Archive for December, 2009

Investors In Powersports Stocks Enjoyed 2009

December 31, 2009

Harley, Polaris, Arctic Cat Post Hefty Gains

Investors who placed bets on the powersports industry last year at this time— and held steady for the ride through the year— have reason to celebrate tonight. I checked the performance of three of the leading powersports stocks this year—Harley-Davidson (HOG), Polaris Industries (PII), and Arctic Cat (ACAT) and each of them outperformed the Dow Jones Industrial Average (DJIA) by a wide margin in two cases and matching it in the last one.

It wasn’t a smooth ride, however, and it took a firm hand to stay in the game through the sharp downtown in the first quarter.  For example, while the Dow lost 13% in value during the first two months of 2008, Polaris lost 25%, Harley  dropped 21%, and Arctic Cat slipped 20%.

For the year, though, the Dow climbed 1,772 points from 8,776 on Dec. 31, 2008, to 10,548 at the close yesterday. That’s a 20% jump. During the last 52 weeks, the Dow ranged from a low of 6,440 to a high of 10,605.

Polaris, the Minneapolis-based manufacturer of ATVs, UTVs, motorcycles, snowmobiles and electric vehicles, posted the biggest dollar gain during the last year of the three companies I looked at. Polaris common moved from $28.65 on Dec. 31, 2008, to $43 at the close yesterday. That’s a gain of $14.35, or 50.1% over the year. Its 52-week performance ranged from $14.53 to a high of $49.74.

If you would have purchased 1,000 shares of Polaris common stock one year ago, your investment would have gained $28,650, not considering quarterly dividends nor any sales commissions. Now, wouldn’t that provide a nice party tonight.

Securities analysts who follow the Polaris stock like the management team lead by new CEO Scott Wine, and Bennett Morgan, president and COO, and a long-time Polaris executive. When talking about Polaris, investors also talk about its ability to quickly bring new products to market, its efficient operations that emphasize cost controls, and its growing ability to control inventories at the dealer level through its Max Velocity Program (MVP) which allows dealers increased ordering flexibility.

Harley-Davidson gained $8.53, or 50.3%, climbing from $16.97 at the close on Dec. 31, 2008, to $25.50 at yesterday’s close. Harley investors had perhaps the toughest time waiting calmly for gains on the HOG stock as the company reworked its operations in several major steps.

One move with immediate and long-term implications was  the new contract it won with workers at its York, PA, plant that  permits the company to cut loose nearly half the 2,000 employee York work force and move ahead with major physical improvements in the plant. The plant modernization will be aided by a stimulus package from the state of Pennsylvania. Harley said at one point that it was considering relocating the operation to Kentucky.

In its second big reorganizational move, Harley dumped its MVAgusta operation and it closed its Buell sport bike business.

During the 2009 52-week period, Harley stock ranged from a low of $7.99 to a high of $30.00

Arctic Cat common stock is played at a much lower level than either Polaris or Harley, but it, too, posted a nice gain of 20% during the period Dec. 31,  2008, to Dec. 30, 2009. It climbed $4.16 for the year, moving from $4.79 in December 2008 to $8.95 yesterday.

Cat had a tough year, partly because of its dependence on snowmobiles and partly because of the loss of Gander Mountain, its high visibility outdoors retail chain based in Minneapolis. Gander had been carrying Arctic’s ATV and SXS lineup in its major stores. Arctic stock ranged from a low of $2.40 to a high of $9.27 during the last 52 weeks.

Okay, so now you’re probably waiting for my forecast on the performance of these stocks in 2010. Sorry, I don’t have one. After reporting on publicly traded stock for more than 40 years, I’ve come up with one basic rule: Stock market performance doesn’t always reflect corporate performance, especially when you try to tie it to a specific quarter or other reporting period. I don’t have a clue how these three stocks, or the Dow, for that matter, might perform over the next four quarters. And if I did know,  I wouldn’t give that information away; I would charge a lot of money for it. Isn’t that what investment advisors do?

Happy New Year and good luck with your investment decisions. I hope your powersports stocks perform well for you in 2010 as these three stocks did in 2009. JD

Contact me with news tips and story ideas at
976/893-6876 or joe@powersportsupdate.com

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Research Shows Changing Dealer Networks

December 22, 2009

There’s been a lot of talk this year about changes in the number and types of franchised dealers operating in the United States and Canada, but there’s been precious little data to back up the talk. Until now.

I’ve been going over some very interesting research developed by Don Musick and his company, Genesys Technology Solutions (GenesysTech). The data collected by Musick shows that the major OEMs lost dealers last year while the non-traditional manufacturers — basically Chinese and Taiwanese and other non-MIC suppliers — picked up ground.

It’s like the frog dropped into a pot of water that gradually heats up to boiling, says Musick. The majors don’t recognize that the Chinese dealers are surrounding them with experienced retailers and are getting ready to eat their lunch.

