Report: Harley could have, should have sold Buell

[SuperHans]

Not exactly earth shattering, but I figured I'd throw it out there.

http://hellforleathermagazine.com/2010/03/report-harley-could-have-shoul.html

Writing in American Motorcycle Dealer, respected journalist Alan Cathcart reports on growing stockholder unrest following Harley management's decision to shutter rather than sell Buell. According to Cathcart, Bombardier made two separate offers to Harley after Buell's closure was announced, but both were declined seemingly for reasons of vanity. Now, HD stockholders have savvied to the fact that declining the offers cost the hemorrhaging doo-rag manufacturer $125 million in shutdown costs and potentially many times more due to negative publicity. Remember, Harley shut Buell without first calculating the costs.

Bombardier -- a Canadian company to which motorcycles are little but a side-line to massive aircraft and public transport operations -- owns both Can-Am and Rotax. Rotax makes the 72° v-twin that was used in both the Buell 1125CR and 1125R, Can-Am makes the utterly pointless, non-leaning Spyder trike that's also powered by a Rotax V-twin (the 60° one that was also used in the Aprilia RSV 1000 R). Seeking to protect a major outlet for Rotax engines, Bombardier initially offered to purchase the design and manufacturing rights and tooling to produce the two water-cooled Buell motorcycles. When that offer was refused, Bombardier then offered to acquire the entire Buell operation. While this would still have meant the end for the Harley-powered models, Cathcart says it could have seen Bombardier use Buell's existing East Troy, WI facility to produce not only the 1125s, but also that Can-Am Spyder; the bikes could have been re-badged under the Can-Am brand. The terms of both offers are unknown, but would have likely covered most, if not all of that $125 million, especially appealing when you consider Harley actually had to pay Bombardier a large sum of money to cancel its 10-year contract for the Rotax motors.

So why didn't Harley take the easy and less costly way out and make the sale to Bombardier? According to Cathcart, it was the risk of getting "considerable egg on their corporate faces" if the 1125s had found more market share simply by being marketed properly and placed in more appropriate dealerships. That's not going to sit well with stock holder calling for blood after larger than expected fourth quarter 2009 losses.

Harley has declined to comment on the potential sale of Buell many, many times, only saying, "We decided not to sell Buell because it is too inextricably tied to Harley-Davidson operations. Bottom line, we thoroughly explored it and decided it was not the option to pursue." We thank them for their good humor and patience in putting up with our constant hassling.  

[chornbe]

I can only assume that the costs involved had to do with parts supply and contractual obligations with Rotax.

Or they just plain didn't want to for internal/political reasons.

$.02

[Rincewind]

That's the first time I've seen a figure related to the shutdown.  $125 million in shutdown costs is pretty staggering.

[scottzilla]

Admist all the speculation, that's a pretty good article with some good information.

[nanbil]

Sounds like Harley was more afraid that somebody might actually make the Buell brand successful than they were about losing $125,000,000.00; wow no wonder they are in trouble.

[Tpoppa]

The $125 Million figure was to buy out the vendor contracts.  The Rotax contract was the biggest.

If HD would have GIVEN Buell to Bombardier, they could have saved that money, not to mention 200 AMERICAN jobs.

And no, a $125 million tax write off is not the same as saving $125 million.  

[BCRider13]

Admist all the speculation, that's a pretty good article with some good information.

Not really.  For such a respected journalist, Mr. Cathcart either needs to do some research or hire a different research assistant.  Bombardier Recreational Products (BRP) is not a division of Bombardier Inc. which is a large public company that makes among other things planes and trains.  BRP was sold by Bombardier Inc. in 2003 and it is owned by a private equity firm.  BRP has about half the sales of HD and it's been trying to restructure it's own debt for the past couple of years.  I seriously doubt BRP has the resources or borrowing power to purchase the Buell company, however it's not beyond reason to have made a bid for the engine that BRP's Rotax division made for Buell.

[kendenton]

Here, let me beat brad to the punch

[Brad1445]

The 1125 as built/designed/assembeled would sell with only one change, and that was half off the price tag.  There was nothing left to buy of the tattered Buell name.  We can read about all these offers but I have no doubt THEY WERE PENNIES ON THE DOLLAR. The brand hand stink all over it in the press and most importantly on the street.

