Harley-Davidson Seeks Bank Bailout Funds

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<snip>...I bet some of those bikes are running well over $3.00 per mile to own. Pretty expensive just to say you are a HOG....I can't/won't spend money on a bike that costs me $2.00+ a mile to own and is not ridden enough to even get any enjoyment out of.

I just calculated my ownership costs of my 2004 FJR that I sold recently based on the same factors as the above ad. My cost per mile was $.06/mile. ( total invested - selling price / mileage). We are talking about owning a bike of equal or greater quality/comfort/performance/looks for only 6% of the cost?

...I am an accountant, ...that kinda financial decision making just don't make sense or do it for me.
This from someone I know who's a hard-core H-D fan:

"My Road Glide was one of the cheapest bikes I ever owned. ...I rode it for nearly 2 years and when I sold it ... I got almost what I paid for it. I priced it for quick sale, sold it in 24 hours, and maybe lost $1500. ...It was cheap to maintain, no valve adjustments, had a belt drive and got 50 mpg. Basically I changed the oil and tires.

You've lost waaaay more money on that "bargain" FJR than I ever did on The Glide. If a cheap to own, cheap to maintain, comfortable touring bike is important to you, you'd look good on a new Road King. You'd probably get more girls too!"

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I think you have a valid point if this transaction was about 6 years ago when the HD fad was peaking and people were selling used HD's for near new price. However, times have changed drastically and it's definitely a buyers market. Gone are the days of "investing" in a HD.

Also, like posted above, did he factor in the chrome/aftermarket stuff that most HD owners buy?? That could make a difference.

 
Had to throw this in for the HD guys out there...

<<...If a cheap to own, cheap to maintain, comfortable touring bike is important to you, you'd look good on a new Road King. You'd probably get more girls too!">>

This is how us METRIC dudes figure it...you spend money on your bike to make yourself look good, we get on our bikes and make it look good! :yahoo: ;)

 
I have MBD - multiple bike disease. I love all types of bikes; my FJR for its ride and speed, my Suzuki for its simplicity, my fathers Victory for it's power and beauty....and I comb the magazines liking most bikes: Aprilla, BMW, Kawi, Honda, etc. I even like H-D. But the problem I had with H-D was I never felt I got what I was paying for. I just couldn't justify paying extra for brand name. They aren't bad bikes, just a little pricey for my taste. My neighbor just bought a very good looking softail (the copper top anniversary version) and got it for over $6000 under sticker - brand new! That blew me away. That is when I realized that H-D must be hurting. Two years ago when I went looking for a cruiser, they wouldn't bend on the price of a Sportster. Now when I walk in, they offer me a much better price, but I simply don't want an H-D.

Bottom line is H-D is a good bike for the people who want them. But I truly hate to hear 1,100 proud Americans loosing their jobs.

The entire motorcycle market must be taking a hit. My local dealership who, I felt, hasn't been the most customer service oriented has suddenly become friendly and customer responsive.

I love my FJR, but I would love to add a Victory to the line up.

 
I bought the wife an 08 Road King. What a piece of crap. Let them go out of business!!!!!
It's disturbing to see anyone cheer when yet another American company teeters on the edge of going under. Those are thousands of real jobs lost and more families hurting.

 
Don't fret it, york.....this forum will bash anything other then fjrs. Heck, they even bash gay pups. Askbustanutjoker how his feelings are handling it. Or, even renojohn, kansaskiddielover, Dcarver....them pups cry themselves to sleep everynight. This forum is disgusting. Damn haters.
Dang! I was gonna ignore this thread but....

Yup :cry: myself to sleep every nite cuz folks here jus don't unnerstand me. :lol:

Damn I hate to see another company take a hit :glare: But when you operate like they have the last decade, well It's going to bite you in the ass eventually.

