Test

This is a test to update the Delmont Report, now that I’m back in good health.

—Joe Delmont

Survey: 3Q U.S. Harley Retail Sales Up 3.5%

Here is some good news for followers of Harley-Davidson: Retail sales in the third quarter were up 3.5%, compared to the 3Q last year when sales slumped 9.4%, according to a recently-completed survey of dealers by Wells Fargo Securities.

There’s more good news as well: Inventories remain at five year lows and all of the dealers described inventories as comfortable/light with a need to improve the mix such as adding more touring bikes. Inventory levels are at about 40-45 days, according to the survey.

However, dealers voiced concerns about the inventory mix and said there probably were lost sales due to lack of product availability on models such as the model year 2012 (MY12) touring, sportsters and softails. “We believe Harley underestimated U.S. summer demand, especially in touring (models),” says Tim Conder, Wells Fargo Securities senior analyst and author of the report. “It likely will be late fall before Harley has U.S. inventories normalized,” he added.

Here’s an interesting comment from Conder: “We continue to believe Harley is making specific efforts to limit some availability of Touring models, in part to encourage the dealer network to grow sales (i.e. Sportster, Dyna, Softtail) into targeted, less penetrated customer demographic segments (i.e., under 35, women, African-American, Hispanics). However, this effort may have been too aggressive when combined with York restructuring transitions.”

The survey included 40 dealers located in 24 states across the U.S., approximately, 6% of Harley’s U.S. dealers and was skewed toward larger dealers in major metropolitan areas. The survey included 10 dealers in the East,  10 in the South, 10 in the Midwest and 10 in the West.

The dealers surveyed were very aggressive in their marketing. In addition to selling new and used motorcycles, clothes, merchandise, parts, accessories and service, 98% of the participating dealers had Harley Owners Group (HOG) chapters, 55% offered rentals, 45% sponsored a Rider’s Edge training program and 33% had an on-line sales program.

The dealers also were very aggressive on their pricing. Seventy percent of the dealers sold at MSRP, 20% sold at MSRP with what Wells Fargo calls “minimal discounts,” and 10% sold at a premium to MSRP. Twenty percent of the dealers said they were selling at least some new models below MSRP, compared to 13% in the Q211 survey by Wells Fargo, and 18% in Q310.

Here are other findings from the survey:

• The ratio of used to new bikes has improved from 2:1 to 1.75:1.
• The price gap between used bikes and new bikes has continued to narrow. Used bike prices were stable through the 3Q after rising for much of the last 24 months, according to Conder.
• Price discounting does not appear very likely in the near term, says Conder, “given clean dealer inventories, increased demand and management’s aggressively managing supply in line with demand.”
• Used Harley bike prices stabilized in Q209 and have increased since then to the point where new bike demand “is positively impacted,” notes Conder. Since Q209, he says, dealers reporting flat or increasing used bike prices jumped from 25% to 88% in Q311.”
• Prices of used Harley’s are likely to continue to increase, year over year, over the next year, Conder predicts.
• Credit standards of Harley-Davidson Financial Services (HDFS) have remained basically stable between the second and third quarters this year, according to the dealers.

Harley common stock has traded in a range of $28-$47 over the last 52 weeks. It closed at $34.33 on Friday, Sept. 30, 2011. JD

Business Seminar Helps Chinese Manufacturers

Panelists’ Message: U.S. Consumers Want Quality and Value

INDIANAPOLIS (Feb. 21, 2011)— Chinese manufacturers Sunday received several tips on how to successfully sell powersports vehicles and equipment in the United States. The seminar here was put on by the Motorcycle Industry Council (MIC) and Advanstar Communications for Chinese exhibitors before a packed house at this year’s Dealer Expo.

Attendees heard from government and industry experts about what it takes to successfully sell powersports equipment in the U.S. market. Presenters included representatives of Sargent’s Motorsports Groups, the Consumer Product Safety Commission and Dealernews magazine. The program, entitled, How To Successfully Sell Powersports Vehicles in the United States, was moderated by Paul Vitrano, executive vice president of the Specialty Vehicle Institute of America (SVIA).