Let the dead dog rest in peace.

I do find the story hard to believe as if rotax wanted to make a bike it could build its own with no luggage or preconceived issues.  A complete revamp of the 1125 would be close to starting from scratch. The four closest Harley stores in Colorado to me did a fine job of setting up floor space and  gave better customer service then the four big Japanese dealers I deal with. Its not the dog bowl, its the dog food no one wanted.

[Tpoppa]

The 1125 as built/designed/assembeled would sell with only one change, and that was half off the price tag.  There was nothing left to buy of the tattered Buell name.  We can read about all these offers but I have no doubt THEY WERE PENNIES ON THE DOLLAR. The brand hand stink all over it in the press and most importantly on the street.

Let the dead dog rest in peace.

I do find the story hard to believe as if rotax wanted to make a bike it could build its own with no luggage or preconceived issues.  A complete revamp of the 1125 would be close to starting from scratch. The four closest Harley stores in Colorado to me did a fine job of setting up floor space and  gave better customer service then the four big Japanese dealers I deal with. Its not the dog bowl, its the dog food no one wanted.

Your speculation is based on...well absolutely nothing.

But wouldn't you rather get pennies on the dollar than loose $125,000,000 of them?  

HD has manged to alienate sport bike riders more then they already were & pissed off share holders in the process.  Well Done

[chornbe]

On the upside, you can't BUY this kind of ongoing name dropping and publicity.  

[nanbil]

I don't know the particulars of the buy-out deal, but the article did suggest that... "Bombardier offered to acquire the entire Buell operation. While this would still have meant the end for the Harley-powered models, Cathcart says it could have seen Bombardier use Buell's existing East Troy, WI facility to produce not only the 1125s, but also that Can-Am Spyder" if this is true and Harley turned it down—if only to keep 200 plus people employed–then shame on them.  

[Brad1445]

I don't know the particulars of the buy-out deal, but the article did suggest that... "Bombardier offered to acquire the entire Buell operation. While this would still have meant the end for the Harley-powered models, Cathcart says it could have seen Bombardier use Buell's existing East Troy, WI facility to produce not only the 1125s, but also that Can-Am Spyder" if this is true and Harley turned it down—if only to keep 200 plus people employed–then shame on them.  

And if the offer was $200,000 it makes all this press and they never were close to a deal.  

Only vultures fly over dead bodies seeing an opportunity, and they don't pay for the meal.

[SalsaShark]

The four closest Harley stores in Colorado to me did a fine job of setting up floor space and  gave better customer service then the four big Japanese dealers I deal with. Its not the dog bowl, its the dog food no one wanted.

I try to stay out of these arguments because they go absolutely nowhere...

But I'm curious which HD dealers you thought did a good job. I can think of only High Country that had a quality sales approach to Buell. If it wasn't for the HD financing and HD insurance and... well HD, I would have bought mine there. Sun all but ignored me every time I went in to inquire about Buells, Rocky Mountain had a couple of bikes, but if you weren't covered in leather tassles, they ignored you as well.

So I'm wondering which Buell dealers you dealt with? I was apparently missing the quality dealers. I had a better sales experience over the phone having my Buell shipped from Uke's in Wisconsin then I ever did, in face, at the dealer.

Say all you want about pods and the like... but if everyone had the same experiences I had in HD dealerships, then it's no wonder the brand died on the vine.


Oh, and before it gets beaten to death (again), I like the pods... Beauty is in the eye of the beholder. Also, I had three people today compliment the bike when I was out and about. I just can't swallow that the "pods" killed an entire brand.


OK, back to our regularly scheduled beating of the dead horse...

[Schneegz]

Let the dead dog rest in peace...

... said Brad without a hint of irony.  

[ninegear]

god. this was a stupid move. HD is stupid as hell. they wont do anything with the company they destroyed and yet people are offering gobs of money for this. also i wonder what erik buell would think if HD wised up and sold it.

