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Harley Davidson Kills Buell, To Sell MV Agusta

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I wish I could say I was surprised this morning to finally see the news made public that Harley-Davidson was going to sell MV Agusta, and shut down Buell’s operations.  But, I wasn’t.

Let’s address the MV Agusta deal first.  I never really understood exactly what the MoCo thought it was getting when it purchased MV and Cagiva.  Turns out I’m not alone in that, since apparently nobody at Harley-Davidson did either.  Cagiva was a financial basket case, and MV–though it had a glorious racing past and venerable reputation–had been reduced to a boutique maker of a small number of motorcycles.

And once HD had finished crowing about buying it, they proceeded to do…nothing.  No press releases.  No earth-shattering changes.  They just let it sort of sit there.  They owned it, but once they did, they didn’t seem to know what to do with it.  So now, they’re selling it at what is probably going to be a deeper discount than they purchased it for, so it seems like it was just a multi-million-dollar bath for Milwaukee.

Oh, well, it’ll make a nice write-off against tax, I’m sure.

As for Buell, I’ve already gotten into some detail in the post linked above as to why the MoCo had completely bungled the management of Buell.

A brief tour of BadWeb, the Buell biker forum, today shows that the Buellers are no more receptive to hearing bad news about the company–nor any more prone to think about it realistically–than they were last month when I wrote that my sources indicated to me that Buell was probably going to be shut down.

It’s full of fantasies about some sort of demonstration to make HD reverse its decision.  There also seem to be a number of analysts who write that this is an insane decision for the MoCo, because losing Buell will destroy Harley.

That’s just fantasy.  Quite apart from the fact that Harley is doing a fine job of destroying itself by confining itself to an aging customer base, the fact is that Harley killed Buell a long time ago through their mismanagement of the brand.  Killing Buell is a symptom of HD’s problem, not the cause of it.

The company says they are doing this to concentrate on their brand, by which I assume they mean continuing to market even more aggresively to their shrinking, aging customer base.  As one industry wag put it to to me today, “How many more 52 year-olds looking for their first bike can they find?”

As far as Buell contributing much to harley financially, well, that’s just absurd.

In 2008, HD’s annual report states that they sold $313.8m in general merch, making up 5.6% of corporate revenues. Buell Motorcycles, on the other hand, made $123.2m in revenues, or 2.2% of corporate revenues. According to the company 10k statement for 2008, Buell accounted for 4,000 of HD’s 222,200 motorcycle registrations. Of the 686 HD dealerships in 2008, more than half of them don’t even sell Buells.

In other words, Buell accounted for 0.2% of HD motorcycle sales, and the MoCo made twice as much money selling orange dog scarves and rhinestone belts for girls than from the sale of Buell motorcycles.

So, the idea that keeping Buell motorcycles will make up for…well…anything at Harley Davidson is so at variance with the actual facts as to qualify as sheer fantasy. Let’s not pretend that Buell has either the user base or financial performance to rank as a serious part of Harley Davidson.

I guess it does show, though, that some people personalize their motorcycle brand very deeply.

I guess my take-away for those people is that sometimes, when people write negative things about your favorite motorcycle brand, it’s not because they hate it.  Sometimes, they write it because it’s true.

Just something to think about.

In 2008, HD’s annual report states that they sold $313.8m in general merch, making up 5.6% of corporate revenues. Buell Motorcycles, on the other hand, made $123.2m in revenues, or 2.2% of corporate revenues. According to the company 10k statement for 2008, Buell accounted for 4,000 of HD’s 222,200 motorcycle registrations. Of the 686 HD dealerships in 2008, more than half of them don’t even sell Buells.

So, the idea that Buell motorcycles will make up for…well…anything at Harley Davidson is so at variance with the actual facts as to qualify as sheer fantasy. Let’s not pretend that Buell has either the user base or financial performance to rank as a serious part of Harley Davidson.

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