Dale's Motorcycle Blog

Posts Tagged ‘Harley-Davidson’

When Harley-Davidson announced that MV would be sold back to Castiglioni, they didn’t mention the price of the sale. As a publicly traded company, however, you can’t actually keep that a secret.

Via the Wall Street Journal, according to the company’s 8-K filing, the sale price was 3 Euros. But get this:

In the filing Harley said it “contributed 20 million Euros to MV as operating capital” that was put in escrow and is available to the buyer over a 12-month period. The buyer is Claudio Castiglioni, who, with his brother Gianfranco, ran MV Agusta for years before selling it to Harley two years ago for about $109 million.

So, H-D paid $109 million for MV, they then had to pay $162.6 million in write-downs to cover MV’s bad debts, and then they had to pay Castiglioni another $20 million to take it back.

I’m sorry, but that’s just hilarious!

But, of course, I’m not a Harley shareholder. They probably aren’t as amused to learn this.

It seems like only yesterday that Carlo Castiglioni sold the iconic MV Agusta brand to Harley Davidson.  Now, two years later, he’s bought it back–for less than he sold it to Harley-Davidson.

Along with Giovanni Castiglioni, the company will be headed by Mr. Massimo Bordi, a well known Italian manager. A 62-year-old engineer, Bordi took Ducati to success during the years when that company was owned by the Castiglionis and continued to manage it successfully under the ownership of Texas Pacific Group. Since 2003 Massimo Bordi has been the CEO of Same Deutz Fahr, contributing largely to the success of the company. Massimo Bordi commented that “MV Agusta has full capacity to once again become a major player in the high luxury brand motor bikes, this brand is one of the most recognized worldwide. We will implement a number of reorganization and managerial actions in the near future.

So, essentially, Castiglioni pawned off MV on Harley, so they could dump money into it for a few years, then bought it back as a stronger company for less than he sold it. Why H-D bought it in the first place is still an unanswered question.

Oh, and how hard did Castiglioni screw H-D?  Pretty hard.

Harley-Davidson bought MV Agusta for $109 million back in 2008 (most of which was bad debt), and now just a little over two years later is making a tidy profit of…well, nothing. After wiping the books clean, investing in new infrastructre, and getting MV Agusta back on track with an all new model line-up (with a bike on the way), Harley-Davidson saw a paltry sum of €1 cross its desks.

€1 is about $1.25.

So, Harley paid for the privilege of getting MV back on its feet, paying off the debt, bankrolling a new product line, then essentially gave it back to Castiglioni.  Who is, after all, the guy who was running MV into the ground before Harley-Davidson rescued it.

So, now we’ll get to find out if Castiglioni will run it into the ground again.

The Road Glide has always been my favorite Harley-Davidson.  I really don’t like the bat-wing fairing on the other big tourers, mainly because I hate the idea of an extra 50 pounds riding on the forks. But the Roag Glide, with its fixed fairing is the best-handling of the big Harleys I’ve ridden–with the exception of the Road King–and I absolutely hated the Electra Glide Ultra.

2011 Harley Davidson Road Glide Ultra

For 2011, Harley has introduced a new Ultra version of the Road Glide, with all the touring amenities of the Electra- Glide Ultra.  Dain Gingerelli at Motorcycle.Com got his hands on one and was able to take it for a spin.  You can read his review at your leisure, but the thing I found interesting was that he highlighted the fact that for 2011, the MoCo is now offering a Power Pak package, the centerpiece of which is not the venerable TC96 powerplant H-D has produced for years, but a new 103ci motor, with increased torque and–to the extent that it matters on a big touring cruiser–horsepower.  And the Power Pak does seem like a pretty good value for the money, considering that you get more than just the engine:

Now for the even better news: the optional Power Pak costs $1,995, a bargain when you consider that the cost for upgrading a standard 96-cubic-inch engine is about that for parts and labor alone. Think of the ABS and security system as a bonus. Ditto for the engine ID emblem.

And the 103ci mill is a big improvement, with 102 ft-lbs of torque at 3,500 RPM. That’s just shy of a 10% increase over the TC96’s output.

