The news wires were hot yesterday afternoon with the story that Harley-Davidson have shut down their Buell subsidiary and will cease production of Buell motorcycles permanently by Friday 30 October.
In a statement by Harley-Davidson spokesman Paul James, the shut down “is part of Harley-Davidson’s go-forward business strategy. The new long-term strategy aims to drive company growth through a focus of efforts and resources on the Harley-Davidson brand.”
James said, “The fact is, a dollar invested into Harley-Davidson, there’s more impact than the same dollar invested elsewhere when it comes to reaching new riders and enriching the experience of our core customers.”
At the same time Harley-Davidson is also divesting itself of MV Agusta, a company purchase that it only made last year.
“We’re exiting the sport bike market with those niche brands,” James said.
In the statement, it was explained that MV Agusta can be sold because it was a standalone business unit, but Buell was not considered for separate sale because it is “highly integrated into the entire business and the distribution network of Harley-Davidson”.
In an emotional video on the Buell website, Erik Buell appeared to be close to breaking down as he explained some of the decision making which has led to Buell’s 26-year-old history coming to an abrupt end.
Buell has been a wholly owned subsidiary of Harley Davidson since 1998 after purchasing a 49% minority shareholding in 1993.
So what’s gone wrong?
It’s no surprise they have sold MV. The surprise was that they bought the italian company in the first place – I could never see how the MV sports bikes fitted with the Harley brand.
But the Buell shutdown, I am surprised about, it’s the Harley that many non-Harley riders would consider riding.
Buell itself apparently has been increasing its sales and profitability, but it’s a sideshow compared to the core territory of Harley-branded machines. For the last two years Harley-Davidson have had seriously declining sales, not just a bit of a downturn but a hugely shrinking market, with a reported 84% fall in quarterly profit since the company peaked.
It’s arguable the reason Harleys sell in the States is precisely because they aren’t simply cloning Japanese bikes but are selling “traditional American iron”. But that puts them in at the lifestyle end of the market, and that’s been hard hit by the current recession over there.
Their last quarter figures were something like $20m profit on $1bn sales.
One gets the impression that Erik Buell was never in it for the money. He used to spend a lot of time online on the old Compuserve “Ride” forum of which I was a member more than 15 years ago, and openly talk about why he was building Buells. He was clearly running on a shoestring then.
As the keynote of Buell’s designs was technical innovation, one of the questions he got asked all the time was why he stuck with Harley engines. His argument was because the engine was American and iconic.
So it was with some surprise I read about the Rotax-engined 1125 that was launched last year. Was that a nail in the coffin for Buell as an offshoot of the all-American dream motorcycle builder? Or was it a genuine attempt by Harley-Davidson to break Buell out of a niche market with an affordable sports bike?
I suppose the question we’ll never know the answer to, is what IF Buell had been funded enough to push into new markets; would sales have continued to grow?
One thing that strikes me is that Erik Buell may have known about this for a while – or at least, feared the worst.
You may remember the bizarre “crusher video” announcement made back in July that the Buell Blast was being discontinued at a time when it was the best selling Buell and a bike favoured by a growing new market; women. The bike wasn’t merely discontinued and stocks allowed to run down in the normal way, they were actively destroyed.
What about the subsequent even weirder announcement of the “limited edition 2010 Buell Blast”, which turned out to be a “run” of the crushed machines signed and numbered by Erik himself.
Here in the UK, I’m left wondering how well the Buell supply chain has been functioning to dealers in recent months.
As we actually have a Buell dealer just up the road, I wandered along this morning to see what the situation is, and aside from the fact that the sales staff completely ignored my obvious interest in their corner of the store, basically the floor appears to be nearly cleared of Buells.
They had one brand new 08 Camo Ullyses traillie thing, another Ullyses ex-demo, a 1200S and an 1125R, and that appeared to be it, with the area that used to be dedicated to Buell mostly filled with Harleys with a SOLD sticker on.
It’s unlikely the full story will come out for a while yet. Buell himself is supposed to be “in negotion” to continue as a consultant, but one wonders if he’ll want to work for the firm that killed off 26 years of his work at the sweep of the corporate red pencil.