The key messages delivered by panelists were:

• QUALITY PAYS. Attendees were told that American consumers value quality over cost and that they are willing to pay more for a better product.
• OBEY THE RULES. Panelists, especially representatives of the CPSC, emphasized the importance of following U.S. government rules and regulations. “Government agencies balance their responsibilities of helping businesses with protecting consumers,” Vitrano said, “and they lean toward protecting consumers.” Penalties for breaking the rules are stiff and expensive, attendees were told.

Joe Delmont, contributing editor for Dealernews, told the audience that it’s important to build a brand, not simply try to export products to the U.S. under many different names to be sold by many different distributors. “That’s a prescription for failure,” he said.

Delmont, who provided a checklist of things to consider in looking at the U.S. market, told the audience that to gain 5% market share in a specific segment for a new China brand might take three years and cost as much as $300 million.

CPSC representatives Tanya Topka and Justin Jirgl described in detail the process of working with the agency that has been set up under the 2008 Consumer Product Safety Improvement Act (CPSIA). A key regulation developed by the CPSC under the law calls for action plans to be approved by the agency before a company’s ATVs may be sold in the U.S.

Gary Sargent, Sr., and Gary Sargent, Jr., have been selling and servicing powersports equipment in their Portland, OR. dealership for more than seven years. They emphasized the importance of building quality machines and backing them with quality parts.

Gary Jr., who runs the dealership’s service operation, told attendees that he prefers to use more expensive, quality parts on a repair job and be confident that it won’t fail.

“I want satisfied customers,” he said, “not unhappy customers who come back because a part failed.”   JD

Patent Office Inefficiency Gives Away U.S. Jobs

Story of Stolen Ideas Familiar To Powersports Companies

President Barrack Obama’s call last night for stepped up innovation is right on the mark. Innovation and product development are two things that we do better than anyone else in the world.

Unfortunately, we may be giving away this advantage every day by disclosing our ideas and research before we can produce the related products and services. Losing intellectual property to unscrupulous foreign manufacturers is an all too frequent experience of many U.S. powersports manufacturers.

So, what’s the latest problem with protection of our ideas?

According to one recent report, the U.S. Patent Office is functioning so poorly that it can take years to act on a patent application, long after the application has been posted on the Internet and examined by potential competitors.

Here’s the story, according to a report prepared by John Schmid, a reporter with the Milwaukee Journal Sentinel newspaper that ran Jan. 16, 2010. The key points presented by Schmid include:

1. Lack of funding and an inefficient bureaucracy are causing patent applications to be delayed in processing at the same time that they are released by the Patent Office on the Internet.
2. Patent applications are published by the office online 18 months after they are filed, whether or not they have been acted upon. “That puts American ingenuity up for grabs,” writes Schmid, “free to anyone with an Internet connection.”
3. Thousands of Chinese engineers sit at computers every day reading U.S. patents on the Internet. “They use the technology for free.”
4. Applications are delayed so long that technologies often become obsolete before a patent is ruled upon.
5. The agency took 3.82 years on average to process each patent it issued last year, up from 3.66 years in 2009.
6. Some 1.22 million patents await a final decision today.
7. Last year, a total of 708,000 applications were waiting an initial review.
8. In 2010 the Patent Office collected $53 million in fees that it was not allowed to keep because of limits imposed by Congress. At the same time, its $2 billion annual budget—all of which comes from fees— is often used in part by Congress for other unrelated government purposes.
9. A study conducted by British patent authorities estimated that the  U.S. wastes at least $6.4 billion each year in lost innovation— legitimate technologies that cannot get licensed and start-ups that can’t get funded because of problems at the U.S. Patent Office.

In his report, Schmid quotes Paul Michel, a former patent court judge: “Everyone goes around saying that innovation is the key to job growth and the key to recovery from the recession. But with the growth of applications and the continued neglect of Congress, the Patent Office is making little progress and in some ways is sliding back.” A lot of companies actually die waiting for the Patent Office, Michel says.