[Baz]

Not really.  For such a respected journalist, Mr. Cathcart either needs to do some research or hire a different research assistant.  Bombardier Recreational Products (BRP) is not a division of Bombardier Inc. which is a large public company that makes among other things planes and trains.  BRP was sold by Bombardier Inc. in 2003 and it is owned by a private equity firm.  BRP has about half the sales of HD and it's been trying to restructure it's own debt for the past couple of years.  I seriously doubt BRP has the resources or borrowing power to purchase the Buell company, however it's not beyond reason to have made a bid for the engine that BRP's Rotax division made for Buell.

If I can recall, that private equity firm you speak of is actually 100% owned by the Bombardier family. They purchased BRP when Bombardier decided to spin off the recreational products line, and the family did not want to see their pride & joy vanish.

There has been quite a fight brewing for years at Bombardier regarding the families majority voting rights with minority ownership of the company through preferred share ownership. (At least this was the case when I was a shareholder back around 2003)

The purchase of BRP from Bombardier was pretty much a hobby for the family. (Really rich people have hobbies too you know  )

Ford has the same problem. The family has controlling voting rights of the company, but does not own a controlling amount of the publicly traded shares.

While BRP may not look like they have funding available on their books, the family has access to piles of money, and in fact could probably raise enough cash for a leveraged buyout of Harley Davidson today if they wanted. (Rumour of a leveraged buyout of HD is circulating in the business headlines these days) http://dealbook.blogs.nytimes.com/2010/03/17/harley-davidson-rises-on-buyout-chatter/?partner=yahoofinance

I believe Brad hit it on the head........

And if the offer was $200,000 it makes all this press and they never were close to a deal.  

Only vultures fly over dead bodies seeing an opportunity, and they don't pay for the meal.

HD's CEO still claims that Buell was far too interconnected with HD to provide for the possibility of a sale, and short of a firesale price, who would really have wanted Buell? Obviously it has been bleeding red ink for years.   Sorry to say, but Buell just is not the worlds most desirable brand name. (You can of course put a lot of blame on HD for this)

[falconati]

The $125 Million figure was to buy out the vendor contracts.  The Rotax contract was the biggest.

If HD would have GIVEN Buell to Bombardier, they could have saved that money, not to mention 200 AMERICAN jobs.

And no, a $125 million tax write off is not the same as saving $125 million.  

[BCRider13]

If I can recall, that private equity firm you speak of is actually 100% owned by the Bombardier family. They purchased BRP when Bombardier decided to spin off the recreational products line, and the family did not want to see their pride & joy vanish.

There has been quite a fight brewing for years at Bombardier regarding the families majority voting rights with minority ownership of the company through preferred share ownership. (At least this was the case when I was a shareholder back around 2003)

The purchase of BRP from Bombardier was pretty much a hobby for the family. (Really rich people have hobbies too you know  )

Ford has the same problem. The family has controlling voting rights of the company, but does not own a controlling amount of the publicly traded shares.

While BRP may not look like they have funding available on their books, the family has access to piles of money, and in fact could probably raise enough cash for a leveraged buyout of Harley Davidson today if they wanted.

Yes the Bombardier family has a financial interest in BRP as they put up 35% of the cash.  Bain Capital out of Boston put up 50% and a pension fund in Quebec the remaining 15%.  The bulk of the purchase was cash which Bombardier Inc. required.

The Bombardier family does have a strong presence on the Board of Directors of BRP.

Within the past year BRP has cut almost 1,000 jobs from it's work force and cut production by 20% to account for the current economy.  The company has also been trying to repurchase a large amount of it's term debt at a discount which caused S&P to lower it's credit rating which was already below investment grade.

My point is that all of this is based on a rumor out of Austria with no corroboration what so ever.  It makes sense for BRP to want the engine because it could be used in it's own products (the Spyer could use more power) or be marketed to another motorcycle company.  It doesn't make sense to purchase the whole of Buell as I doubt BRP has any interest in the air cooled thunderstorm engine or any of the bikes Buell already sold.  In the long run it would be less expensive for BRP to design and produce it's own motorcycle line without all the baggage that Buell would bring with it.