However, you should probably be aware of this, before you buy:

Which begs the question: why doesn’t Harley-Davidson equip all of the Big Twin line with this bigger and better engine? Good question, and when asked, one Harley spokesman merely smiled.

The TC96 is not a bad engine, at all.  But a 1574cc engine for a big cruiser when the Big Four are running 1800cc – 2000cc mills–with signifigantly more power–in their competing bikes makes the TC96 a comparatively underpowered engine for such large bikes.  Even Victory has switched their entire model line over to a 106ci mill for their 2011 models. And by comparison, the 2011 Victorys’ engine will put out–depending on the factory options you want–up to 113 ft-lbs of torque, or nearly 10% more than the Harley’s 103ci mill does.

The TC96–despite being unveiled in 2007–is just a bit long in the tooth, in the sense that it produces torque and horsepower that reflect the standards of an engine generation ago. It’s better than the 93ci mill it replaced, but it still isn’t on a par with the big Japanese cruiser motors, or the motor that will grace this year’s Victory motorcycles.

I think that smile on the H-D representative’s face indicates that H-D is gearing up for another change to the engine line-up in the next model year or two.  With Victory doing so this year, I suspect that makes a change at Harley inevitable in the near future.

So, your question has to be, “Do I want the bigger engine now?, Or can I wait a season or two until it’s standard equipment, and most likely cheaper?”

Harley-Davidson Boom Audio System, available for late-model Sportys, Softies, RKs, and the Wide Glide

I sure wish this had been available when I owned a Sportster.  Harley-Davidson announced today that a new Boom! audio system is now available for the 2004-later XL Sportster, 2010-later Dyna Wide Glide, 2000-later Softail, and 1999-later Road King models.

From the H-D press release:

The new Boom! Audio Cruiser Amp and Speaker Kit (P/N 76262-08 Chrome, 76320-08 Black; $399.95) from Harley-Davidson Genuine Motor Accessories provides amplified music through two 3.5-inch speakers. The individual speaker pods clamp to either a 1-inch or 1.25-inch handlebar and can be adjusted to direct the sound toward the rider. The waterproof speaker elements are protected behind black-and-chrome grilles that are finished with a center-mounted Bar & Shield medallion. The compact two-channel stereo amplifier mounts on the frame downtubes. A stereo auxiliary input connects to most portable audio players, some of which can be easily housed in a convenient BOOM! Audio Tank Pouch (sold separately). The integrated hand control features volume up/down buttons and a backlit on/off button, and is designed for easy operation with the rider’s right thumb, even while wearing gloves.

It’s now available from Harley-Davidson dealers.

Motorcycle.Com kicks it off with their ride on the new Sportster 883 SuperLow.  H-D has redesigned the suspension of this bike to give it a smoother ride and more suspension travel, all while keeping the seat height only two feet from the ground. Sadly, those improvements, while increasing the ride quality, haven’t–and can’t, really–solve the problem of cornering clearance with a lowered bike. There’s a host of improvements on the bike, however, meaning that the “SuperLow checks in with new suspension calibrations front and rear, new wheel and tires sizes, new fork and gas tank, even a new and better-padded solo seat.”

meanwhile, Motocycle USA went straight to the high-end bikes, checking out the new CVO custom editions of the Road Glide, Street Glide, Electra Glide, and Soft Tail. These are Harley’s top-of-the-line bikes, and are all Powered by the 110ci V-Twin, rather than the standard 96ci plant.  This gives them a nice bit of extra oomph that the standard models don’t have.

Harley-Davidson unveiled their new model year bikes today, expanding the product line to 32 motorcycles. OK, so its really more like 32 versions of the same 4 motorcycles. Whatever.

Still missing from the Harley lineup for 2011: a beginner bike of any kind, and more specifically, one that can be used in the company’s proprietary Rider’s Edge program for training beginning riders. H-D indicates such a bike will be available within three years. I doubt that’s very comforting to dealers who need the bikes for the program now, however. And I’m not sure that Harley is going to like the image of riders on Honda Rebels taking their proprietary training.