Don Musick

I’ve traveled to China and seen the potential of Chinese factories, and I realize that most of them have a lot of problems as far as succeeding in this market, But, still, Musick makes a pretty strong statement, one that’s worth considering when we talk about the changing dealer network and what it might look like in 2010 and 2011.

Musick founded GenesysTech in 2004 and began collecting dealer information in powersports, auto and a number of other industries. There’s nothing magic about how Musick comes up with his numbers; it’s just a lot of hard work and computer analysis.

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Buying vs. Shopping

December 22, 2009

Here’s My Take On Holiday Shopping

Men buy and women shop. And they shop and they shop.  At least in my family, where I buy and my wife, Bobbie, shops.

I’ve been married to Bobbie for 42 years and I just realized the other day that I buy and she shops; this difference in the way we spend time in stores has caused tension  — and a few flare-ups– in our marriage over the years.

It’s a Delmont family joke that when Bobbie tells me she’s just going to “run in” to the store, I don’t know what she means. After all these years, I still don’t get the message: She’s SHOPPING, not BUYING. And you don’t shop in just a few minutes.

I always assume she is running in to BUY something, a simple straightforward task that should only take a few minutes. Walk to the department, pick up the item, check out and back to the car where I’m waiting for her. I can occupy myself calmly in the car for a few minutes and while she does her BUYING. But after 15 minutes or so, I start to get edgy. That’s where the tension comes in.

The problem, of course, is that I never realized she wasn’t BUYING, she was SHOPPING. And that takes longer than buying, a lot, lot longer.

When I explained to her the other day my concept of Buying versus Shopping, she looked at me like I was crazy, a look both of us have become familiar with over the years.

The day after we had our discussion, Bobbie reported the talk to her nurse friends at work. “They all told me that you’re nuts,” she said with a small smile when she related the chat.

“If that’s the way he feels” her best friend told Bobbie, “give him a list and let him go on his silly little BUYING trip. See how long it takes him.”

“I’ll make up your list,” she told me. “You can go buying; I’ll stay home by the fire with a glass of wine and my book.” That’s how it came to pass that I was out buying late one evening recently.

How did this happen, I wondered as I trudged across the dark, snowy parking lot toward the distant lights of the Target Superstore?

Buying vs. Shopping. I just wanted to make a point, to reach an agreement on how we would spend our time in the stores. I didn’t want change to my lifestyle. After 42 years, I probably should have known better.

Merry Christmas, shoppers. And buyers, if there are any of  you out there. JD

Contact me with news tips and story ideas at 952/893-6876 or joe@powersportsupdate.com.

Dealernewsblog Top 20 Viewed Stories of 2009

December 21, 2009

With 2009 quickly coming to a close, we’d be remiss if we didn’t tackle that trite-but-true end-of-the-year cliche known as the Top Whatever Stories List of (Fill in the year). Some of the time these stories are picked by readers, other times they’re chosen by editors/reporters. At Dealernewsblog we’ll opt for the former, based on the site visitor stats calculated by the good folks at WordPress.

We wish we had the energy and certitude to assemble a bevy of what we feel are the top powersports industry stories of 2009, but we’re kind of fat and lazy after snacking on too many holiday cheese logs, so we’ll leave this up to the cold analytics of the WordPress dashboard. For a more measured and thoughtful approach to the top stories, our own Joe Delmont is assembling a Top 10 list that should be appearing soon (link to come!).

And now, according to our blog stats, here are the Top 20 Dealernewsblog stories that viewers (like you!) clicked on in 2009:

  1. Harley’s Iron 883 – Nightster’s Younger Bro
  2. The Kymco Like — “Classic is one scooter …”
  3. Tragedy for Glen Helen Owner and His Family
  4. It’s Black Tuesday. Some Kid’s ATVs, Bikes Banned
  5. Harley Iron 883, You Are Soon to be Mine (for a while)
  6. Harley-Davidson Iron 883 Review
  7. KTM RC 125 GP Race Bikes for Sale
  8. Vendors That Compete Against Their Own Dealers
  9. 2009 Triumph Bonneville SE — Retro Riding
  10. Moto Guzzi V7 Classic – want one
  11. Top Dealer To Challenge CPSC Lead Content Rule
  12. Ducati Working on Adventure Tourer?
  13. High Fashion Gear for Women Riders? You Betcha
  14. H-D Iron 883 First Peek — On the Road to Review
  15. Dealer Expo Comments; Extra Product Coverage
  16. CPSC’s Recent Action Doesn’t Help Powersports
  17. Second Co-Founder Departs Baja Motorsports
  18. Small Stores Versus Big Stores
  19. New Polaris On-Road Division Raises Questions
  20. Roll Your Own Gear – Joe Rocket’s Hemp Jacket

Obama Can’t Have It Both Ways

December 17, 2009

Free Market Should Dictate Lending Practices

President Barack Obama seems to be uncertain about how he wants to deal with U.S. bankers—sending them directly conflicting messages about their lending practices—and his inconsistency is causing a continuing problem for consumers and small businesses who can’t get the credit they need, especially those in the powersports industry.

