ATK Bets on Harley Dealers for Bike Sales

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33,000 Bikes Would Be Sold Exclusively Through Harley Stores

Frank White has been working to put together a manufacturing partner with his ATK Motorcycles off-road company for the better part of a year, and it looks as though he’s finally done it. Last week, ATK announced it signed a $100 million manufacturing deal with S&T Motors Co., Ltd., to produce 33,000 motorcycles over the next four years.

The pact calls for S&T to produce the motorcycles at its Korean facilities next year and then begin assembling them at the ATK facility near Salt Lake City after that. S&T Motors is a Korean manufacturer that began developing and selling ATVs, scooters and motorcycles in 1978. Today, it sells powersports equipment under the Hyosung brand around the world, and it expects to generate annual sales in 2011 of $US 300 million, according to its website. It employs about 350 persons. Here is more information on S&T Motors. Make sure you go to the English language page.

Its U.S. distributor, Hyosung Motors, is based in Norcross, Georgia. More information on Hyosung Motors can be found here.

It’s one thing to produce bikes, but it’s another thing to build an effective dealer network to sell them for you.  White plans to distribute the ATK/S&T bikes exclusively through Harley-Davidson franchised dealers; he says he has a small number of Harley dealers who are ready to take on what he calls, “a second American brand— ATK.”

“The Harley dealers want an exclusive in the USA,” says White, “and that’s OK. The Harley dealers will have a controlling interest in ATK, and they collectively will call the shots.”

But at least one experienced Harley dealer in the South says he’ll pass on the ATK bikes. Here’s what Clark Vitulli, co-owner of Harley-Davidson of St Augustine, Fl., had to say about the ATK plan:

“A noble goal, but not too realistic from my perspective,” says Vitulli.  “Not that there isn’t a possibility that a particular brand could never work within a Harley-Davidson dealership.  There are very rural areas of the country where Harleys sit right alongside Hondas.  But typically, it would be a stretch, and I believe most customers would not understand the connection, particularly from a new or smaller brand.

“For example, we’re an authorized EagleRider rental franchisee for Harley-Davidson motorcycles and Vespa scooters.  Being in a tourist area (St. Augustine, FL – the “Oldest city in the Nation”), we believe it’s appropriate to have both types of vehicles available to rent.

“But when customers see a Vespa on our lot, they nearly always question, Why?  ‘Why do you have those things sitting on your lot?  That’s not a Harley.’  Of course, we explain why, and they understand.  But the initial reaction is a raised eyebrow.

“In my experience, the typical Harley riders do not expect to see any new vehicles on a Harley-Davidson dealer’s lot except a ‘real Harley’ (maybe that was part of the Buell issue?).  Besides, H-D shoppers are not just buying a V-Twin … they’re buying a Harley, a dream, a lifestyle, a HOG group to ride with, an investment, a legend!

“I’m sure the ATJ/S&T/Hyosung folks will build a good product— I’m just not confident of its success in Harley dealerships.  For now, if they were to come knocking on our door, I’d have to pass.”

Here’s another interesting question: Will Harley-Davidson dealers be able to work in a metric environment regarding such things as tech training, parts availability, ordering and warranties? The Harley system is pretty well defined in these areas.

ATK’s White admits the ATK brand won’t work in every dealership.  “Of the 600+  US based authorized Harley dealers,” he says,  “if we were in 20 percent in two-three years, that would be just fine.  Our primary objective is to lend a hand to many Harley-Davidson dealers, actively cultivating new and younger motorcycles, and we intend to do just that.”

He says the Harley dealers who participate in the H-D “Ridersedge” program are the most excited about his strategy.  Their students learn on a small displacement motorcycle, he points out, and then they can buy that motorcycle when they are done with the class and keep them from buying a competing Japanese metric brand.

“Many participating Harley dealers,” he says, “had the Buell Blast as the trainer bike and now that Buell is gone the dealers are looking for a viable alternative.”

White intends to sweeten the pot for participating Harley dealers by selling them a piece of the action, stock in ATK. At this time, ATK is owned by White and his partner, Malcolm Zanca,  owner of Harley-Davidson, Baton-Rouge. “However, in late July this will change,” says White. “The end of July the initial shares will be divided up between myself, Malcolm, some other key dealers and some retired management from Harley-D, another strategic manufacturing partner or two… those will be the initial shareholders….   I’m not a securities attorney, however, this is the plan.”

ATK’s management team, in addition to White and Zanca, today includes several former Harley-Davidson manager and other industry figures, according to the ATK limited distribution documents I’ve seen.

White says the strategy is for the H-D dealers, collectively, to have a controlling interest in ATK.  “We want more than dealers, we want partners as dealers,” says White.  “This is the best scenario for all. (We want) Harley dealers who have vision to be a part of History, who see a need for a second American brand in their dealerships to cultivate new customers.”

More than 80 percent of ATK stock could be available for acquisition by Harley dealers, according to White. ATK, a closely-held company, was established in 1984.

The Harley-Davidson Motor Company has not endorsed any of White’s activities to develop bikes, sell them through Harley dealers, and offer stock to participating dealers, White emphasized when we talked this weekend.

He said “five Harley dealers have product,” and he expects to have 40-50 Harley dealers in the first year. “However, we don’t want to grow too fast. We learned some things from Buell— we weren’t involved, but we watched from the sidelines.”

There will be six models of cruisers and sport bikes, ranging in size from 250cc to 650cc and carrying MSRPs of $3,995 to $6,995. ATK is waiting for orders from EPA and from CARB to have these machines re-certified as ATK models, White said.  JD

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

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One Response to “ATK Bets on Harley Dealers for Bike Sales”

  1. Thomas Says:

    Frank, lay of the crack pipe. You’re becoming delusional.

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