[Rogue]

The $125 Million figure was to buy out the vendor contracts.  The Rotax contract was the biggest.

If HD would have GIVEN Buell to Bombardier, they could have saved that money, not to mention 200 AMERICAN jobs.

And no, a $125 million tax write off is not the same as saving $125 million.  

Well said.  

200 American jobs is only good if they are building H-D motorcycles per H-D's management.  If they are building sportbikes, cut them loose!  What's $125 Million worth just to save face anyways?

[Brad1445]

Well said.  

200 American jobs is only good if they are building H-D motorcycles per H-D's management.  If they are building sportbikes, cut them loose!  What's $125 Million worth just to save face anyways?

I think we seem to forget the they did not kill a successful manufacture.  The dealers had PLENTY of stock.  Buell was selling XB bikes not the new one.  Ducati and Triumph (similar small companies) experienced market share growth during the same time period.  Buell built more bikes year over year but did not sell them until the fire sell.

[Tpoppa]

Buell grew 55% over the last 5 years.

Ducati and Triumph are sold in dealers that ACTUALLY KNOW HOW TO SELL SPORTBIKES.  Ducati and Triumph weren't sabotaged by the management team.  Dispite that...Buell grew 55% over the last 5 years.

[Brad1445]

Buell grew 55% over the last 5 years.

Ducati and Triumph are sold in dealers that ACTUALLY KNOW HOW TO SELL SPORTBIKES.  Ducati and Triumph weren't sabotaged by the management team.  Dispite that...Buell grew 55% over the last 5 years.

Your numbers include the bikes that set 24 months than sold for $5,000

I had no trouble buying 5 Buells from Harley dealers better service than the big four Japanese dealers run by kids.

[Jeff]

Your numbers include the bikes that set 24 months than sold for $5,000

I had no trouble buying 5 Buells from Harley dealers better service than the big four Japanese dealers run by kids.

I understand your point about the Japanese dealers, but Triumph and Ducati are Euro, not Japanese. Buell's may not have done alright alongside the Japanese squid bikes, but I bet they would've done quite well in a Euro bike shop.

Jeff

[Tpoppa]

Your numbers include the bikes that set 24 months than sold for $5,000

I had no trouble buying 5 Buells from Harley dealers better service than the big four Japanese dealers run by kids.

Those are the number reported by HD, and that was prior to the fire sale.

During the same period where Buell grew 55%, HD grew 9%.  Financial reports are readily available.

I have yet to see a statement that Buell was closed for financial reasons, not even by HD.


If you hide from facts maybe you can still believe they're not true

[BCRider13]

Buell grew 55% over the last 5 years.

Ducati and Triumph are sold in dealers that ACTUALLY KNOW HOW TO SELL SPORTBIKES.  Ducati and Triumph weren't sabotaged by the management team.  Dispite that...Buell grew 55% over the last 5 years.

The numbers that are given in the Harley Davidson financial and delivery information are not units sold to customers but units delivered to dealers.  The number of Buell units sold in 2008 was a 33% increase from what was delivered in 2004.  That increase was still only 3,262 units.  For 2009 the numbers given lump Buell and MV Agusta together.  You still need to remember that sales from Buell account for only 2% of the total HD revenue.

As for Ducati and Triumph, Ducati has built a business on Brand Name recognition.  Just like HD some will spend more to have a Ducati even though there are better performing, less expensive options out there.  The Ducati engine is almost as old school as Harley Davidson but it sounds sweet and the bike handles very well.  Oh, the bike that's kept Ducati going is the Monster line, which has sold more units in the past 15 years then Buell has sold, period.  The Monster is a naked bike, not a sport bike, and is the least technologically advanced bike in the Ducati line.  Triumph is much the same.  They deliver 3 times the number of units each year as what Buell did and their best selling line is the Street / Speed Triple line and the Bonneville line.  For 2010 the most hyped model in the Triumph lineup is the new Thunderbird, which is a big, parallel twin cruiser.  The reviews of this bike have been very positive so far.

HD chose to concentrate on their core brand, which is a financial move.  Could Buell have been bought and kept going with the same models and number of employees?  I doubt it.