President Obama is on the right track in pushing innovation as an engine to job creation, but Congress should wake up and plug the leak at the overextended Patent Office so that we stop providing free ideas to the rest of the world.  JD

Contact me with story ideas and news tips at
joe@powersportsupdate.com or 612/845-8091

Polaris Kicks Off 2011 With RZR XP 900

 

Polaris RZR XP 900

Polaris Industries started the new year in powerful fashion today announcing its new RZR XP 900 in what it calls “a whole new class” of SXS vehicles. The 2011 RZR XP 900 has a new 875cc,  88 hp, ProStar 900 Twin EFI engine with dual overhead cams (DOHC) and a new 3-link trailing arm independent rear suspension with 13 inches of ground clearance. You can read a complete information package on the Polaris website by clicking here.

“When we set out to design the RANGER RZR XP 900,” said Matt Homan, vice president and general manager of Polaris’ Off-Road Vehicles Division, “we wanted to create a ground-breaking, high performance vehicle to complement our current, best-selling RANGER RZR line. The result is simply incredible.”

How will the RZR 900 be received? Interesting question. Here’s one comment from a discussion last month speculating on the new Polaris release: “I sure hope it is something worth while. If they make this big announcement for an 850 it will be a disappointment in my eyes as far as lot of others as well. Come on 951 CC or 1100 would be even better!”

Well, the 875cc power plant didn’t make that mark and it doesn’t match the top-of-the-line BRP Commander 1000 on several points, notably engine size (875cc vs. 976cc and price, $15,999 vs $14,999). It does win on horsepower (88 vs 85) and ground clearance (13 inches vs. 11 inches), however. If you’re interested in making more comparisons between the Polaris RZR 900 and the BRP Commander 1000, click here for RZR 900 specs and click here for BRP Commander 1000 specs.

The RZR 900 also includes several premium features, including the industry’s first factory LED headlights, performance brake calipers and large diameter, ventilated rotors on all four wheels, completely adjustable Fox Podium X 2.0 shocks on all four wheels and high performance  ITP 900 XCT tires. The RZR 900 also features a large grill opening and a front air dam for improved air flow. For safety, the RANGER RZR XP 900 has a certified roll-over protective structure (ROPS).

The RZR XP 900 carries an MSRP of $15,999 and will be available in Polaris dealerships this month. JD

Contact me with story ideas or news tips at
612/845-8091 or joe@powersportsupdate.com

Will CPSC Database Cause Problems for Business?

Database of Consumer Complaints May Have Insufficient Safeguards

The Consumer Product Safety Commission (CPSC) is a federal agency charged with protecting the safety of consumers. However, as we’ve learned over the past year, it often does so with a misdirected dedication and zeal that causes unintended harm to small businesses. Case in point: The so-called “lead laws” that prevent the sale of ATVs and dirt bikes to kids age 12 and under.

Now, there’s another big project that could create more unintended problems for small businesses in the powersports industry— both retailers and manufacturers. It’s called the Consumer Product Safety Information Database, and it’s slated to go live in March, only about three months away.

While the majority of CPSC commissioners said the impact of the database on small businesses would be minimal, others disagree. Here’s CPSC Commissioner Nancy Nord, who voted against the final rule: “The majority makes the bald and unsupported assertion that this rule will have no impact on small business,…. This conclusion ignores examples we have in the agency of companies harmed by unfounded complaints made against products later determined not to be unsafe.”

The CPSC is nearly set to roll with this project— it recently voted 3-2 to publish the final rule in the Federal Register on Dec. 9, 2010; the rule becomes effective Jan. 10, 2011.

EICMA Draws Record Consumer Audience

Visitors jam the Harley-Davidson exhibit during EICMA 2010 in Milan.

MILAN—Here’s a positive sign that interest among motorcyclists, at least in Europe, is alive and well. Crowds jammed the six-day EICMA show here last week, according to sales figures released by the show management. The numbers are very good, even though retail sales of bikes in Italy are down this year.

According numbers provided by show management, consumer traffic on Thursday was up 5% over the same day last year, 18% on Friday, 24% on Saturday, and 13% on a cold and rainy Sunday. That means attendance topped 500,000 visitors compared to about 450,000 at last year’s show.