On the one hand, he beats up bankers for making so many bad mortgages and creating such a mess that we taxpayers had to bail them out. Shame on you, you greedy bankers, he says, for making so many lousy variable rate mortgages to people who couldn’t make their payments when the new rates kicked in.

That seems like a reasonable position. I think there were a lot of lenders and Wall Street pros who got caught up in spinning mortgage paper, quickly shifting loan packages off their desk and on to the next greedy investor before he could look at the underlying poorly structured loan. While Wall Street bankers bear the brunt of the blame for packaging these loans, the real blame has to come back to the originator— the local banker who approved the so-called NINJA loans for people with no income, no job and no assets. Main street bankers were far from innocent in the entire sub-prime housing mess.

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Cycle World Reader Surveys on Tires, Helmets

December 15, 2009

Retailers are hungry for statistics about the recessionary consumer. Last year, Cycle World produced two such shopping surveys, one on tires, the other helmets. The magazine compared the results with 2005 findings. Below are results transcribed into purely textual form. Click here for full reports with pie charts and bar graphs. You’ll see studies dating back to 2005, including a 2008 study on dealerships.

The most interesting findings may be that 42 percent of readers bought their current helmet at a dealership, and 30 percent bought online (see the full results below). But of the readers who wanted to buy a helmet within the year, only 35 percent planned to do so at a dealership; 44 percent planned to go online.

Similar stats for tires: 44 percent bought at a dealership, 20 percent at an accessories store, and 31 percent online. Since 2005, online purchases have grown by 10 points; dealer purchases have dropped by 5 points.

But who are Cycle World’s readers? (more…)

Backstage look at FMF: A cool little video with Don Emler for the Take 20 program

December 7, 2009

We first reported on FMF‘s new Take 20 Savings Program in our coverage of the LeMans Corp. 2009 Holiday Showcase. This is the program that runs through March 31, 2010 designed to increase dealership floor traffic and help move exhaust systems. For the campaign, FMF is reducing the suggested retail price of all of its street and off-road 4-stroke exhausts by 20 percent.

In this video, we get to spend a little time with Don Emler and hear some history about the famed exhaust manufacturer. It’s good stuff and a pretty darn good piece of marketing. 

Backflip on an XR1200? Let’s See This Done on a Road King.

December 7, 2009

Because we’ll never have video of me flipping anything but the bird, here’s a link to Australia’s Kain Saul backflipping an XR1200. Saul makes it so smooth and buttery looking, I may just try this in the backyard on my Thruxton. Now that I see this is out and about, there’s also news that American Chuck Carothers pulled off this same trick a day later in Prague. Really nice work.

Ducati Unveils Multistrada 1200 at Long Beach International Motorcycle Show

December 4, 2009

Taking a page from the European motorcycle show scene, Ducati opened the official unveiling of its Multistrada 1200 Friday afternoon with a lineup of prancing models and pulsing electronica — and it was good.

 

Yes, the Multistrada 1200 is somewhere in there.

 

 

The scene? A throng of media types standing by with cameras ready. Cue the music. Strike the umbrella girl poses. Leather short shorts. Tight spandex. Blasting disco, and then, Michael Lock, CEO of Ducati North America.

“OK, now you get me for a couple of minutes,” says Lock as he took the stage. “You might have heard that there is a recession out there, but not at this booth.”

Before pulling the curtain off the new adventure touring bike that was first shown to crowds at the EICMA show in Milan, Italy last month, Lock took some time to explain why the OEM was coming out with a sport touring bike given the small size of the market segment and the company’s history with such models.

Lock explained that with the aging motorcycle market, the company is targeting at the newer riders coming into the scene and the Multistrada 1200, basically an adventure touring bike version of a Ducati superbike, is aimed squarely at them. Conceptually, the idea behind the bike was to take the company’s engineering prowess on the track and apply it to a bike that is a fairly standard setup.

“We’ve really thrown everything we know at this bike,” Lock says right before returning the stage to the prancing models and pounding disco.

Harley To Restructure York Operations

December 3, 2009

New Labor Agreement Reached

Harley-Davidson, Inc. is going to restructure its motorcycle operations in York, Pa., now that it has reached an agreement with the union there. The seven-year labor agreement by company employees at York, this week was followed by the decision of Harley’s  board of directors okaying the restructuring plan and related funding.

The new union pact paves the way for Harley’s previously stated goal of cutting nearly half of the 2,000 non-management jobs at the plant. The company expects to employ about 1,000 full-time and “casual” workers at the plant. The operation will also employ about 150 salaried employees, compared to about 270 today. The staff cuts and other concessions were necessary to keep the company viable, said one analyst.

The new long-term agreement keeps Harley and its well-paying jobs in York. The company had been considering pulling out of York and relocating the operations to a new facility in Kentucky.

“A restructured York operation will enable the plant to be competitive and sustainable for the future, and the new labor agreement is critical to making that happen,” said Keith Wandell, president and CEO of Harley-Davidson, Inc., in announcing the company’s plans.

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