Harley-Davidson Takeover: shares spike as KKR becomes rumored buyer

Dailies -


harley-takeover.jpgHarley-Davidson (HOG) stock is trading frantically right now as speculation that private equity firm KKR may purchase The Motor Company in a leveraged buyout offer. Harley shares are up five percent already. We’ll keep you updated.

via Reuters

Update: Both KKR and Harley are declining to comment on what they describe as “market rumors and speculation.” 

  • Tom

    One has t owonder if this is even true because what exactly is the upside in a leveraged buyout of a dying brand? Perhaps KKr sees the potential in breathing new life into a storied, but tired, old brand. Stellican is keeping Indian alive so perhaps KKR sees the possibility of making harley a real global player.

    • smitty

      come on they cant get a v-twin right you expect them to spin a engine at 14000 rpm’s. ha ha ha thats a joke just like there r&d. they need to get bought out get rid of all the waste and politics in management and who knows maybe they will get back into the motorcycle buisness and stop focusing on how pretty they look standing next to their bikes.

  • http://www.thisblueheaven.com Mark D.

    I doubt KKR is going to have much input on R&D (if you can call it that) at HD. Its interesting financially, but unless they commit to building a real American sport bike (ahem:BUELL:ahem), I just don’t care.

    • http://www.thisblueheaven.com Mark D.

      Seeing as much of KKR’s previous buyouts have been focused on mature markets, I doubt they have any interst in growing the HD brand. HD is in fairly tough financial shape, so the Barbarians are at the gate.

  • Mathew

    It would be impossible to make Harley a “global player” without spending many millions on a new line of bikes. Harley is losing almost 3 million dollars a day right now. That plus the multi millions it would take to create a new line of bikes makes a takeover unlikely.

  • PeteP

    It would be a damned shame if they pulled a “Gordon Gecko” on HD.

    • Chinese Harley?

      Private equity could gut the assets and then file for BK to wipe out the pensions and debts.

      Within 12 months HOG would be DOA.

      That would make many of the HFL faithful very happy but it would be horribly sad for workers, fans, and American manufacturing.

      Hopefully, it does not come to that.

  • Risky investment?

    I don’t know if Henry Kravis or George Roberts are Harley riders, they are certainly in that age group. Likely the numbers are telling them something that escapes us.

    Out of curiosity has anyone been tracking the resale value of Harleys? I wonder if the markets flooded with used bikes bought during the equity boom. If so that makes a buy out of the MoCo even more questionable.

    • Bobbi Jo

      The resale is pretty consistent and surprisingly strong. That being said, there are plenty available. Nightsters are very plentiful but still go for $7-$9K on Ebay, not bad considering a new one is $10K.

      Vrods, have taken it in the ass. One can buy a year old VRSC for $13K-$15K and they go as low as 8k for 06/07s.

  • BL

    interesting that the stock is up…

    obviously wall street sees an upside to the buyout

    …now, to short or long…?

    • geonerd

      i think that’s part of the point of a LBO. investors are looking for an upturn in the market and with harley’s recent cost cutting measures they’re looking to cash in later on. meanwhile harley execs are raking in mad bonus loot as a result of the inflated stock prices.

      • BL

        harley execs–must be these guys–

        ‘The most popular HOG option today is the out-of-the-money April 30 call, which has seen more than 11,000 contracts ‘

        more profitable than buying long…smart bastards! (if it goes up)

  • Skip

    V-Rods and Sportsters are considered girls bikes by the Harley crowd. Whoever ends up with HD will have to spend millions to update the aging line of bikes. Harley only appeals to the older buyer and they are moving to walkers and RV’s not motorcycles. The young buyers will not buy the overweight and outdated bikes HD makes. Harley has been pushing the outlaw image to long and relying on the sales of clothes of prop up the bottom line.

  • Woody

    That’s probably because “Real Harley” guys don’t believe in demon technology such as liquid cooling or having your engine designed by “some kraut”.

  • Skip

    The Harley engines are so old that they forgot who designed them. If you mention technology at HD they will think it is the name of there new line of clocks or belt buckles.