Sport bikes are "cool" but they are not the bread and butter sellers for any of the manufacturers.

[chornbe]

Sport bikes are "cool" but they are not the bread and butter sellers for any of the manufacturers.

Correct. None of them.

Read the Motorcycle.com review of the new Stratoliner Deluxe for a brief mention of sales numbers on cruisers vs. sports.

http://www.motorcycle.com/manufacturer/2010-star-stratoliner-deluxe-review-89236.html

Despite the miserable economy and state of the motorcycle industry that we’re all painfully familiar with, cruiser sales suffer the least, according to info from Derek Brooks, Product Planning Manager for Star Motorcycles.
 
During the launch of the 2010 Star Stratoliner Deluxe, Brooks pointed to industry sales data supplied by the Motorcycle Industry Council (MIC) that highlighted how cruiser sales accounted for the largest share of total motorcycle sales in the past five years.

Cruisers outpaced all other segments by literally tens of thousands of units sold.

[Rogue]

Sport bikes are "cool" but they are not the bread and butter sellers for any of the manufacturers.

H-D does NOT sell "Bread and Butter" motorcycles!  Well, they have the 883 but that's hardly something that keeps H-D up and running year after year.  

Also, manufacturers don't build sportbikes just because they are "cool".  Believe it or not, it may not dominate the sales pie charts but they are significant enough to make a difference in the overall Profit and Loss statement.  Why else would they pour money into it year after year?  In addition, sportbike building pushes the limits of performance and that means it pushes engineers and designers to get better at what they do year after year.  This has a trickle down effect towards lesser performing models.  You can clearly see that in the Japanese cruisers, most of which can easily outpower any of H-D cruisers.  

Sportscars are not bread and butter either yet all the automakers build and develop them.  This is because there are tangible benefits in doing so, in addition to additional market share that manufacturers should not ignore.  In the case of H-D, they ignore it at their own peril.  

Let me put it another way.  The Sportbike market does not occupy a large part of the market.  However, it is not a shrinking market, it is a growing market in the US.  The opposite is true in Europe were sportbikes, standards, and scooters dominate.  

[Tpoppa]

The numbers that are given in the Harley Davidson financial and delivery information are not units sold to customers but units delivered to dealers.  The number of Buell units sold in 2008 was a 33% increase from what was delivered in 2004.  That increase was still only 3,262 units.  For 2009 the numbers given lump Buell and MV Agusta together.  You still need to remember that sales from Buell account for only 2% of the total HD revenue.

As for Ducati and Triumph, Ducati has built a business on Brand Name recognition.  Just like HD some will spend more to have a Ducati even though there are better performing, less expensive options out there.  The Ducati engine is almost as old school as Harley Davidson but it sounds sweet and the bike handles very well.  Oh, the bike that's kept Ducati going is the Monster line, which has sold more units in the past 15 years then Buell has sold, period.  The Monster is a naked bike, not a sport bike, and is the least technologically advanced bike in the Ducati line.  Triumph is much the same.  They deliver 3 times the number of units each year as what Buell did and their best selling line is the Street / Speed Triple line and the Bonneville line.  For 2010 the most hyped model in the Triumph lineup is the new Thunderbird, which is a big, parallel twin cruiser.  The reviews of this bike have been very positive so far.

HD chose to concentrate on their core brand, which is a financial move.  Could Buell have been bought and kept going with the same models and number of employees?  I doubt it.

Sport bikes are "cool" but they are not the bread and butter sellers for any of the manufacturers.

Correct, HD reports on number shipped to dealers.  Just like other manufactuers...Duc, Triumph, etc.

I'm afraid I don't understand your comments on the Monster or Speed/Street Triple.  Fairing or not, if you don't think these are sport bikes, then you haven't ridden them.  They are marketed based on cornering capability not a lifestyle.  You can argue that the lower end Monsters (600, 620) are less sporty, but they still have sportbike handling.

BTW, if your are looking to compare a bike to the Monster, the closest comparison is the Buell XBS.

[Rogue]

The Monsters and Speed Triples are sportbikes without fairings.  Period.  Their riding positions and performance clearly put them in the sportbike class.  