:jester:

 
We are in interesting times to say the least. I bought my HD Dyna Super Glide Sport in May of 2003, after waiting for it to be built (placed an order 1/2003). At the time, when everyone was a millionaire by virtue of dumb luck with their house doubling(or more) in value, Fresno HD sold me my Dyna for MSRP. Many other dealers nationwide were adding thousands to the MSRP because they could. I paid mostly cash, but financed a couple thousand of the total $16K cost. It was very interesting to me at the time that you could finance chrome stuff, performance goodies, even leather goods (I didn't however)! HD dealers didn't even have to "sell" the product, people just came in, took a number, and bought because it was cool to ride an HD.

At the time, the chopper shows were all the rage on cable TV, and I could never fathom how a market could be built around a m/c that could not possible be driven for more than about 20 miles before the operator was ready to commit suicide from the pain. And, the cost of these bikes was $30K to $100K and more. I would watch Orange County Choppers each week for grins to see what crazy bike they would come up with next.

Why, even Fresno had a chopper shop called Freedom Rider that carried the BIG chopper names like Big Dog, Borget, Big Bear, BMC, etc... I went in for a look, and just could not figure that there was a very big market for a bike to ride 10 to 15 miles for a beer and back. And, I figured that after a while you would run out of folks with that kind of disposable income. But, I didn't throw many rocks as I was riding my $16K Dyna myself, which to many might not make sense.

Now, most chopper shops are gone (Freedom Rider closed up), and most HD shops are hurting. But, so are most car dealers, boat dealers, RV dealers, etc.

All the folks that had the 120 HP chopper to ride to Cheri's Place for a beer have disappeared.

I will say that my HD product was bulletproof, great fun to ride for 23K miles, and was a great looking ride.

I was ready for a new adventure, thus the 2007 FJR in the garage replaced the Dyna. Different bikes, but both had a place on the road.

I'm no genius, but I knew the days of $10 coffee mugs, $28 long sleeve white T-Shirts, $30K bar bikes could not possibly last.

I do feel bad for the folks that are losing their jobs however, and wish them Godspeed.

Whatever you ride, just do it!

biknflyfisher

 
Wow..... Not a HD fan, will never own one, just doesnt fit me, but that stinks and is really suprising. Hard to tell if the problem is just slow sales (which they should be able to handle) or people defaulting on loans through HD finance.

 
HD Finance is definitely in deep doo doo, as is much of the financial sector.

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Head of Harley-Davidson’s finance arm resigns

MILWAUKEE - Harley-Davidson Inc. said Thursday the head of its financial services unit resigned and its chief financial officer will lead the division on an interim basis.

The Milwaukee-based motorcycle maker said in a news release that Sy Naqvi made a personal decision to resign from Harley-Davidson Financial Services, which he joined as president in February 2007.

The company said Tom Bergmann, Harley’s chief financial officer, will take on the added responsibility as president of HDFS, while it seeks a full-time replacement.

Chief Executive Jim Ziemer said he was confident in Bergmann’s ability to lead HDFS.

“In the current economic environment, HDFS is an especially important priority for us and Tom has been highly involved in guiding that business,” he said, according to the statement.

Bergmann, who became Harley’s CFO in 2006, had been chief executive of USF Corp., a $2.5 billion publicly traded transportation and logistics company.

He also has worked as corporate controller and vice president of finance for financial services at Sears, Roebuck and Co., and in senior level positions at The St. Paul Companies Inc. and Johnson & Johnson.

The motorcycle maker is facing slumping sales as consumers cut spending. On Wednesday, Raymond James analyst Joseph D. Hovorka downgraded the company and estimated its fourth-quarter U.S. sales will decline by a percentage in the low- to mid-20s, a bigger drop than the third-quarter’s, of 15.5 percent.

Last month Harley said in a Securities and Exchange filing that it received a one-time advance of $500 million for HDFS, which makes loans to consumers and offers wholesale lending to the company’s dealers.