  • Jason

    The last time Harley was bought in this kind of deal, AMF was the purchaser and Harley suffered for years with unreliable, poorly built and oil dripping motorcycles. It wasn’t until the employees bought the company back in 1980 that the Motor Company turned things around and built a global brand with revenues of $5.9 billion.

    However, because Harley’s primary value is in its brand, investors would be well advised to monitor the growth or decline of Harley culture.

    Hopefully all the HFL faithful don’t soil themselves with schadenfreude. Just because the company is targeted for a takeover does not correlate to the demise of the brand. Quite the opposite may actually be the reality.

  • EdgerWinter

    Let the hate show begin! Readers of HFL like nothing more than bashing HD!

    • pauljones

      That’s always going to happen here. It comes with the territory. Many of these commenters claim to be avid motorcyclers, but I sometimes wonder at that. It seems to me that a real motorcycle lover shouldn’t really give a rat’s ass what another guys is riding. As long as the other guy is on a two-wheeled vehicle rather than in a crossover SUV, then give them some respect.

      As far as their hatred of Harley-Davidson goes, there are the occasional valid points; but for the most part, it’s just a bunch of vitriol. Let them have it. If it makes them feel better about themselves, whatever. But don’t let that spoil the site for you. Wes brings some pretty cool stuff to this website, and while it doesn’t move as fast as other blogs that try and post as many stories as they can per day, the quality and effort is still evident around here.

      On a related note, there are signs that the Harley drop is beginning to level out; brands that offer a lot in the way of lifestyle, and not just transportation devices, are beginning to recover more quickly than their competitors. Harley-Davidson, Triumph, and Ducati are all showing more cause for optimism that brands like Yamaha, Kawasaki, or Suzuki. The market can change pretty quickly, so that may not mean much in a month or so, but it is interesting. It will be even more interesting to see how long that trend continues.

      • Tom

        That’s always going to happen here. It comes with the territory. Many of these commenters claim to be avid motorcyclers, but I sometimes wonder at that. It seems to me that a real motorcycle lover shouldn’t really give a rat’s ass what another guys is riding. As long as the other guy is on a two-wheeled vehicle rather than in a crossover SUV, then give them some respect.

        Paul, you should be directing this comment TO the Harley people not to the rest of us because your comment applies to them not us. We are the ones who don’t ride a “real” motorcycle according the them.

        • pauljones

          Touche. It is true that there are a lot of Harley guys out there who too full of themselves to acknowledge that other bikes exist, let alone are actually fun to ride. But simply throwing out comments like “I sure hope they don’t drop there line of Harley jock straps and panties and belt buckles. If that happened they would be out of business for sure.” really doesn’t make the people who say them look particularly intelligent, nor any better than the people whom they are trying to insult.

          I really don’t care what kind of motorcycle you like or ride. I really don’t care how you choose to dress. But the people on both sides of the argument who just stand around and spew a bunch jumbled vitriol can go get stuffed. That goes for the Harley guys and the Harley bashers. Just let it go. If a couple of assclowns decide to make a few snide comments, show them who the real motorcycler is and just keep riding while they are standing around looking like idiots.

  • http://www.urbanrider.co.uk Urban Rider

    Well, if you were going to buy a big brand like HD, surely there would be no better time in the last 10 years to do so?

    Once the current recession is a fading memory it could look like a great bit of business.

  • Nick

    Is it just me or is that like the gayest picture ever?

  • Rob

    Read the last line of Visordown/Ben Cope’s reprint of your story:


    I gotta say that’s funny after you gave them a bit of a slap a week ago!

  • Kidchampion

    KKR is making the news lately. They are also reportedly in talks to buy EMI, in partnership with Warner Bros Records. And in the NY Times article about the next financial doomsday, the wave of junk bonds that mature in 2012:

    “The period from 2012 to 2014 represents payback time for a Who’s Who of private equity firms and the now highly leveraged companies they helped buy in the precrisis boom years.