Anyway, the full press release can be found here.

The three new models are shown below.

2011 Harley Davidson Road Glide Ultra

2011 Harley Davidson Sportster XR1200X

2011 Harley Davidson Sportster Super Low

Of the three new bikes, only one is relatively new, the XR1200X–which has been out for almost a year–one is an “Ultra” trim model of the the existing Road Glide, and one is a lowered Sportster 883.

The Super Low is the bike Harley-Davidson now says is suited for beginning riders. Personally, I think anything over 650cc is a bit too much for a beginning rider.  If you positively have to start riding a V-Twin, I’d recommend the V-Star Classic or the Suzuki S50, both of which are substantially lighter, and substantially less expensive–$1500 in the case of the V-Star–than the Super Low.

If you really want a good beginner bike, skip cruisers and sport bikes altogether, and get a Kawasaki Versys. It’s 100 pounds lighter, it sits the rider up high enough that you can see over traffic–and traffic can see you–far more maneuverable and confidence inspiring, and still costs $500 less than the Harley.

In my opinion, you need some miles under your belt before buying a Harley–or a Kawasaki Vulcan 900, or a Honda VTX 1300, for that matter. Later on, if you want a big cruiser, then save your pennies for a Road Glide. As far as I’m concerned, the Road Glide is the nee plus ultra of big V-Twin  cruisers.

Harley-Davidson announced its 2nd quarter earnings today, showing continuing improvement in key areas, blah, blah, blah. Forget the financial stuff.  What leaps out at you is this statement:

Harley-Davidson is the U.S. market share leader of on-road motorcycles among young adults.

Now that’s very interesting, indeed, considering that the average rider age of Harleys has been increasing steadily. Without attracting younger riders, H-D is in for a long, slow decline as their current riders die off. But the phrase “market share leader of on-road motorcycles among young adults” can mean a lot of things.  What is it really telling us?

The Kneeslider’s Paul Crowe did some calling around and learned:

[T]he relevant statistics are from R.L. Polk and were covered on the earnings call yesterday.

· . . . in the U.S., no one is reaching new customers better than Harley-Davidson.

· Based on recently provided Polk data, we have been the heavyweight motorcycle category market leader in new motorcycle sales to young adult men and women ages 18 to 34 since at least 2006.

· We have also been the heavyweight market leader since at least 2006 in new motorcycle sales to women riders, Hispanic riders and African American riders ages 35 and older. Of course, we are also the market leader among Caucasian men ages 35 and older.

· And when it comes to new motorcycle sales to young adults in ALL sizes of on-road motorcycles, Harley-Davidson has been the U.S. market share leader since 2008.

While talking to Bob Klein, I also found that a lot of this is directly attributable to sales of the Iron 883 and the Forty Eight.

That’s very, very positive for the Motor Company.

Look, I have no animosity towards Harley-Davidson.  But funny is funny, and this video below…well, that’s just some funny stuff, there. Obviously, the Buell fans still feel a little miffed.

Back in November, I wrote that US dirt-bike maker ATK and Korean conglomerate S&T inked a deal for ATK to assemble ATK-branded street bikes at some select Harley-Davidson dealerships.  It’s a dealer-level deal, and has nothing to do with the Motor Company itself, just some dealers put together by ATK’s CEO Frank White.

This week, we get an update, with ATK and S&T formalizing a deal for 33,000 motorcycles over the next four years.  The models below are the ATK-assembled and badged bikes whose parts will be brought in from Korea:

There will be two 250cc models, a sportbike and cruiser, and two similar 650cc models.

According to Frank White’s statement in the ATK Press release:

White is quick to explain that The Harley- Davidson Motor Company does not endorse or support this joint venture in any way. White states; “Nevertheless, our new products fit the current Harley-Davidson dealer need and move to offer both the dealer, and more importantly, the retail customer, a complete staircase of V-twin based products, which only acts to complement the current Harley-Davidson product line-up.”