Source: businessweek.com

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CHICAGO (Reuters) — Harley-Davidson (HOG) said Friday that it will cut nearly 12% of its workforce and close several plants as the global pullback in consumer spending crushed its earnings even worse than Wall Street had expected.

The quarterly results, which were also pulled down by a big loss at the motorcycle maker's in-house finance unit, sent Harley's already battered shares sharply lower.

Manufacturers of discretionary items like motorcycles, boats and recreational vehicles have been especially hard hit by the confluence of economic problems.

The contraction in U.S. house prices, the Wall Street meltdown, loss of consumer confidence have relegated the industry's pricey products to the bottom of most households' to-buy lists.

The breakdown in the credit markets and surge in unemployment have only added to the industry's problems.

FIND MORE STORIES IN: United States | Pennsylvania | Wall Street | Wisconsin | Milwaukee | Latin America | Goldman Sachs | Thomson Reuters | mid-December | Reuters Estimates | Aaron | RBC Capital Markets | York | Menomonee Falls | Harley-Davidson Financial Services | Jim Ziemer

Analysts at Goldman Sachs think Harley's sales in the United States — its largest and most important market — will tumble 30% this year, the largest decline since the early 1970s.

Harley said it is taking several actions to cut costs, including plant closures that would result in the elimination of 1,100 jobs. The company employs about 9,000 workers, according to its most recent annual report.

Its fourth-quarter net income fell 58% to $77.8 million, or 34 cents a share, from a year earlier.

That was well below the 57-cents-a-share profit analysts had expected the company to report, according to Reuters Estimates.

Edward Aaron, an analyst at RBC Capital Markets, called the results "a big miss."

During the fourth quarter, worldwide retail sales of Harley motorcycles fell 13.1%, pulled down by a 19.6% drop in the U.S. But sales also fell in once-robust overseas markets, including Latin America, which saw a 28% decrease.

In response to the slowdown, Harley said it would slash its production of motorcycles in 2009 as much as 13%.

"We reduced our production levels prudently in 2008, helping our dealers achieve lower inventory levels," said Jim Ziemer, the outgoing chief executive, "and we're going to show similar discipline in 2009."

But Aaron at RBC isn't sure. "It's not clear to us that this cut will be sufficient."

Along with the production cuts, Harley said it would combine its two engine and transmission plants, consolidate paint frame operations into one facility, and close its parts and accessories distribution center. In the future, Harley said it would use a third party to distribute those products.

The 1,100 jobs to be cut over 2009 and 2010 include about 800 hourly production positions. Harley said most of the layoffs would occur this year.

The contraction in consumer spending on bikes, boats, all-terrain vehicles and RVs isn't the only problem dogging Harley.

Over the past six weeks, the company has announced the departure of two top executives, adding boardroom uncertainty to its challenges.

In mid-December the company said that Ziemer, 58, would retire as CEO sometime in 2009 after only four years at the helm.

Then, in early January, it announced that Saiyid Naqvi, the head of its critical in-house finance unit, had resigned and left the company less than two years after joining it from the world of mortgage lending.

Naqvi's abrupt departure from Harley Davidson Financial Service was the latest trouble at the in-house lending unit, which helps more than half of Harley's customers finance the purchase of their bikes.

That unit, which accounted for about 15% of Harley's operating profit of $1.4 billion last year, relies on a healthy securitization market for both its operations and profits — and that market has been largely paralyzed as a result of the credit crisis.

The economic downturn has added to its problems. In the fourth quarter, higher projected credit losses at the unit forced Harley to take write-downs of $35.1 million on retained securitization interests and $28.4 million on finance receivables held for sale.

The company's shares have lost 75% of their value since September.

Copyright 2009 Reuters Limited.

 
Terrible news about job losses at HD.

One has to ask the question though; Why did HD buy MV Agusta late last year when the bean counters must have had some idea on how the loan sector at HD was performing or under performing as the case may be?

I dont know if this was a true bit of information or not, but a friend of mine in motorcycle sales added that HD sales people were trading in things like small water craft and the like for the purchase of HD motorcycles.