Part of the reason for the gains, said EICMA Director Constantino Ruggiero, was the return of exhibitors Honda and Yamaha. Honda played a leading role, holding a huge press conference in the number one spot on the schedule Tuesday to kick off the show.

The show also drew 45,708 trade visitors,  including 12,853 foreigners, and  2,104 accredited journalists. Meanwhile, EICMA’s website also recorded strong gains, climbing from  271,438 visitors  to 340,664 visitors. JD

Contact me with news tips and story ideas at
joe@powersportsupdate.com or 612/845-8091

An Interview with Constantino Ruggiero

Long-Time Italian Motorcycle Leader Retires

MILAN (Wednesday, Nov. 3, 2010)— Constantino Ruggiero, 72, arguably is one of the most influential leaders in the Italian motorcycle industry. He is considered by many to be the grand old man of Italy’s two-wheel industry, everything from bicycles to mopeds and motorcycles. He’s headed the national association of bicycle and motorcycle manufacturers (ANCMA) for 25 years and built its annual equipment show, EICMA, to be the largest of its kind on earth.

Constantino Ruggiero

But now, Ruggiero is moving on; he retires on Jan. 1, 2011. I caught up with this soft-spoken Italian gentleman during one of his hectic days here at EICMA.  Here’s a summary of our conversation, edited for brevity and clarity.

Joe Delmont: Your retirement was a surprise to many. When is your last day in office?
Constantino Ruggiero: My retirement is effective Jan. 1, 2011.

JD: What will you do after you leave office?
CR: Anything I can find. I have to earn money in some way and not get bored. Now we are working in order to live to 120 years of age, so 72 is a very young guy.

JD: How long have you been in the industry?
CR: 25 years at ANCMA and 23 years before that at Pirelli.

Second EICMA-China Show Set for July 2011

Seen as an exchange of commerce at the global level

MILAN (Wednesday, Nov. 3, 2010)— The second annual EICMA-China motorcycle show has been scheduled for July 2-4,2011, at the China National Convention Center in Beijing, show organizers said here today.

Plans for the show were announced at a press conference conducted by the event’s planners: CIME (China Italy Motorcycle Exhibition), a joint venture of EICMA, the China Chamber of Commerce for Motorcycles (CCCMA) and the Genertec International Advertising & Exhibition Company.

This year’s show was held last July in Beijing and drew 130 exhibitors and about 45,000 attendees. More than 200 exhibitors are expected to participate in next year’s show, said CCCM’s Bingnan Chen.

Opening Day at EICMA’s Motorcycle Show

Prime Minister Silvio Berlusconi with the director of EICMA Costantino Ruggiero during opening day ceremonies. It's a memorable show for Ruggiero, who is retiring this year after 25 years as executive director of ANCMA, the Italian motorcycle and bicycle trade association, and head of the group's EICMA show.

Huge show venue covers area of nearly 47 football fields

MILAN — It’s been seven years since I walked this world’s largest motorcycle show,but it seems as though I was never gone.

While much has changed at EICMA, much is the same— the almost overwhelming size, the jammed press conference schedule on the first two days (Tuesday and Wednesday have 21 press conferences) devoted to trade and press representatives. The doors open to the general public on Thursday. By the time this 68th edition of EICMA wraps up on Sunday, Nov. 7, close to 500,000 people will have walked these aisles.

The highlight of the first day, for Italians certainly if not for foreign visitors, was the opening ceremony featuring Italian Prime Minister Silvio Berlusconi.

Security seemed especially tight for Berlusconi’s visit this year and made it almost impossible to move through the presentation area in the main administration building that houses EICMA offices and the media room where we do a lot of our work. The media center is set up with computer facilities, and it hosts the drop off area where exhibitors distribute information to the media.

Unlike in past sessions when Italy’s top politicians opened the show with comments related to motorcycles, often discussing transportation issues and plans for boosting Italy’s important motorcycle and bicycle industries, Berlusconi used Tuesday’s event as an opportunity to poke barbs at his political opponents and to talk about general political issues. Recycling,  garbage issues in Naples and proposed wire tap legislation didn’t hold much interest for international guests looking for news about motorcycles.