We just got off the phone with Harley spokesperson Paul James. According to him, Erik Buell is in ongoing discussions with Harley about taking on an advisory roll at The Motor Company, in which capacity he'll contribute to future product design. The rest of Buell's 180 employees won't be so lucky, they'll be out on the street as of December 18, the day the Buell plant shuts down. This news will come as a shock to them, like the rest of us, they only found out about Harley killing Buell this morning.
Paul didn't have Buell sales figures to hand and we don't believe
they're published by Harley, but he suggested that this year's sales
were down compared to last's about the same percentage as Harley's
better-than-industry-average 21.3 percent figure. 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
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.
Asked how Harley intends to replace the customers that will now be lost
to Buell's competitors and how Harley intends to expand its appeal to
post Boomer generations, Paul is insistent that Harley's current range
already has the ability to appeal to that audience, saying, "Keep in
mind, in the U.S., H-D holds the number two share position overall (all
size bikes) among young adults 35 and younger and we are the share
leader in heavyweight motorcycles among this group, so we know our
motorcycles appeal to young adults.
"We will continue to develop products under the Harley-Davidson brand
that appeal to riders under 35 years old. That said - and while I can't
discuss the specifics of future product plans - you can expect us to
focus on high-impact product introductions that attract new riders and
help define the future of motorcycling. We are not ruling anything in
or out...we simply will pursue it through the Harley-Davidson brand."