Ride safe,

Taff.

 
This web page for the local Harley-Davidson® dealer shows just how serious they are in confronting the disasterous demographics facing The Motor Company®. Click and see for yourself. One antique picture of a white guy. Pictures of bikes and at the bottom we have the future demographic of The Motor Company®. Bye bye old white guys...

TCHD

 
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I've owned my Harley for 10 years now. It's been the most reliable bike I've ever owned.

Having spent time in many dealerships across the country over the years, the change in attitude lately is startling. The arrogance is gone (for the most part).

Case in point: One of the local dealerships, very well established, in the past had a reputation of being arrogant jack-asses to deal with. If you didn't have a bike to trade in (or, for that matter, anything else to trade in), they wouldn't give you the time of day. Literally.

The last couple of times I've been in there, I've seen things I never thought I'd see (a 'SALE - PRICE REDUCED' tag on a new Harley) and heard things I never thought I'd hear (while talking with a salesman he mentioned something along the lines of, "We still have some '08's and are looking to deal!").

A forum member here works at that dealership. His FJR came in on trade.

 
I bought the wife an 08 Road King. What a piece of crap. Let them go out of business!!!!!
It's disturbing to see anyone cheer when yet another American company teeters on the edge of going under. Those are thousands of real jobs lost and more families hurting.
Yes, I feel bad about those that would lose their jobs especially those that work the line. But as for Harley, they have been screwing over their customers for years. You just can't keep doing that and expect to stay in business. They build crap. Then their customers have to spend thousands just to make their bikes rideable. All they would have done to stay in business was to do to their bikes what the customers had to do. But they wouldn't do that because they they were greedy. Now they have to pay for it...I hope.

 
Well..., they are a "National Icon" (we don't want to be losing any of them...) ;)
In all due respect....where do you end the "handouts".

I bought my FJR because it is a perfect fit for me and my style of riding. I didn't buy a Harley or even consider it as I believe it is grossely over rated, and over priced. I used my money to buy the FJR. Why do I have to use "my tax" dollars to bailout Harley. Why don't they do what the rest of us have to do when we are in over our heads....have a garage sale and get rid of the things that I don't need or should have never bought in the first place. My tax dollars are suppose to provide services to the people, defense, etc. I believe the US Gov't has failed the American People miserably , just look at the debacle of Katrina, the current bank bailout that has led to CEO bonues that are off the chart and even major banks to buy 50 million dollar private jets.

Now, you believe we should bailout a motorcycle manufacturer that uses a "in your face, screw-it marketing" that has failed them and now I need to bail them out just becuase they are a so called icon. The only icon that I am interested in seeing bailed out is the active duty soldier, and his family or the veteran who have busted they bodies to give us freedom. But continue to be underpaid, often taken for granted and not always appreciated for the sacrifice they have given this country and it's people. And, the rest of the God fearing people who work hard, provide for their families, respect their fellowman and show him every curteosey and still tear up when they hear the Star Spangled Banner and believe in saying the Pledge of Allegiance. These are the people who deserve the greatest care.

 
Well..., they are a "National Icon" (we don't want to be losing any of them...) ;)
In all due respect....where do you end the "handouts".

Now, you believe we should bailout a motorcycle manufacturer that uses a "in your face, screw-it marketing" that has failed them and now I need to bail them out just becuase they are a so called icon.
There was a little "Wink" 'smiley' attatched..... :blink: :)

 
Well..., they are a "National Icon" (we don't want to be losing any of them...) ;)
In all due respect....where do you end the "handouts".

