Archive for October, 2011

Feeding the buzz

October 27, 2011

It’s been a day since it was announced that Steve Jobs died and it’s hard to ignore the avalanche of accolades and odes to the Apple man appearing across the interwebs.

As was referenced in this space back in the June 2011 issue of Dealernews, I’m a diehard Apple acolyte, and I happen to agree with nearly everything that’s been written about Jobs and his impact on Life as We Know It. If you boiled down the many and various ways our lives intricately intertwine with technology, you’d end up with Jobs and his vision of what could be — which more than anything were dreams writ large by a man of unmatched vision.

Here was a guy with a drive to create products that excite people and worm their way into the everyday existence of their users. He took a once-floundering company and turned it into a cultural flashpoint.

So here we are, forever swirling around the bowl of the powersports market’s endless flushing. All this twirling around can leave a person dizzy and discombobulated: Dare we keep our eyes raised high to the light or cast down into the abyss? I choose to keep my sights set upward and onward. Never mind the glass half full, I’m looking at the toilet half flushed. We’re not down yet.

And we won’t be down. Motorcycles are way too fun to go away. Yes, it would be great for a moto-Jobs to come along and raise the entire industry out of the stink, but that’s not likely. And maybe not necessary.

Look around, there are two-wheel visionaries hard at work among us. Dreams are being wrought into reality everyday.

Take Roland Sands. For my money, he’s one of the most forward-looking and creative individuals working in the aftermarket. His eponymous company continues to devise, design and build products that quite simply are like nothing else out there — from their custom bikes to the new

Clarity Line of hard parts (see-through timing cover, anyone?) to its just-released lineup of high-end and stylish apparel. RSD seems to exist on a different plane.

And then there’s Tom Seymour and his team at Saddlemen, where nobody ever seems to sleep.

How else to explain the company’s release of 100 new seats for Harley-Davidson and metric applications? There’s also an expansive amount of new luggage and luggage accessories aimed at the popular touring market. A new overseas factory owned and managed directly by Saddlemen. Nobody at Saddlemen is hunkering down waiting for blue skies.

How about Brian Klock and his team at Klock Werks? Not only is the crew from South Dakota breaking records at Bonneville, it continues to design and develop new products and come up with killer retail solutions to help dealers sell said product. I had a good conversation with Klock at the recent Drag Specialties Rocky Mountain Run about his windshields, parts and dealer programs such as the “Try It Before You Buy It” demo ride offering. Seriously, contact these guys. Not only will Klock knock you down with his enthusiasm and good grace, you might even get a personal visit from one of the Klock Werks’ crew members.

Chris Carter and Motion Pro continually produce new gadgets, tools and equipment to help ease motorcycle operation and maintenance. Cobra Engineering. Icon. Spidi. Drayko. GoPro. Klim.

All have something to keep we riders enthusiastic about being enthusiasts.

And check out Victory Motorcycles, Ducati and Triumph. These OEMs, and a couple others, continue to build some of the best bikes in the history of motorcycling — that is until the next round of new models comes around.

It would be impossible to discuss forward-thinkers without mentioning Erik Buell. H-D? Who needs ‘em. Buell is well into the next chapter in his life and it involves a motorcycle that is as impressive looking in person as it is on paper. Saw and touched the 1190RS up close, and it was one of those moments where I thought, “Should I be getting this excited about a motorcycle?”

So while the industry has yet to find its singular Jobs, it has dozens — if not more — of inspiring innovators who keep us buzzing along on the strength of their creativity. Much like with Apple and its striving for something ever more cool, the world of motorcycling’s never ending search for better continues to astound. Onward and upward.

Dennis Johnson
Editor in Chief
dennis.johnson@dealernews.com

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

October 3, 2011

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