“The approach is simple; get new and younger riders to go into the Harley-Davidson dealerships,” explains White. “We want to capture those customers who are initially looking for a smaller displacement motorcycle, at an affordable price, and then over time these new riders will develop the aspiration for a traditional Harley-Davidson.”

HD may not have any part of this deal, but I’ll bet they’re watching it closely.

A&R presents part 2 of  How to Save Harley-Davidson.  Folowing on their marketing advice, they start by pointing out the problem with Harley’s product line.

35 motorcycles, 7 model lines, 4 chassis, 3 motor families, & 1 market segment, that’s Harley-Davidson’s product line by the numbers. Where many large production motorcycle companies might have 30 or so motorcycles that span the entire gamut of motorcycling’s different sub-markets, Harley-Davidson has put all of its eggs in the heavy cruiser market. This singular pursuit of one market segment has not only been the cause for Harley’s success, but also a significant contributing factor to the company’s recent downfall, which has led to a recently rumored leveraged buyout. [One of the reasons for Harley's stock price increase over the last few weeks is rumors of an impending private-equity buyout.-- Ed.]

As the old idiom goes, one should not put all their eggs in one basket, which is exactly the faux pas being committed here by Harley-Davidson in its product offering. Businesses, especially public ones, should always have an eye on sustained long-term growth, and a key element to that goal is a well-diversified position in their appropriate industry. Taking this lens and applying it to Harley-Davidson, one can immediately see a portfolio that has been extensively mismanaged by focusing on only one segment of the total motorcycle industry: the heavy cruiser market.

What this has effectively created is a motorcycle company that looks like Alfred Hitchcock’s take on Baskin Robins: 31 flavors, but they’re all Rocky Road.

If you count the new Trike, Harley really has 5 motorcycle models, although one of the Models, the Sportster, has two engine sizes, albeit they use the same engine with different cylinder bores.  Essentially, those five bikes come in 35 factory option packages.

As A&R points out, what Harley doesn’t have is any sort of light, performance oriented machine, like a cafe racer or scrambler.  I would go a step further and say they also don’t have any sort of lighter, entry-level cruiser.

Even if HD has no interest in getting into modern sport-oriented bikes–and there’s nothing wrong that attitude–they don’t even offer a lighter, smaller-engined entry-level cruiser.  Their”entry-level” offering is a 600-lb, 1200cc Sportster.  And whatever else it may be, the Sporty is by no means an entry-level motorcycle.

They already have the basic tools and expertise to build smaller, more performance oriented cruisers, and entry-level bikes.  But they’ve invested so much of the company in catering to the baby boomers, they arean’t offering bikes that appeal, by and large, to new entrants into motorcycling, or to riders that want even a small amount of get-up-and-go in their rides.

That’s been a fantastic strategy for the past 30 years, and it’s served the company well.  There’s only one problem with their strategy of selling to the Baby-Boomers.  The Baby-Boomers are starting to die.  So, it’s not a market with a lot of growth potential moving forward.

Jensen Beeler at A&R has kicked off a 3-part series on what Harley-Davidson needs to do to prevent the company from dying along with their aging demographic.  He starts off with the same premise I wrote about last summer, but really drills down into the details.  It’s a fantastic piece about H-D’s ongoing marketing failure.  Read the whole thing.

Vance & Hines and the AMA Pro Racing series have teamed up to create a brand new racing series for the Harley-Davidson XR1200.  Granted, the XR is the only Harley that can be said to have any pretensions to being a racing bike…of some kind.  A&R has taken the press release of the big announcement, and helpfully translated it, line by line, as follows:

“We have racing in our DNA, Harley-Davidson has racing in their DNA and we are truly thrilled to bring Vance & Hines and Harley-Davidson back into AMA Pro Racing,” Terry Vance, a prolific champion as both rider and team owner, said of the new series. “The XR1200 has proven to be an exciting platform for spec racing in Europe and this class will be a perfect cost-effective platform to showcase new talent on a national stage. Many of the finest motorcycle racers all over the world got their start in the AMA Supertwins class of the 1990s.”