    The biggest include the hospital owner HCA, which was taken private in 2006 by a group led by Bain Capital and Kohlberg Kravis & Roberts for $33 billion, and has $13.3 billion in debt payments coming due between 2012 and 2014. Another buyout led by Kohlberg Kravis, for the giant Texas utility TXU, has $20.9 billion that needs to be refinanced in the same period.”"

  • Kidchampion

    Let’s just pray that Shia Labouef (Laqueef sp?) rides a Harley in Wall Street 2, Money Never Dies.

  • Cliff

    I don’t think they are losing $3mil per day, HD has annual revs of about $3.5bil, so they are not going to lose close to a $1 bil for a year, especially when 1/3 of their revenues are parts/accessories/merchandise. Going private? Well, they have about a $1.5bil in cash and another $3.5 bil in accounts receivables. Long term debt is about $1.5 bil. So, you could pretty much use the companies own cash to buy itself. And KKR loves to do that kind of thing. The promise for the insiders is that the market turns around and the leveraging of the insiders positions allows them to cash out later and retire to Aruba. Trust me on this, KKR will not lose money on the deal not matter what happens to the market, but dealers and employees might want to make sure their retirement portfolios are looking good….

    If I was on the manufacturing line, this action would justifiably scare the shit out of me, KKR may not be a strip and flipper, but they will be looking for every source of cash they can find. Can you spell decontenting?

    • pauljones

      Actually, as strange as it sounds, de-contenting isn’t an entirely bad idea. Harley-Davidson prides itself on selling motorcycles that can pretty much be custom-tailored to any rider with any taste using their phonebook-sized aftermarket parts catalog. So why not take that one step further, and allow buyers the option of “building” their own bike from the ground up for a fee?

      Is there a buyer out there that wants to buy an XR1200-style Sportster, but the V-Rod Revolution, liquid-cooled motor? That buyer should have the ability to do so. Charging a fee for allowing buyers to do that, while simultaneously dramatically lowering the obnoxious mark-ups on some of their accessories would be beneficial in a lot of ways. It would seem like a better deal to the buyer, it would make the buyer feel more involved, and it would still leave a reasonable profit margin to HD. For those that don’t really feel the need to go through that process, they can still buy “off-the-shelf” models like the Street Bob, Crossbones, or the Road Glide.

      I really think that if Harley were to make the investment and develop a new set of frames, introduce some improvements to their current engines, and allow buyers more flexibility in getting what they want, it would more than pay off the initially expensive investment in the long run.

      Of course, that still leaves the issue of certain dealerships, but that’s another story.

      • Epyx

        That is a nice idea but not a possibility with mass manufacturing. It could possibly be done with pre-set variables (colors, bars, seats, wheels, etc) but if you interject switching engines (not as easy as it sounds) at a whim this becomes almost impossible without costs rising dramatically. Warranty issues, quality control issues, would all be factors. Besides, the heavy VRSC engine may not be so great in the little Sportster frame.

        I think cost would go up even by choosing the basics above. Factories like to limit variation, not add exponential variability. Variability adds cost.

        • pauljones

          True. At this point, it really is just wishful thinking. GM of old used to have the option of pretty much throwing any engine in any car as long as it would physically fit; which is why once in a while, you come across amusing oddities like a 409-powered Chevrolet Biscayne or Impala station wagon. It would be nice to see the Harley develop their next-gen chassis and engines with a higher degree of commonality, though.

  • Risky investment?

    Yeah that picture is hilarious. Bet they’re members of the Druids or Praetorians.

    I think Cliff’s analysis is right and that doesn’t sound too good for the MoCo.

  • PeteP

    The picture is from a poster for the movie “Harley-Davidson and the Marlboro Man”.

  • Risky investment?

    I was thinking about the AMF takeover as well. The difference was that AMF was a manufacturing company interested in making money by making things and selling them. Remember how we used to actually make stuff in this country?

    KKR on the other hand is an investment company that’s probably not terribly interested in building motorcycles. They just see a balance sheet.

