Harley Davidson Financial Woes

[RhadamYgg]

But the real question is what is going to happen to HD now? Will they remain the company they are at present (good or bad) or will they be forced through re-organization, funds sources, etc - to become a different company which is more commercialized/productized.

Here is an article about how the stimulus may affect and re-invigorate HD motorcycle company in specific and also impact other bike manufacturers as well.

But I think, that purchasing a new bike is low on the list if you are searching for enough money to pay your current mortgage on a house. I'm fortunate that at the moment I've got a reasonably stable job, but that could just be an illusion.

So, I might get some money back at the end of the year for buying a new bike. I don't think it is going to spur sales, but it might weigh in as a factor in someone in a position to consider buying a new bike right now.

RhadamYgg

Sadly in today's world, having a "secure job" is illusionary. Last year I was really considering buying a new bike, but felt rather uneasy about what I was seeing in the trucking industry. When freight numbers start dropping right across the market place, that tells me no one is buying as they once were and the economy could be in trouble......this was long before the melt down really got ink in the press.

So I didn't buy, and that was probably a good thing. A couple of weeks back my company, one of the largest and profitable 3 PL's went into lay off mode.

As for HD, their machines have been marketed as a status symbol for a long time. This could be their undoing, as people a more likely to cut back on such items. Whereas Honda and the like have a solid foundation in the basic personal transportation markets, especially in the South East Asian markets This will allow them to weather the current economic storm better then HD.

Well, they have been positioning their bikes as fuel efficient - during the high-gas price period of a little while ago. The problem is that their prices on most of their bikes would take a long time to make up in fuel savings - even with the high gas prices we were having.

Where do their prices come from? Do they just make a lot more money per bike than the foreign counterparts or does it really cost that much more to make them?

RhadamYgg

[RhadamYgg]

HD 10K Statement

I worked at a publicly held company that screwed up and stopped sending their 10K statements. Very shortly thereafter they stopped paying the employees (illegal in NJ and California - where they had employees).

Looks like they will be reducing overall operations and consolidating as much as they can to weather the economic storm.

They will be reducing their workforce by 1100 people. They are looking at a further 10% reduction of the market they sold last year - which was already a reduced market compared to previous years.

RhadamYgg

[jonnythan]

Well, they have been positioning their bikes as fuel efficient - during the high-gas price period of a little while ago. The problem is that their prices on most of their bikes would take a long time to make up in fuel savings - even with the high gas prices we were having.

Where do their prices come from? Do they just make a lot more money per bike than the foreign counterparts or does it really cost that much more to make them?

RhadamYgg

Not that it necessarily justifies the cost, but have you compared an H-D to a similar Yamaha or Honda? The H-Ds really aren't significantly more expensive at MSRP.. and the H-Ds tend to have comparatively few to no plastic parts and higher quality detailing on the metal parts.

[koji52]

HD 10K Statement

I worked at a publicly held company that screwed up and stopped sending their 10K statements. Very shortly thereafter they stopped paying the employees (illegal in NJ and California - where they had employees).

Looks like they will be reducing overall operations and consolidating as much as they can to weather the economic storm.

They will be reducing their workforce by 1100 people. They are looking at a further 10% reduction of the market they sold last year - which was already a reduced market compared to previous years.

RhadamYgg

Your company that didn't file their 10-K statement was likely planning on not paying the employees before they decided not to submit their filing. When a company stops sending their filings to the SEC, it's typically a bad sign for the company (either they don't have the money to get their financials audited, their financials are not organized for an efficient audit, they know they're going down the toilet, etc.) and they get delisted from the stock exchange. It doesn't necessarily lead to the company refusing to pay their employees.

HD reducing the workforce is typical to the times. A lot of companies are retrenching and consolidating operations to increase efficiencies. The market for luxury products is reduced and probably will continue to be for the next year or two.

[Gummiente]

Where do their prices come from? Do they just make a lot more money per bike than the foreign counterparts or does it really cost that much more to make them?

Things must be different up here in Canada, because the pricing of Harleys is very similar to equivalent bikes on the market. Let's take the touring Electra Glide, for example...

2009 Electra Glide Classic: $23,619 CDN
2009 BMW K1200LT: $24,750 CDN
2009 Honda Gold Wing GL1800AL: $29,399 CDN
2009 Yamaha Royal Star Venture S: $23,799 CDN
2009 Victory Vision Street: $24,194 CDN

What are the MSRP's for these bikes in the area where you're living?

[HYPERR]

As for HD, their machines have been marketed as a status symbol for a long time. This could be their undoing, as people a more likely to cut back on such items. Whereas Honda and the like have a solid foundation in the basic personal transportation markets, especially in the South East Asian markets This will allow them to weather the current economic storm better then HD.

You hit the nail on the head there Ceemes. Along with the Evo Blockhead, it was their ingenious marketing aimed towards the rich yuppies that skyrocketed HD from one foot in the grave to market stardom back in the 1980s.

Harley's strength is also a double edged sword. Harley's basically cater to a certain demographics which they do very well. However in this "times are a changin" era, they are nowhere as diversified as Honda so they are much more vulnerable in times like these.

[Gummiente]

However in this "times are a changin" era, they are nowhere as diversified as Honda so they are much more vulnerable in times like these.

Imagine how Ducati, Triumph, Ural, Moto Guzzi and other "mono-product" companies must be feeling right now. BMW, Victory, Kawasaki, etc at least have their parent companies to suckle off of during hard times. However, considering most of their motorcycle production amounts to a single digit percentile of their total manufacturing operations, what do you think the chances are of their motorcycle lines surviving if the economy REALLY gets bad? Do you think, for example, that BMW would cut their car production before reducing their motorcycle production?

[HYPERR]

However in this "times are a changin" era, they are nowhere as diversified as Honda so they are much more vulnerable in times like these.

Imagine how Ducati, Triumph, Ural, Moto Guzzi and other "mono-product" companies must be feeling right now. BMW, Victory, Kawasaki, etc at least have their parent companies to suckle off of during hard times. However, considering most of their motorcycle production amounts to a single digit percentile of their total manufacturing operations, what do you think the chances are of their motorcycle lines surviving if the economy REALLY gets bad? Do you think, for example, that BMW would cut their car production before reducing their motorcycle production?

Mike, I don't think BMW ever took their motorcyle division seriously ever again after their car division became very succesful.

I think two of the reason Harley is getting hit harder than the other niche bike manufacturer that you mention are:
1. They expanded in anticipation of more growth when the market actually started to shrink.
2. The majority of their sales are in the US where the economy has been hit the hardest.

[Gummiente]

I think two of the reason Harley is getting hit harder than the other niche bike manufacturer that you mention are:
1. They expanded in anticipation of more growth when the market actually started to shrink.
2. The majority of their sales are in the US where the economy has been hit the hardest.

That Harley will be hit hard as the global economy continues to sputter, I have no doubt. However, I don't think it will be quite as severe as a lot of people are predicting (really, you should see some of the gleeful comments about their hopeful demise on other motorcycle forums I frequent). But they will not be the only motorcycle manufacturer that will be facing and executing difficult decisions. Keeping in mind that motorcycles in general are viewed as "luxury" items, it won't be just HD that will feel the effects of reduced sales in the coming months.

EDIT: Oh, and if they DO go under it won't really matter to me... I've already got mine.

[HYPERR]

It is safe to say that there would be no way that the public would support any kind of bailout money for HD(or any motorcycle company) for that matter. Afterall in the public's eyes, motorcyclists are third class citizens; one step above a convicted criminal.