Translated: We’re going to just lie for a minute and then justify this series with some loose mentioning of racing in the company’s past, which an entire generation doesn’t remember because it happened before they were born. First one to mention flat-tracking loses the argument…

AMA Pro Racing Chief Operating Officer David Atlas welcomed the new series, “Adding another element to our events with a series of this caliber will be a great benefit to our sport. The specification of the XR1200 package will put the premium on the rider’s ability and will provide a great new class of racing that has ties to the past.”

Translated: We’re actually telling the truth now. This series will really showcase a rider’s skill, especially while they try and maneuver a 600lbs motorcycle through chicanes with some of Milwaukee’s finest engineering from the 1950’s.

Read the whole thing, it’s priceless.

Oh, by the way, the big purse for the winner is…$2,500.  So, building an XR1200 into a race bike will be, like, totally worth it.

Kain Saul has converted a Harley-Davidson Xr1200 to Dirt use--including a heavily modified suspension--taken it out into the Australian countryside…and done a back-flip on it.

Pretty cool.

And, yes, I do know that Chuck Carothers did the same stunt in Czechoslovakia.  Or the Czech Republic, or whatever the hell it’s called now.  But he didn’t stick his landing and got thrown off the bike.

FAIL!

As of this afternoon, Harley Davidson announced that Erik Buell has left the MoCo, and is opening a race shop.  His new venture, Erik Buell Racing LLC, will specialize in creating race-use only 1125r motorcycles under a lciense from Harley-Davidson.

As such, he will no longer be an employee of Harley-Davidson, and will once again be directly involved in the motorcycle racing world.

The fascinating question is whether or not this is just a stop-gap venture to take up his time until February 2011, when his no-compete contract with H-D expires, and he is free to join up with another motorcycle company to begin building bikes for the rest of us again.

The full press release from Harley-Davidson is below the fold.

Read the rest of this entry »

ATK CEO Frank White has sent me the following email in regards to the deal that ATK has made to sell American-assembled motorcycles from S&T:

Buon Giorno from EICMA Italy (Motorcycle Show)

One of our Harley Dealers is a regular to your site and suggested I make some comments to the recent posts to set the record straight. I normally avoid BLOG’s however, what the heck, your site seems quite good and your information is factual.

A comment on ATK taking the place of Buell on some BLOGs.

We are NOT working through the H-D Dealer network under the endorsement or support of the Harley Davidson Motor Company in any way. This is stated on the press release.

We are NOT going to be making products in the same market niche/segment that Erik Buell was making. Erik is a Maverick in innovation and development in his part of the industry and we would be fools to try and step in. Obviously with H-D pulling the plug has created a vacuum of opportunity in the network that want American Branded products.

Some of our Dealers sent me the gut wrenching U Tube link with Erik and I feel for the guy. We’ve been in business basically the same amount of time and this is NOT an easy business.

Our focus is going to be attracting an all new and much younger customer into Harley shops with a diverse quality platform of products. (Like Scion is to Toyota) We also want to get more people in the motorcycle world like the industry did so well in the 70’s… This should be interesting

Feel free to post this.

Ciao

Frank White
ATK Motorcycles

In my previous post, I did append the press release, which does say that this is a deal that Harley knows about, but does not endorse.  I also stated:

It’s a bit of a coup for Harley dealerships, and possibly for Harley-Davidson itself–as well.  They will–or at least selected dealers will–have access to new lines of motorcycles to bring in younger customers.  This is especially true if the ATK dirt bikes can also make an appearance on dealer showrooms.

Let me clarify what I meant here.  To the extent that new, younger riders are drawn into Harley dealerships, The MoCo will, if this deal operates successfully, eventually have access to these new dealership customers when they begin looking for large displacement motorcycles.  I did not intend to imply that this was part of any strategy on the part of Harley-Davidson.  This is something at will operate purely at the dealer level with some select dealers, and any advantages that accrue to the Motor Company will be more or less incidental.

And, of course, implying that HD itself was part of this would imply that HD actually had a strategy.  Which, after the MV Agusta deal and the closing down of Buell, is a pretty questionable implication.