    AMF is seen as a low point for the MoCo, but at least they invested in new tooling modernizing Harley’s production processes. Don’t expect KKR to do anything like that.

    • Andre

      AMF did nothing to improve technology, build quality or machinery at Harley. After the employees bought Harley, they (the new management team led by Willy G.) went out on a limb and invested in new production line processes and CNC machinery from Japan. Even so, It would ALL have been for naught had Mr. Forbes himself not gotten bitten by the “bug” and made it “OK” in the eyes of millions of people to become weekend bikers. That coupled by a price guarantee on the newly built sportster line pulled in millions of faithful followers over the years.

  • travis

    you could save the company by getting rid of half of the managers and anyone in engineering who hasnt contributed to a model that got produced.

    • pauljones

      That’s not a half bad idea. Harley-Davidson has been a little slow to react in some ways, and streamlining things might be beneficial. A somewhat younger management team and a smaller, more flexible engineering department would help a lot. Relatively simple things like aluminum frames and liquid-cooling on their big V-Twins would go a long way towards broadening Harley’s appeal.

  • Jocko

    I sure hope they don’t drop there line of Harley jock straps and panties and belt buckles. If that happened they would be out of business for sure.

  • sburns2421

    KKR must know something we don’t because I wouldn’t pay $2 for this pig…er..hog.

  • No Bashing

    I guess pauljones is speaking for all of us when he thinks we should accept out dated motorcycles and a company that promotes the use of loud exhaust or no exhaust. I think the Harley outlaw image and there marketing idea of selling a motorcycle only to sell the aftermarket crap has seen its day. I want a modern up to date motorcycle and I could care less if I have a window decal or a shirt or hat or clock or whatever with the name of my motorcycle on it. It is too late for Harley “to see the light” as they have chosen to rest there laurels on selling aftermarket items first and advancing there technology 2nd. As a younger buyer I have no interest in a outdated and heavy V-Twin bike. Sure there are other V-Twin motorcycles on the market but I do believe that they are light years ahead of HD. You have mentioned a new water cooled V-Twin for Harley. Well, they spent millions on the V-Rod motor and the Harley morons stick there nose up at it because it does not “sound” cool. Believe it or not – Harley has to keep selling the old outdated bike or nothing. The V-Rod project proved that. HD has lost money on every V-Rod they sell, which is very few. The Harley bunch will only buy the bike that is produced now or nothing at all and the young buyers will not buy a Harley. The current buyers are aging and they are buying an aging bike. When they quit buying,- Harley will quit being a viable company. These are the facts and not “Harley Bashing” as you put it. Why stick up for a company that has given us the finger every year by bringing out there “new line” of motorcycles when all they really were was last years crap with a new paint job. Get real pauljones…..

    • pauljones

      I am speaking for all of you, on both sides of the argument, when I say that that you need to get over yourselves. I don’t care whether you like Harleys or not, and I’m not trying to convince you one way or the other. But it seems to me that we should all have higher priorities than throwing out a bunch of crap at people who don’t ride the same kind of bikes. Go plan your next weekend ride. Or clean your bike. Something. Anything. There are better things to focus your energy on than insulting other motorcyclers, regardless of what they ride, or what you ride.

      Comments such as “I want a modern up to date motorcycle and I could care less if I have a window decal or a shirt or hat or clock or whatever with the name of my motorcycle on it.” really don’t make you look any better than the stereotypical “Harley guy” that you are trying to insult.

      Yeah, there are stuck up douchebags who feel the need to have everything in their lives branded with the Harley logo. It’s true, I don’t deny it. But by the same token, there are douchebags who ride around sportbikes wearing sneakers, shorts, and a hoody. Or douchebags that tool around on dirt bikes with no helmets. Different bikes, different styles of riding, but one thing in common: they’re all douchebags. And the truth is, they’re a lot less common than we make them out to be. If you see douchebags like that, feel free to label them as douchebags, but do so based on the behavior that they display, not the bikes that they ride.

