US bike manufacturer shuts down Buell and puts MV up for sale.
The bike industry is awash with the news that Harley Davidson is in deep financial trouble. Deep enough to bury the Buell brand completely and put MV, the Italian bike company it bought only last year, up for sale.
HD is caught in a financial pincer of seriously declining sales and huge bad debts arising from its financial division – a scenario that looks very similar to the fate of that other American engineering icon GE (General Electric).
Sales of the big American twins dropped 23% during the last financial quarter following a 30% drop in the quarter previous. Overall the company is reporting an 84% decline in income from a year previous and profits down 91%. These are serious numbers folks.
But, the big elephant in the room, is the huge tidal wave of defaults building up in the companies financial division which was set up, using cheap money, to finance sales of their motorcycles. Right now the company is seeing massive defaults by sub-prime customers. In other words the company has been using funds to make loans to people who were never going to be able to pay it back.
And it’s going to get worst for HD, in my opinion these defaults are only a taster for what’s looming on the horizon where huge numbers of Alt A borrowers are are struggling to pay their mortgages and loans.
All in all, not good news for the company. So, can we expect the US Government to rescue HD? Probably. But what impact are all those repossessed bikes going to make on the motorcycle market in general and on the showroom price for new HD’s in particular?