[Tpoppa]

H-D does NOT sell "Bread and Butter" motorcycles!  Well, they have the 883 but that's hardly something that keeps H-D up and running year after year.  

Also, manufacturers don't build sportbikes just because they are "cool".  Believe it or not, it may not dominate the sales pie charts but they are significant enough to make a difference in the overall Profit and Loss statement.  Why else would they pour money into it year after year?  In addition, sportbike building pushes the limits of performance and that means it pushes engineers and designers to get better at what they do year after year.  This has a trickle down effect towards lesser performing models.  You can clearly see that in the Japanese cruisers, most of which can easily outpower any of H-D cruisers.  

Sportscars are not bread and butter either yet all the automakers build and develop them.  This is because there are tangible benefits in doing so, in addition to additional market share that manufacturers should not ignore.  In the case of H-D, they ignore it at their own peril.  

Let me put it another way.  The Sportbike market does not occupy a large part of the market.  However, it is not a shrinking market, it is a growing market in the US.  The opposite is true in Europe were sportbikes, standards, and scooters dominate.  

I would agree.  Sportbikes are the icon bikes of this generation.

Why do you think Moto GP exists?  Manufacturers pour tons of money into Motp GP bikes & you can't buy those bikes.  But the  technology gained in Moto GP benefits their entire product line.  Also, Honda knows that putting their GP bike on the podium = more poeple in the showroom buying CBRs, VTXs, etc.

[Brad1445]

I'm afraid I don't understand your comments on the Monster or Speed/Street Triple.  Fairing or not

I think they are called standards, or cafe racers style.  It's the seating position.

[Brad1445]

I have yet to see a statement that Buell was closed for financial reasons, not even by HD.

Ask a Dealer

[Tpoppa]

Ask a Dealer

Which one?  The half of HD dealers that were clueless so Buell pulled out years ago, the other half that were semi-clueless and were not staffed or trained to support sportbikes, or 1 of the handful of good Buell dealers that knew what they were doing and had sucess with the brand?

[BCRider13]

Correct, HD reports on number shipped to dealers.  Just like other manufactuers...Duc, Triumph, etc.

I'm afraid I don't understand your comments on the Monster or Speed/Street Triple.  Fairing or not, if you don't think these are sport bikes, then you haven't ridden them.  They are marketed based on cornering capability not a lifestyle.  You can argue that the lower end Monsters (600, 620) are less sporty, but they still have sportbike handling.

BTW, if your are looking to compare a bike to the Monster, the closest comparison is the Buell XBS.

I've ridden both Triumph models and the Monster 696 and they are great motorcycles.  I've also ridden the XBS, and had fun in the short time I was on the bike.  As for being sport bikes, I understand your reason for putting them in this class, however I've always considered this type of motorcycle as a Naked or Standard because of their riding position, taller suspension and motocross style bars, which make this style of motorcycle suited very well for shredding city streets or mountain roads.  This is why I've got the Z1000.  In many situations this type of motorcycle will out perform what I consider a sport bike, which would be the "repli-racers".

My point is that bikes like the Triumph or the Monster sell well because they blend a good chassis, with a good engine that's fun to ride.  

Now if you add the Naked bike to the sport bike numbers, the competition is stiff and makes up less then 30% of total motorcycle sales.  This would make it very difficult for a sport bike only company to survive.  

[Brad1445]

Good post BC,
I think the margin for error is small and unforgiving.  Ask the B-King.

[chornbe]

The good news is that none of the Buell conversations are going in circles or becoming the least bit trite.  

[Brad1445]

The good news is that none of the Buell conversations are going in circles or becoming the least bit trite.  

ROFL  
 

[falconati]

 

[discochris]

Wow. After sifting through these threads, I have a headache.  

When the shutdown was first announced, I speculated that BRP might have an interest in Buell. I believe I posted it
over on ADVrider at the time.

There's a very good reason for this (perhaps it was mentioned in the other BRP thread - I didn't read every squabbling post).
Ever hear of OMC?