      If you have no interest in a V-Twin, that’s cool. I get that. Just don’t knock them because they aren’t your preference. As for Harley’s technology compared to the competition, it’s a mixed bag. They are behind on things like brakes and engine cooling, but they are ahead in other areas like transmissions and suspensions, the latter particularly noticeable on the touring-line. It is what is. I see no reason to spew crap at Harley for that, nor their metric competition.

      And for the record, when you refer to companies that have given us the finger by bringing us “new bikes” that are just last year’s bikes with no colors, you’re also referring to companies like Yamaha and Suzuki, who have skipped most of their 2010 lineup in favor of new colors and decals on the 2009 bikes, right? All companies do that in rough times, it’s nothing unique to Harley. Interestingly, however, if you pick up the latest copy Motorcyclist, you’ll find an article citing evidence that “lifestyle” motorcycle companies like Harley, Triumph, and Ducati are rebounding faster than other motorcycles manufacturers.

      • DaFoxx

        FWIW, Suzuki skipped the 2010 models that would have only had Bold New Graphics in favor of not making their dealers try to sell 2009s against 2010s that were going to be virtually the same…

  • sburns2421

    Per his comments on the Erik Buell Racing 1190 post three weeks ago, pauljones doesn’t even own an H-D, although he is saving up for one and his dad just bought one. He also isn’t interested in owning anything else, so I assume he doesn’t have a bike and never has had one.

    His proposal above about a plug-and-play system of choosing your components + engine and building your own H-D displays a basic ignorance of complex integrated mechanical systems.

    Keep these in mind while assigning any validity to his opinions.

    I said it first last fall and will repeat it now: 50/50 chance H-D goes bust within the next five years. I may have to shorten that time frame though, and the odds are looking greater every day.

    • pauljones

      You can’t come up with a rational response, so instead you resort to personal insults? Cute.

      You’re right, my dad did just buy a Harley after sampling it next to a Victory, Kawasaki, and a Honda. You’re right, I don’t own a Harley yet. I own a Suzuki Intruder 800 and a Yamaha WR250. They’re both a bit basic, but they work well enough. You’re right, there a lot of complexities that I overlooked and am not entirely familiar with, not being a manufacturing engineer.

      It still does nothing to justify your inability to come up with a reasonable argument that doesn’t fall back onto meaningless vitriol, nor your need to resort to personal attacks.

      See, No Bashing actually presented a much better argument when he noted that Harley’s future demographic (or apparent lack thereof) is their biggest problem. But this also isn’t a new problem for them. It’s a problem they have been facing for close to 15 years, and yet somehow they’ve survived. How? I don’t know. But they have. I won’t sign off on their odds of survival just yet, as the market tends to be a fickle place.

    • Tom

      sburns, thanks for your post. Paul’s comments about motorcyclists does reflect a young age and a certain naiveté about Harley owners and their grungy unsophisticated past – I’m being charitable in my wording. Had Paul been aware of Chris Shield’s website – http://www.goingfaster.com/angst/main.htm then he would know how its the HD guys who started it and its the HD guys who keep it going. Lets be real here.

      • pauljones

        Interesting character. He reminds me a great deal of post-scientology Tom Cruise with his rants. When I first opened the page, I thought it was some sort of white supremacist site. The plain, black background, simple layout with a quote at the top center, and contrasting red-and-white typeface all meld together to give the impression of a radical supremacist. Even that bold, attention-grabbing title “American Angst” lends itself well to the genre of radical supremacy. In looking through the site, I was most impressed with the level of effort he put it into the content, if not the graphic design. That’s definitely a guy who has considerable passion when it comes to his convictions. I can respect that. While his choice of target for his angst is certainly unusual, I certainly admire his dedication and creativity.

        I can’t help but wonder, though, if he puts as much effort into enjoying going for a ride on his bike of choice as he has into creating such elaborate content for his website. If this is what he thinks about whenever he sees a Harley on the road, I kind of feel bad for the poor guy; nothing spoils the pleasure of going for a ride quite like being angry for the entire ride.

