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Old 10-15-2009, 12:29 PM   #1
teh POD
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Unhappy Buell Motorcycles to be Discontinued

http://thekneeslider.com/archives/20...-income-falls/

Link to Erik Buell's video announcing the discontinuation: http://www.buell.com/en_us/

Quote:
Originally Posted by The Kneeslider
Buell Motorcycles to be Discontinued and MV Agusta Sold Off as Harley Davidson Income Falls

Harley Davidson’s earnings just came in and third-quarter net income dropped 84%. But this jumped out at me:

Quote:
The company plans to discontinue its Buell product line and sell its MV Agusta unit, essentially exiting the sport bike market.

“The fact is we must focus both our effort and our investment on the Harley-Davidson brand, as we believe this provides an optimal path to sustained, meaningful long-term growth,” CEO Keith Wandell said in the release.
Buell motorcycles will be discontinued, resulting in the loss of 180 jobs over time and MV Agusta will be sold. The troubles are substantial and the work necessary to rebuild is enormous.

I have to admit, I was not expecting that news. Wow.

I’ll add more details as they become available but what are some possible directions for Buell? Harley Davidson needs to do what it must to save the company and Buell may not fit into their plans but that does not mean there is no place for Buell in the motorcycle market. Ideas?
Quote:
Highlights from the Harley Davidson press release:

Harley-Davidson announces 3rd quarter results, Unveils long-term business strategy


MILWAUKEE (October 15, 2009) – Harley-Davidson, Inc. (NYSE:HOG) announced decreased revenue, net income and earnings per share for the third quarter of 2009 compared to the year-ago period, while reporting a moderation in the decline of retail new Harley-Davidson motorcycle sales compared to the second quarter.

Worldwide retail sales of new Harley-Davidson® motorcycles declined 21.3 percent in the third quarter compared to last year’s third quarter, an improvement from the 30.1 percent decline in this year’s second quarter. An 84.1 percent decline in net income and an 84.5 percent decline in diluted earnings per share from the year-ago quarter reflected lower motorcycle shipments and the effects of the economy on retail and wholesale loan performance at Harley-Davidson Financial Services.

Harley-Davidson also unveiled major elements of its go-forward business strategy to drive growth through a single-minded focus of efforts and resources on the unique strengths of the Harley-Davidson brand, and to enhance productivity and profitability through continuous improvement. As approved yesterday by Harley-Davidson’s Board of Directors, the Company will discontinue its Buell product line and divest its MV Agusta unit as part of this strategy.

“While the environment remains challenging for us, we are mildly encouraged by the moderation in the decline of dealer retail Harley-Davidson motorcycle sales,” said Keith Wandell, Chief Executive Officer of Harley-Davidson, Inc. “And moving forward, our strategy is designed to strengthen Harley-Davidson for long-term growth and deliver results through increased focus.

“As our announcement regarding Buell and MV Agusta indicates, we are moving with the speed and decisiveness required to bring our business strategy to life,” said Wandell. “The fact is we must focus both our effort and our investment on the Harley-Davidson brand, as we believe this provides an optimal path to sustained, meaningful, long-term growth.”



“Delivering Results Through Focus” Strategy
A key element of the Company’s go-forward strategy is to focus on extending the Harley-Davidson brand by leveraging unique Harley-Davidson strengths. The strategy focuses company resources on Harley-Davidson products and experiences, global expansion, demographic outreach and commitment to core customers. In addition, the Company will continue to expand its initiatives to enhance profitability through continuous improvement in manufacturing, product development and business operations.

“We are refocusing our business with the expectation that we can provide growth that is both profitable and sustainable over the long term,” said Wandell. “We believe we can create a bright long-term future for our stakeholders through a single-minded focus on the Harley-Davidson brand.”



Details of Buell and MV Agusta Actions
The Company will discontinue production of Buell motorcycles. Remaining inventories of Buell motorcycles, accessories and apparel, while they last, will continue to be sold through authorized dealerships. Warranty coverage will continue as normal for Buell motorcycles and the Company will provide replacement parts and service through dealerships.

The decision will result in a reduction over time of about 80 hourly production positions and about 100 salaried positions at Buell. Employment will end for a majority of Buell employees Dec. 18, 2009.

Harley-Davidson, Inc. expects to incur approximately $125 million in one-time costs related to the discontinuation of the Buell product line. The Company expects to incur approximately $115 million of that amount this year.

