Shocking news - Buell ordered to shut down

[Skier]

Word on the grapevine says you can pick up a brand new Buell for about $5,000.

[High_Side]

Word on the grapevine says you can pick up a brand new Buell for about $5,000.

There was a picture posted of a new 1125CR on another website with a $4995 sign on it, so I went down to my local dealer and they still had their $15995 (Canadian $) sign on theirs! I found this really surprising as I had them down to $11000 on it this spring before I ended up buying the KTM instead. The bike still looks great to me and if I was still in the market I would be seriously trying to work out a deal one.

On another note there is also a rumer floating around that Yamaha has expressed interest in aquiring Buell. Personally, I would like to see BRP pick them up as they are already making the engines anyway and they have a full and enthusiastic dealer network in place. They would look great with Can-Am written on the tank

[koji52]

You people need to stop looking at the situation from a rider's point of view and start seeing it from a business point of view if you ever want to understand this. Harley is, first and foremost, a business. That means their mandate is to make as much profit as possible to keep the shareholders happy. This mandate holds true whether a business makes motorcycles or missiles, the bottom line is always about profit.

If you make a major move like shuttering a division, and you can't even articulate, in dollars and cents, what you hope to accomplish by doing so, you're not running a business..... you're engaged in random acts fueled by blind hope. Their CFO can't even lay out a business case for closing Buell. And their CEO can't seem to articulate a plausible plan for sustained profitability, at least not in his remarks to date. Stock prices are as mercurial as women's fashions (sorry, ladies)- up one day, down the next. You don't achieve long term growth by only looking as far as the next quarterly earnings report. My comments above weren't about evaluating H-D as a motorcycle company, but as a business.

You guys are both right in a way. Right now, though, I think investors are trading the MoCo's stock based on immediate liquidity. Much of HD's debt is coming due in April and the company isn't generating positive operating cash flow. A lot of its revenues have been recorded onto the balance sheet as receivables to HDFS. As everyone knows, HD likes to securitize its receivables and sell them in the marketplace. Based on the latest securities filings, their latest sale of receivables was to a special interest unit and had investors putting out notes to HD at a 22% discount to the fair value of the receivables. The fair value of the receivables should already take into account the likelihood of collection. So the fact that investors need a 22% discount to issue DEBT, raises the question: How collectible are they? All of the company's receivables held for sale have been reclassified to long-term assets, which means management doesn't foresee anyone buying these. Halting Buell's operations saves on cash (which the MoCo needs at this point) and the sale of MV generated cash (even at a loss).

Short-term, these changes are needed. Raising as much cash as possible is absolutely necessary to continuing the company's operations. I think this is why the stock was up on Monday when they announced these actions. Come April, I think there's a strong chance of default if HD cannot raise additional capital. If they default on one loan, the rest of their loans will come due as well. If that happens, Chapter 11 is the next step and the company will undergo reorganization. The brand is too valuable still to liquidate the company though.

Long-term, these changes are terrible. People who would have come in for Buells will never step foot in a Harley dealership. HD will rely on repeat business from people who already have Harleys and hopefully their family members. I love my Harleys, am 25 and have a job and some job security. However, I think I am something of a rarity with motorcyclists of my age.

If I didn't lose my shirt at the end of 2008 and had the nuts, I'd short the hell out of HD stock. It's going to be interesting to see what happens at the end of this year and going into April of next year.

And BTW, I just got back from the local dealership and looked at the 1125cr's and r's...no unreasonable offer refused. I saw the $4995 price at another dealership online somewhere and made that offer. Instantly refused. I'd buy one at that price, hold it for a few years and I think it could sell for $10K a few years from now when the market picks up (as long as I didn't put any miles on it haha).

[Graunke]

Word on the grapevine says you can pick up a brand new Buell for about $5,000.

Where is this taking place?

[koji52]

Just picked up a 1125r for $6k out the door here.

[Superfly3176]

Long-term, these changes are terrible. People who would have come in for Buells will never step foot in a Harley dealership. HD will rely on repeat business from people who already have Harleys and hopefully their family members. I love my Harleys, am 25 and have a job and some job security. However, I think I am something of a rarity with motorcyclists of my age.

Same here. I think quite a few people even our age (I'm 22). Wish they could buy a harley. Fact is, they're just too costly. Buell never really did it for me anyway. I'm not a big sports bike guy anyway, but I think their is a ton of better looking sports bike then Buells. Also much faster ones too. I just always saw Buell as a niche rather then the market.

Not saying they aren't good bikes. I'm sure they are. Just unattractive compared to most sports bikes. That being said with all the discounts if I didn't have a loan on the bike I'd consider it seeing how cheap they are going.

[MotoGuy23]

I think quite a few people even our age (I'm 22). Wish they could buy a harley. Fact is, they're just too costly.

I keep hearing everyone say Harley's are too expensive and they only market to baby boomers. My question is what will happen with all of these Harley's (and the price of new/used Harley's) when all the baby boomers die or sell them to pay for retirement homes. Is there enough demand to keep them all on the road?

On the topic of Buell, while I agree they were ugly as sin I have heard nothing but good things about how they ride. Any day a motorcycle company goes under (regardless of the brand) is a sad day in my book.

[koji52]

I think quite a few people even our age (I'm 22). Wish they could buy a harley. Fact is, they're just too costly.

I keep hearing everyone say Harley's are too expensive and they only market to baby boomers. My question is what will happen with all of these Harley's (and the price of new/used Harley's) when all the baby boomers die or sell them to pay for retirement homes. Is there enough demand to keep them all on the road?

On the topic of Buell, while I agree they were ugly as sin I have heard nothing but good things about how they ride. Any day a motorcycle company goes under (regardless of the brand) is a sad day in my book.

Demand can be created on just about anything given a low enough price.

I actually like the Buell look. They're different than most anything out on the roads these days.

[MotoGuy23]

Demand can be created on just about anything given a low enough price.

I just worry that Harley has created a business model that relys on selling their bikes at high prices. If prices drop sure demand will go up (I'd buy one) but will Harley be able to adapt quick enough to offer their bikes at reduced prices. (To beat a dead horse) The days of selling $25,000 bikes are numbered and closing Buell makes me worry Harley doesn't realize that.

[Graunke]

..... (To beat a dead horse) The days of selling $25,000 bikes are numbered and closing Buell makes me worry Harley doesn't realize that.

What HD's are you talking about that are $25k?

The market I live in, hasn't sold a Harley for that price in years. (excluding CVO models). Looking at the current model selection, and the MSRP there are 12 models that start under $15000.

The touring models, and more heavily equipped models will get you closer to the $20000 mark, as will most anything in the same class offered by the competitors.