      • Epyx

        How tired is the web page? It’s like the HD hater bible. That thing has been around for years, he still talks about the Buell Thunderbolt in his FAQ.

        His rants are also full of hypocrisy, he calls out dumb, uneducated, redneck bikers than claims all HD riders are Dentists and Lawyers (as if that is a bad thing). He goes on to criticize anyone that does not maintain their own bike, as if Ducati and Guzzi owners are wrenching in large numbers. Lastly he backs none of his claims with hard, statistical evidence – namely the unreliable fallacy. Antidotes and “my friend” stories don’t count for much.

        I may be cynical but I think if you want web traffic you build a polarizing web-page bashing something that has a loyal following. You will attract the supportive haters and the retaliation of fervent fans. The whole thing looks opportunistic. No one has more vocal haters than HD – why is that? Seems like if you don’t like something you would just ignore it, not constantly talk about it at every opportunity.

        But whatever, I read a little of the page just to see it is the same old crap over and over.

        Much of the RUB criticism I see just as much when I am at the Duc dealer as I do at the HD dealer. American’s in general are brand whores and this is not only true of motorcycles. HD just capitalized on it better than most.

        • Tom

          “Seems like if you don’t like something you would just ignore it, not constantly talk about it at every opportunity.”

          That could have been been possible, perhaps, if not for the fact that these lemmings make so much noise to get attention. This is why the South Park episode was so hilarious – it was 100% spot on. HD people are either dirt bags or RUBs trying live a fantasy of being a bad ass biker. Its like rich white suburban kids trying to dress black and act all ghetto.

          HD fanatics simply cannot be quiet in order to be ignored. They scream for attention and approbation and most importantly – to not be ignored. So, Harley people get blasted more because they ASK for it.

          • lux

            Funny, I own a Harley but yet own no Harley Gear etc.. Actually the only thing that says Harley on it is the bike. Are their Harley Stooges and Soldiers who dress like Clowns and act like jerks etc.. ? Of Course Yes, also there are ones just as ridiculous who ride every other brand of bike out there. I am fairly New to the Bike Thing, only 6 years and 80,000 miles but in that short time I have discovered its The People, not the bikes that i have a problem. Its like having a friend with moronic parents, not their fault. I like Bikes, all sorts of bikes (thats why I visit this site and others) I enjoy talking to people that own other bikes and what they have done etc… I dont “Lump People” into categories like this guy (and others here have been doing). And while you sit and Pass Judgement on me for whatever Reason you like I also have a Ducati Monster sitting in my garage, I do own 2 Ducati shirts though and 3 Triumph shirts but dont actually own a Triumph, I guess you are correct, I am a Poser looking for attention.

  • sburns2421

    If Harley fails, here will be the post-mortem why the soaring bald eagle was turned into fried chicken.

    All of these are interrelated really, but I’ll try to pick out individual issues in no particular order…

    1) Limited product offering. H-D does one thing very well, heavy cruisers/touring bikes. That is it. They have all their eggs in one basket with the closing of Buell and sale of MV. Doing one thing well is great when in fashion, not so hot when demand shifts to other types of bikes or no one can afford what you make.

    2) Shrinking customer base. Each year the average age of a buyer for a new Harley has increased 0.7 years. What this tells us is that while they may be loyal, fewer younger buyers are moving to the brand. Eventually most get too old to ride or have shifting life priorities that preclude buying a new bike. There is a tremendous amount of “inertia” with these numbers, it requires a drastic revision of products available to reverse this trend.

    3) Lower unit profit. Even among the bikes they do sell, the trend is that those are the lower-priced models that do not have as much profit in each unit. It is more uncommon today for a new buyer to deck out his new bike in high-profit chrome crap before leaving, and the big twin or CVO models (high profit) do not move as quickly as the more budget models. The revenue has dropped, but the EBIDTA has dropped much more as a percentage as a result of this phenomenon.