I bought my FJR because it is a perfect fit for me and my style of riding. I didn't buy a Harley or even consider it as I believe it is grossely over rated, and over priced. I used my money to buy the FJR. Why do I have to use "my tax" dollars to bailout Harley. Why don't they do what the rest of us have to do when we are in over our heads....have a garage sale and get rid of the things that I don't need or should have never bought in the first place. My tax dollars are suppose to provide services to the people, defense, etc. I believe the US Gov't has failed the American People miserably , just look at the debacle of Katrina, the current bank bailout that has led to CEO bonues that are off the chart and even major banks to buy 50 million dollar private jets.

Now, you believe we should bailout a motorcycle manufacturer that uses a "in your face, screw-it marketing" that has failed them and now I need to bail them out just becuase they are a so called icon. The only icon that I am interested in seeing bailed out is the active duty soldier, and his family or the veteran who have busted they bodies to give us freedom. But continue to be underpaid, often taken for granted and not always appreciated for the sacrifice they have given this country and it's people. And, the rest of the God fearing people who work hard, provide for their families, respect their fellowman and show him every curteosey and still tear up when they hear the Star Spangled Banner and believe in saying the Pledge of Allegiance. These are the people who deserve the greatest care.
You might want to climb down from that soapbox before you get a nosebleed... ;)

And again, this thread wasn't intended as a forum to bash H-D or, certainly, the US Government. As far as H-D's finance arm goes, you also have to consider that GE Money Bank and HSBC Powersports - lenders for Yamaha, Suzuki and Kawasaki, are in as bad if not worse shape than H-D right now. Everybody made mistakes, and everybody is in trouble.

 
In all due respect....where do you end the "handouts".
Not being an expert on the subject I would say if the following two conditions are met then they get bailout money

1) They can justifiably make the claim that with bailout money they will survive bad market and the foreseeable future. Justifiably is vague and will be a point of contention in any conversation, but a company that has survived for 50 years or more deserves to be considered.

2) The company disappearing is going to cost the economy as much as the bailout funds. Here is where the I'm no expert part comes in because it is hard for me to imagine the impact of a company like HD going under. Not just the lost factory workers and administrators of HD itself, but all of the mom and pop bike shops, customizers, etc. All of the money these folks lost would no longer be in the economy, things like vacations not taken, etc. I think there is an infinite series calculus II problem in there somewhere. ;)

I find it weird how people are bad mouthing HD sales practices when it worked just fine. If the economy hadn't tanked they would still be cruising along as far as I can see, were they supposed to have expected this?

 
You might want to climb down from that soapbox before you get a nosebleed... ;)
And again, this thread wasn't intended as a forum to bash H-D or, certainly, the US Government. As far as H-D's finance arm goes, you also have to consider that GE Money Bank and HSBC Powersports - lenders for Yamaha, Suzuki and Kawasaki, are in as bad if not worse shape than H-D right now. Everybody made mistakes, and everybody is in trouble.
Your thread opens all kinds of doors so your "intent" is pretty much worthless.
No, not everyone has made mistakes, and those that haven't got greedy or succumbed to gov't pressure to do subprime loans are holding their own fairly well. You need look no further than your own neighborhood: Umpqua Bank, -they are one of countless examples of companies that did not make big mistakes and they are one of many who are not in trouble. Perhaps a bit of research on your part would cease your broad and untrue accusations.

 
The point is that you may have it backwards. Their sales practices didn't work just fine, they contributed to the situation we're in now. The idea of "stimulating the economy" by lending people money they don't need is ludicrous.

It's not so much that H-D (GM, Ford, Chrysler, your local bank, the mall, whoever) is in trouble because the economy has tanked, it's that the economy has tanked because lenders put money out there for people who couldn't afford it, just to promote sales. It's reached a point of no return and started a vicious circle of failure. Loans that shouldn't have been made have gone bad, lenders have uncollectable paper in their hands, cash flow is clogged at every step.

Lending a half year's salary to someone will certainly sell a motorcycle, but how long before the buyer discovers he can't keep up the pose?

H-D's situation does not warrant a federal bailout. That's not Harley-bashing, it's just my own little opinion. They can ask, though. Can't hurt to try, right?

 
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