Friday, October 16, 2009

Buell to be shut down, MV Agusta to be sold: Harley-Davidson unveils new business strategy

In a shocking statement released to the press yesterday, Harley-Davidson have announced that they will shut down Buell completely and stop production of all Buell motorcycles. The company will also sell MV Agusta, which it only acquired in 2008.

These decisions come in the wake of declining sales and revenues for Harley. Sales were down 21% during the third quarter this year, net income was down 84% and earnings per share were down 84.5% for Harley-Davidson. ‘Moving forward, our strategy is designed to strengthen Harley-Davidson for long-term growth and deliver results through increased focus,’ said Keith Wandell, CEO, Harley-Davidson Inc.

‘As our announcement regarding Buell and MV Agusta indicates, we are moving with the speed and decisiveness required to bring our business strategy to life. The fact is we must focus both our effort and our investment on the Harley-Davidson brand, as we believe this provides an optimal path to sustained, meaningful, long-term growth. We believe we can create a bright long-term future for our stakeholders through a single-minded focus on the Harley-Davidson brand,’ said Wandell.

Harley-Davidson expect to incur about $125 million in one-time costs related to the discontinuation of the Buell product line. The company expects to incur about $115 million of that amount this year. Remaining inventories of Buell motorcycles, accessories and apparel, while they last, will continue to be sold through authorized dealerships. Warranty coverage will continue as normal for Buell motorcycles and Harley will provide replacement parts and service through its dealerships.

Harley will, with immediate effect, also begin efforts to find a suitable buyer for MV Agusta, which is based in Varese, Italy. 'Our objective in acquiring MV Agusta last year was primarily to expand our presence in Europe, and was a recognition of MV Agusta's proud legacy. While growth in Europe and other global markets remains highly important to us, we believe that focusing our efforts on the Harley-Davidson brand is the optimal path to sustainable growth," said Matt Levatich, President and COO, Harley-Davidson. 'This decision was not made lightly, [however] with a streamlined business and an exciting product pipeline. we sincerely believe that MV Agusta is well positioned for the future,' he added.

We really don’t know how to react to this piece of news. Harley deciding to sell MV isn’t that big a deal – in fact we wonder why they bought Harley at all since there seem to be no business synergies whatsoever between the two brands. If anything, MV will probably be better off being sold to a more appropriate (preferably European) buyer who can focus completely on the MV brand.

However, Buell being shut down is a major shock. The company has, over the last few years, built some truly exciting, innovative motorcycles and the brand to suddenly disappear is certainly a terrible thing to happen. (Some might remember, UK's BIKE magazine once rated the Buell XB12R Firebolt as the world's best handling motorcycle, ahead of various GSX-Rs, Ducatis, KTMs, Hondas and Yamahas!) Our understanding of the business of motorcycles may be limited, but we do wonder why Harley wouldn’t sell – rather than shut down – Buell to an outside investor who’s prepared to invest in the brand and continue growing it?

Definitely a dark, sad day for the motorcycle industry and for motorcyclists everywhere, regardless of whether or not you actually own or ride a Buell motorcycle. Our sympathies are with Buell employees, most of whom will lose their current jobs by mid-December this year.


Erik Buell speaks about Harley's decision to discontinue the Buell brand. Erik may continue to work with Harley-Davidson in an advisory capacity

15 comments:

Danny said...

so sad, I plan to purchase buell next year and then, no more words to say, no more buell

Frank Nathan said...

How ironic. Erik Buell recently crushed one of his 'Blast' motorcycles. And now Harley crushes Buell. I'm a GSX-R guy but I'll still miss Buell. R.I.P.

Rice'r said...

I never figured out why Buell used old, slow revving and crappy engines from Harley, but the company and its bikes were so cool. The way they look, the way they perform is just brilliant. And the fact that Buell had the nuts to do things their way, without blindly following everybody else, makes me admire them. What a pity Harley doesn't see a place for Buell machines in its overall product strategy.

Mike_1977 said...

If they can look for a buyer for MV, why the hell can't they also look for a buyer for Buell???? I'm sure there'll be somebody who'd be only too happy to buy a readymade brand that has a strong following in the US and elsewhere! I'm AMAZED that Harley have announced they'd shut down Buell. How much more stupid can things get???

Anonymous said...

The damn recession has claimed yet another victim. Sad. I wish Erik Buell and his team all the very best. I'm sure they'll bounce back in a new avatar. You can't keep a good man (and his company) down for too long.

Steve said...

Buell is closed! MV Agusta is in deep shit! Harley is a lousy brand.

Anonymous said...

If they can find a buyer for MV, why can't the jokers at Harley find a buyer for Buell? How the f%&* can they be dumb enough to shut down a 25-year-old brand that's actually the only successful American sportsbike brand?!?!??!? Bonkers!!!!!

Anonymous said...

Sad, sad way to end the week. But I'm sure Erik Buell will make a comeback. With his passion for motorcycles, he'll be making his own brand of bikes again someday. My best wishes are with him and his team. Go for it, Buell!

Arshad M said...

With Buell out, that only leaves Fischer as America's only surviving sportsbike brand. But, wait, have they even sold a single motorcycle yet?

jeremy said...

sad news :(

Gonna keep my xb forever!

RIP

raith.chris said...

This is another good example of people in high places, with high income and no knowledge of the core business they are running. The same guys thought a little over a year ago, that they had to buy a sport bike manufacturer to attract more people that they wouldn't reach with the Harley brand and now they do a 180 on the hole thing. Show's just how little they think or know. The most recent advertising for Harley shows the American dream. Well, they (management) showed their true coulors. Their dream is money and more money at what ever cost, even if it means to spit in the peoples faces that had invested their hard earned money in Buell and their American Dream. Shame on you! Do you really thin by "refocusing" on Harley as you core business you can win over people that you (management)though wouldn't look at Harley just a year ago. How blind are you or your advisers!

Banting ReeF said...

Sad But True ... i miss you

Tuong Nguyen said...

I guess H-D will integrate Buell technology and design into H-D products, that's how they don't sell Buell brand. They simply want to improve the performance image of H-D brand.
We're gonna see some sporting H-D which resembling Buell in near future...

Thousand of soldiers die, for one King's life.

R. Adrian Z said...

XB12STT was very Best of motorcycle in my humble opinions..that's definetly my style design. Love it..

What ever the condition i believe Buell Brands will come again..!!
Positive thinks always win !

Go Buell!!

Anonymous said...

Dear H-D Management,

So, Buell had their best year ever, winning the AMA championship, gathering millions of dollars in free publicity, building truly cutting edge motorcycles and you are closing down the division. Well, you are certainly right to stop selling Buell’s at Harley-Davidson dealers. Many Harley dealers hated Buells, no doubt about that. They didn’t know how to sell them and spit on Buell customers, so, yes, I’m with you there. But why, oh why didn’t you just keep building the Buell motorcycles and let any authorized Ducati, Triumph or BMW dealership order wholesale? You could have easily tripled sales while making your main line dealers happier. Instead you chose to alienate thousands of customers while squandering millions of dollars in free publicity and engineering innovation. Great job guys. Stupendous.

Sincerely,
A Future Ducati Owner

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