    4) Finance division. Harley self-finances customers, great when times are good but will destroy any company in a recession. If General Electric can be brought to its knees by self-financing, H-D surely can as well. Losses due to loan defaults come directly off overall P&L. Now ask yourself if literally millions of homes are in mortgage default at the moment, how many of those have a bike in the garage with missing payments? The finance division will continue to be a drag on Harley for years, and will likely be the final straw to break the eagle’s back should bankruptcy happen.

    5) Increasingly desperate competition. The Japanese are sucking wind with motorcycle sales, and have been heavily discounting bikes. While this will hurt them fin the long run, every crusier they sell is a sale loss for H-D. Of course some only consider buying Harley, while some wouldn’t even consider it. But there are many in the middle that are not as brand-loyal or brand-averse. Would they buy a discounted ’09 big cruiser from Honda or pay twice as much for a superb Harley paint job?

    6) Economic conditions. Everyone assumes things will get better from here. At some point things will be better, but might get worse in the meantime. No one really knows for sure the timing or ultimate trough. Even higher unemployment, less disposable income due to higher taxes for those that do have jobs, increased fear of losing employment…all these things dissuade people from dropping ten or twenty grand on a new toy at the moment.

    7) MASSIVE supply of used Harleys. A used Harley does not make the company any money. It is not unlike the residential RE market if you think about it. You will not see new housing starts increase until the system is purged of the oversupply of existing homes. So too with Harley to some extent. This is exacerbated by the more-or-less unchanging design of a Harley. Honestly, how different is a 2003 model from a new one, and aside from wanting to be the first owner how much of a premium will most pay over a used one? Harley is in an unusual position among motorcycle manufacturers of having their own previous products (that look and work identically to their existing product) poaching new bike sales. See point #1 above.

    Is this a rational enough answer for you?

    • pauljones

      Yes, actually. That is how to make an effective argument, and significantly better than resorting to personal insults or hyperbole-filled vitriol. In fact, I can’t really argue against anything that you’ve said with any sort of efficacy, except perhaps to say that there is always a chance that the fickleness of the market that we both refer to may turn to Harley’s advantage.

      Point number one was a quick shot in the arm for them in the short term as far as making immediate cost cuts, but it was poorly thought-out and my guess they will come to regret closing Buell in the long run. In my opinion, they really didn’t have any business buying out MV Agusta in the first place, and flipping it as quickly as they did just made them look foolish.

      Point number two is one that has been a constant threat for them for the past 15 years, and somehow, against all odds they have survived. I’m not enough of an analyst to explain why, but I wouldn’t dismiss the possibility that they will somehow survive it again.

      Point 3 is perfect. Sportsters and Dynas are selling a hell of a lot better than their other models, and the profit margin is much thinner on those.

      Point 4 is also perfect. Direct financing on the part of HD just wasn’t a good long-term decision.

      Point 5 is right about the metric competition, and for the most part, the average buyer. The willingness to spend the extra $3-4k really comes down to what a consumer wants in the bike.

      Point 6 is great. There really is no arguing with that, though I think it may still prove to be too difficult of a variable to predict when it comes to figuring out the odds of Harley’s demise. If Harley moves quickly, the eventual upswing of the market may save them.

      Point 7 is also great. Harley’s own worst enemy is used Harleys. Aside from some frame improvements over the years, a 2010 Harley is difficult to differentiate than a 2005 Harley in the looks department. The ride department is sometimes a different story, though. But I agree that Harley shouldn’t just depend on that alone.

      Now that you’ve laid out the problems that Harley-Davidson is facing so succinctly (which, in my opinion, is worthy of being a post of its own on HFL), the question is what ideas exist for Harley to tackle those problems. Obviously, simply sticking with their current business model isn’t going to work for them. They need alternatives. It’s easy enough to lay on the hate Harley train of thought, but can we provide well-thought-out ideas for them to improve?

      Nice post, btw.

    • http://www.thisblueheaven.com Mark D.


      Also, most of the poking fun at HD is lighthearted and cheeky, not mean-spirited. I wave at people riding Harley’s all the time, think the company is an American institution, and would even enjoy owning a Sportster. There are a million kinds of douches in the world.