Relative to MV Agusta, the Company will immediately commence efforts to sell the business, which is based in Varese, Italy.

In the third quarter, Harley-Davidson, Inc. recorded a one-time fixed-asset impairment charge of $14.2 million related to Buell and a goodwill impairment charge of $18.9 million related to MV Agusta.

“Buell and MV Agusta are great companies, with proud brands, high-quality exciting products and passionate enthusiasm for the motorcycle business. Buell has introduced many innovative advancements in motorcycle design and technology over the years and MV Agusta is known in Europe for its premium, high-performance sport motorcycles. However, our strategy to focus on the Harley-Davidson brand reflects the fact that we believe our investments in that brand are a better utilization of overall company resources,” said Wandell.



Retail Motorcycle Sales.During the third quarter, retail sales of Harley-Davidson motorcycles decreased 21.3 percent worldwide, 24.3 percent in the U.S. and 13.1 percent in international markets, compared to the prior-year quarter. Industry-wide U.S. retail heavyweight (651cc+) motorcycle sales declined 35.9 percent during the quarter, compared to the year-ago period.

For 2009 compared to 2008 through nine months, retail sales of Harley-Davidson motorcycles decreased 22.9 percent worldwide, 25.5 percent in the U.S. and 16.5 percent in international markets. Industry-wide U.S. retail heavyweight motorcycle sales declined 38.7 percent year to date in 2009, compared to 2008.

Harley-Davidson Financial Services
Harley-Davidson Financial Services recorded an operating loss of $31.5 million for the third quarter of 2009 compared to an operating profit of $35.6 million in the third quarter of 2008. This decrease of $67.2 million was due to a higher provision for credit losses in both the retail and wholesale portfolios as well as increased interest expense. Year to date through the third quarter, HDFS reported an operating loss of $110.8 million, compared to operating income of $107.7 million for the prior year period. The nine-month operating loss includes two non-cash charges recorded in the second quarter of 2009: a $72.7 million credit loss provision for a one-time reclassification of motorcycle loan receivables; and a one-time $28.4 million charge to write off goodwill associated with HDFS.

HDFS continues to successfully access the credit markets to fund its lending activities. On October 9, HDFS completed a $700 million term securitization transaction with a weighted average interest rate of 1.2 percent.

Update on Restructuring Activities
On a combined basis, the Company expects previously announced restructuring activities, together with the discontinuation of Buell operations, to result in one-time charges of $215 million to $245 million over 2009 and 2010, or an increase of $55 million from the estimate provided July 16, 2009. The Company estimates annual ongoing savings from restructuring of approximately $140 million to $150 million.

The Company continues to pursue its previously announced “two path” study to determine whether additional major restructuring at York, Pa. facility can make those operations competitive and sustainable long term, or alternatively, whether the Company will relocate those operations to another U.S. location. As part of the restructuring analysis, the Company has begun contract talks with the union representing employees at York and expects to make a final decision on the status of the York operations by the end of this year.
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Old 10-15-2009, 01:25 PM   #2
SilverFleet
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A sad day indeed. They made some pretty cool and innovative bikes.
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Old 10-15-2009, 01:27 PM   #3
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HD didn't qualify for bailouts, huh?


Erik's video is tough to watch.
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Old 10-15-2009, 01:36 PM   #4
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Translation: Developing modern performance motorcycles is expensive and profit margins are thin. Developing logo wear is much cheaper and has much better margins.
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Old 10-15-2009, 01:39 PM   #5
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Good I never really liked them anyway. I mean they looked cool but I always felt there were much better bikes out there for the money.
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Old 10-15-2009, 02:03 PM   #6
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Sucks man.
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Old 10-15-2009, 02:13 PM   #7
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I dont really like buell but its sad to hear they are folding.
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Old 10-15-2009, 02:20 PM   #8
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"... goes to show that a small private company CAN compete with the much larger companies..."

How can you make a statement like that when you are shutting down because you CAN'T compete with them financially.

