaki standards of the day. I thought that would be a good compromise between American manufacturing and Japanese thinking. If my dad would let me have a motorcycle at all, it would have to be an American make, you see. Well, he would never let me have one as a kid so I left any interests in motorcycles alone in favor of cars. In my early twenties I worked with a guy who had an '82 Yamaha GS650 that I fell in love with. But I couldn't get my parents to co-sign so that ended that. So what interest might I have later in life when owning a motorcycle became a possibility? It was never the chrome couch with refined technology from the 1950s, even if many looked cool. I couldn't ride looks so I wanted to find a real machine! One day in the parking lot outside work a lone Buell Blast, black in color, sat. I looked at it and thought: "that is a machine with good design, excellent engineering, practical, and very different!". I decided to look up this "Buell" on the web and found that they had many other cool machines, AND, were made in America. I had no idea at that time who Erik Buell was, or that Harley was connected to them at all. A few more years go by before I get serious about looking for a bike. I looked into used Yamaha GS650s, Kawasaki KLR650s, and that lovely little Buell Blast. Though the first two have certain positives, I ended up falling for the Buell motorcycle and the Buell company. I got the Blast, in black. Eventually I needed more power and got another Buell, my 2003 yellow XB9s, and fell in love with it, and even more in love with all that is Buell. This put me pretty much in the sport bike category as a rider, of course, and I have looked at what all the world's manufacturers have to offer to us Americans. Some are pretty interesting, but not like a Buell is. So even though I may be older than the coming demographic powerhouse market target, I think I probably share a lot with them. If they are American, and wanted to buy American, then they will look for something that not only is equal to, but far exceeds what foreign makes offer. It is preposterous to think that will look anything like an antique 30s, 40s, or 50s Harley. It could look like a Buell XB or 1125. So what? Well, the company known as Harley Davidson, and it's corporate leaders, mid-level managers, dealers, sales staff, and fans have to maintain a fixated gaze on an image of the past to support their denial of what the present day needs and capabilities are in the mainstream motorcycle market. The nostalgia market has peaked and is in rapid decline now. The company and the minions are still wanting to remain in denial and believe that they are maintaining the ethos of those halcyon days of the mid twentieth century. In normal economic conditions they may get to fade gradually away, but with the stress of the recession reality is slapping them hard in the face. Like a drug addict, they will maintain denial fiercely. Also like a drug addict, they will face imminent calamity and actually set in motion the events that bring about their demise. Regardless of what happens to Erik, the Elves, and BMC, we can be certain that the future won't look like a Harley, nor any other chrome couch immitator. The future will look more and more like a Buell, even if Buell as we have known it is merely an inspiration to that future. Buell is dead Long live Buell! | ||
| Mrbear |
Reepicheep, I'm a Cincinnati guy too, and I'm really saddened to hear about Aces and Eights.It is a very nice dealership, and the owners seemed very nice. I talked to them a year and a half ago. They were actually excited about Buells, but just had no understanding of the Sportbike market or buyers. I actually considered moonlighting there to help them get into the groove on Buells, but my job tends to keep me buried. I hadn't really let go of the idea, and was thinking recently that I should open the discussion again. Obviously that's on hold for more than one reason now. Steve Brock was working there, and he sold me my S2 in 1995. My wife just dug up a photo taken when I piked up that bike. I had a very big smile on my face. Oz (Doerman) is in it, and for those who have seen him, you won't believe how different he looks (well, me too - it was 14 years ago). Nostalgic, and now sad at the same time. I do intend to scan it and post it. Cheers | ||
| Doerman |
Steve.. there's a Buell guy if there ever was one. Unlikely to be recognized as such by first impression, but a performance junkie through and through. A hell of a nice guy too. I still have the 96 S1 he sold me. | ||
| Reepicheep |
They tried, and they were nice, but I went in once for an oil pump gasket... and they had to special order it. Went in again for an exhaust mount bolt, and they only had it in chrome. Called a third time for a new throttle cable... not in stock. Went in a fourth time for a set of back brake pads... and they had to special order that as well. That was the straw that broke the camels back... The place was still intact, so I expect it'll re-open. I feel bad for the owner, he just invested a fortune to open that place and had to be creamed. I feel bad for the staff as well (who were generally helpful)... they will no doubt get clobbered also. Wonder if that Ducati is still sitting in there... | ||
| Mrbear |
What Ducati? Not that I need another one. I need to sell a couple. But asking is an unpreventable reflex. | ||
| Reepicheep |
They had a 998 or something, pretty unique bike. Looked better from 15 feet away then it did when you really got close... I expected better attention to detail for a $25k bike. | ||
| Reepicheep |
Bummer. Found out the owner died, probably from a heart attack, a few weeks ago. Last news was that his widow was going to try and keep things afloat... best of luck to her. No idea how things progressed since then. It's a tough time for tough times. My condolences to his family and friends... | ||
| Gohot |
When I saw that Buell was useing Rotax, I thought then and there that it was up for Buell, that they were so far from a real Buell that they would end up loosing customers. Kind'a like stuffing a Honda RC51 motor in a Buell chasi. Thats my theory. | ||
| Trevharding |
I guess if they wanted to play in the Superbike category, they had to beef up the performance a bit, ergo the Helicon. Anyone ever find any vids or comparisons of RC51 (ish) V-twins against 1125CR/R? Just for fun. | ||
| Conchop |
This whole affair is ridiculous. The management team is all underground now and little is being said. Lots of dust to settle . |