    • robotribe

      sburns2421 said:“Is this a rational enough answer for you?”

      Hell yes, and regardless of how long it was, it was well put and much appreciated. Plus, the fact that you used “EBIDTA” on a motorcycle blog makes you today’s official Winner of the Internets.

  • Skipper

    Yamaha, Kawasaki, Suzuki, Triumph and the rest of the motorcycle manufactures actually bring out a “new” model each and every year with actual improvements over last years model. They also do not promote the use of loud exhaust that destroys every ones right to a peaceful life. I do not like some idiot on a Harley with no exhaust roaring down the street and waking my children and scaring elderly drivers. No thanks – Harley has not earned any respect from me and never will. Harley is mainly a boutique clothing seller with a line of aging motorcycles. If pauljones wants a Harley so be it and I can imagine he also sees himself roaring down the street with his showoff loud exhaust. A Harley only sounds bad when in fact if you take the loud noise away all you have is an old outdated motorcycle from a company that could care less as it only wants to sell the image and the clothes to go with it.

  • Short comments are better

    Keeping our comments to one or two paragraphs is better at getting a point across.

    • http://hellforleathermagazine.com Grant Ray

      Thanks for the hall monitoring, but I’m afraid this is isn’t your classroom. As long as the posts are considered and thoughtful towards the topic at hand, HFL is perfectly content to let commenters engage in longer posts to strengthen a point of discussion.

  • Epyx

    Ill give great odds that Ducati goes bankrupt before HD. (not saying either is in a great position).

    BTW I own products from both and my Motard is louder than my Nightster.

  • Short comments are better

    Sorry Mr. Ray, guess I’m attention deficit disordered- it’s easier for me to grasp someone’s point when it’s truncated. No disrespect intended.

  • Tom


    Instead of being sensitive and getting your feelings hurt, you should watch the South Park episode to see who is and is not a “Harley Person”.

    If I were staying in the US, and if I could find one near me that was $6500-$7500, I would not turn my nose up at a VROD because I’m not able to find an Excelsior-Henderson at that price ever. I won’t go to a HD dealer or hand about Harley people, but its still a decent bike. I’m moving out of the US July 27th so the point is moot.

    I don’t paint with a broad brush. I’m very specific in who I am referring to. Please watch the South Park episode for context.

    • lux

      I have viewed that episode and Yes there are plenty of people out there just like that, But I also know there are plenty who are not. The Harley Dealerships are another story, they are poorly run and their service depts pitiful (Especially with My bike as its “New Technology to them (even though its 20 year old technology at best). I am just talking about “Bike People” in general, Many of them are just Narrow Minded angry people who feel that they GAve Birth to their machines instead of what they did, Bought a Mass Produced Product. I ma lucky, I live in Southern CA, I ride all year and see every make of bike almost weekly. I like the Diversity. Will you find me at a HOG rally? No.

  • tim

    KKR’s only interest in Harley would be short-term profit by selling off assets and busting up the company. If the assets are worth more than the stock price, they would go there. While this might make those that despise the company chortle with glee, I doubt there is enough value there for KKR to bother.

  • iactuallylikeharley

    sburns really nailed most of the arguments for why the brand is in its current predicament. As many have said the internal culture has mirrored its customer base. Where it was once staffed by people who love riding (I’m talking management roles here) it now is staffed by people who love the idea of the brand and have lost touch with the product.

    Harley rode the wave of a historic anniversary, consumer spending fueled by home equity and a user base who’s children were leaving the home and they we’re looking to regain their youth. In the last two decades they didn’t have to sell bikes, the demand was there. Now they have to sell bikes and be competitive, they have no idea how to do that, especially now as company their size.

    What we’ve see is a brand succeed despite its product and marketing, because the cultural and economic trends were with them. There are a lot of good people at the company, and I’m one who believes we need more manufacturing at home, just don’t know how the company can turn the corner without a major purging. A purging that will cause a tremendous blow to the company. Perhaps if KKR does it, we will have an outsider to blame and sometime in the distant future they can write another comeback story.

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