It's sad to see that they are shutting down operations though. I did have a look at them before I bought my Ducati Monster. Like someone else posted, there were better bikes out there for the money. Maybe they'll be back once the economy is looking better. If they don't come back, unfortunately I don't think they will be missed much except by the few people that do own them.
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Old 10-15-2009, 02:23 PM   #9
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My dad's on his second Harley in three years. Uncle has a Buell Ulysses, and that thing is angry.
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Old 10-15-2009, 02:41 PM   #10
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=/ A shame indeed...Buell made some neat bikes.
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Old 10-15-2009, 03:02 PM   #11
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I don't ride, but I always thought Buell's were cool... almost makes me want to go pick one up.
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Old 10-15-2009, 03:13 PM   #12
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Meh.....Very cool guy and racer. Sub-par bikes.
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Old 10-15-2009, 03:18 PM   #13
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Quote:
Originally Posted by Chromer View Post
Translation: Developing modern performance motorcycles is expensive and profit margins are thin. Developing logo wear is much cheaper and has much better margins.
Ya hit the nail on the head.
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Old 10-15-2009, 05:52 PM   #14
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Quote:
Originally Posted by elirentz View Post
Good I never really liked them anyway. I mean they looked cool but I always felt there were much better bikes out there for the money.
exactly, everyone liked it but nobody was buying it.
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Old 10-15-2009, 06:12 PM   #15
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Quote:
Originally Posted by rallymaniac View Post
exactly, everyone liked it but nobody was buying it.
I was / did. Glad I got mine. Not that you can't find them used still...
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Old 10-15-2009, 07:41 PM   #16
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Good thing Buell has won a bunch of races in the AMA SportBike championship this year. GO DMG!!!! bwahahahahahahaha lol.

On a separate note; I can't understand why Harley ever decided to buy MV Augusta. They have never had the intention to build sport bikes. Can't say i am shocked by this news at all.
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Old 10-15-2009, 10:59 PM   #17
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I remember when Buell was buying engines from Harley. I think they were 1200's. I'm not sure when Buell was purchased outright by Harley. When Bimota left the U.S. market I really wanted to get a leftover, but the dealer wouldn't budge and wasn't very nice to deal with. I went back a couple years later and they still had Bimotas in the crate, but I had a new kid and couldn't drop the 22grand on a cycle. That was about half price off new. Maybe I'll be able to pick up a leftover Buell for a sweet deal.
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Old 10-15-2009, 11:14 PM   #18
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sad news.. Cool bikes...
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Old 10-16-2009, 05:10 PM   #19
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Buell's motorcycles are over priced. It's not that they didn't make a good product but Buell can't compete with the Japanese manufactures as far as performance and price.

I'm sure Harley dealerships being the only place, most of the time, that you could buy a Buell didn't help. We all know what HD dealerships are like.
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Old 10-16-2009, 07:18 PM   #20
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^^^^^I know exactly what you are describing about Harley dealers. They have sold so great over the years until just last year that they turned into snobs, just like there clients. Now you go in and they are pushing the product and it is just too expensive. I'm buying my father a Triumph Speedmaster for his retirment next year. My dad has a lot of nastalgia for the Triumph and the Speedmaster is something he can ride and not worry about too many maintenance issues. 3 neighbors with Harleys and all STILL have bolts coming loose all the time. I thought that was an issue in the past.
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Old 10-16-2009, 07:32 PM   #21
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Quote:
Originally Posted by Scooby-Doode View Post
Good thing Buell has won a bunch of races in the AMA SportBike championship this year. GO DMG!!!! bwahahahahahahaha lol...
I'm assuming you're being sarcastic because they raced an 1125cc against 600cc bikes and won... I can kick a Kawi 125 Eliminator's ass all across a track and back with my 250, but it's not particularly fast.

Buell made technologically interesting bikes, but the bikes he competed against were just better. A few days ago I was looking at an 1125CR, and it's a cool bike, but I'd rather have a Ninja 10R for the price.

For a bit of fun, go to the Buell web site and look at the Blast in the 2010 full product line up. Funny isht!
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Old 10-16-2009, 07:58 PM   #22
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Quote:
Originally Posted by reddoak View Post
For a bit of fun, go to the Buell web site and look at the Blast in the 2010 full product line up. Funny isht!
HAHAHA! Nice find!

I like the little pop ups on the Features page. HILARIOUS!
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Old 10-16-2009, 10:23 PM   #23
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meh. they're neat but...
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Old 10-17-2009, 05:05 AM   #24
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Quote:
Originally Posted by sgilson View Post
I'm buying my father a Triumph Speedmaster for his retirment next year.
This makes me wanna have babies.
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Old 10-17-2009, 04:45 PM   #25
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Kind of sad to watch this video. I always liked Buell's but was never in the market for a bike.

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