Ok, if you haven't you've probably heard of their brand names. Evinrude and Johnson.
OMC went bankrupt due to a poorly designed product and the resulting warranty claims. Who purchased them?

That's right. BRP.

Upon purchasing OMC, BRP kept a lot of the jobs in the existing factory, and is even continuing to produce parts and information on older model of outboards (of which I own two). Based on that track record for an acquisition, and their overall track record in motorsports, it would have made perfect sense to acquire Buell, especially since they were already in bed with the company.

This was a way for the Motor Company to avoid embarassment. Plain and simple, and it killed 200 jobs, and the only really innovative motorcycle operation in this country.

And to answer the inevitable question from Brad, yeah, I own a Buell.

[Brad1445]

That question keeps coming around in a simplistic manner.  
BUT AT WHAT COST??????
There are people on this bored that would have bought Buell,
I would of at a certain price.

No Doubt this sell and others were talked about but due to the dealer supply of two year old inventory any offer made by anybody would be far less than writing it off and stopping the supply certainly took the dealers off the hook.

[Snowbird]

That question keeps coming around in a simplistic manner.  
BUT AT WHAT COST??????
There are people on this bored that would have bought Buell,
I would of at a certain price.

No Doubt this sell and others were talked about but due to the dealer supply of two year old inventory any offer made by anybody would be far less than writing it off and stopping the supply certainly took the dealers off the hook.

...with your "pod" casts.  

And, it's "would have."

[discochris]

That question keeps coming around in a simplistic manner.  
BUT AT WHAT COST??????
There are people on this bored that would have bought Buell,
I would of at a certain price.

No Doubt this sell and others were talked about but due to the dealer supply of two year old inventory any offer made by anybody would be far less than writing it off and stopping the supply certainly took the dealers off the hook.

They paid $95 million for OMC's outboard business, so they'll spend money. They also honored warranties held by customers on existing OMC products prior to the purchase (which had to be expensive since it was warranty work that bankrupted OMC in the first place).

They have a massive existing dealer network with Evinrude, Sea Doo, Ski Doo, and Can Am, so from that aspect, supply chain, marketing, infrastructure etc. would already be in place.

Not saying Buell would have gone for that, but considering HD flushed over $100 million down the toilet to shut them down, that would have been $120 million saved, plus whatever the purchase price was.

[Brad1445]

...with your "pod" casts.  

And, it's "would have."

I have to stop drinking and posting.....

2:00am to boot.

[BCRider13]

They paid $95 million for OMC's outboard business, so they'll spend money. They also honored warranties held by customers on existing OMC products prior to the purchase (which had to be expensive since it was warranty work that bankrupted OMC in the first place).

They have a massive existing dealer network with Evinrude, Sea Doo, Ski Doo, and Can Am, so from that aspect, supply chain, marketing, infrastructure etc. would already be in place.

Not saying Buell would have gone for that, but considering HD flushed over $100 million down the toilet to shut them down, that would have been $120 million saved, plus whatever the purchase price was.

You need to check your history of this deal a little better.  Bombardier, Inc. purchased the Johnson and Evinrude assets at an auction in a joint bid with Genmar Corp., who took the boat portion of OMC, for a combined total of $95 million.  This was in 2001 and prior to BRP being spun off of Bombardier, Inc.  At the time this was a great deal for both companies as Bombardier, Inc. was able to add known brands to it's recreational line and had a ready buyer of the engines in Genmar.  As in interesting sidebar, Genmar sought bankruptcy protection in June of 2009.

There is a big difference in what took place with the purchase of the OMC assets and the purchase of Buell.  OMC was bankrupt and it's assets were sold at auction.  Bombardier, Inc. and Genmar Corp. were under no obligation to keep employee's of OMC nor were they obligated to honor warranties or supply parts.  Both companies did offer warranties for the 2000 and 2001 model years and Bombardier, Inc. also recalled and repaired some engines.  This was done to instill consumer confidence in the brands, which was a smart business move on their part.

If Buell were purchased, the cost of doing business would be significantly more then the purchase price because employee contracts would have to be transferred, warranties would be in full force and parts would have to be made available.  This means that the purchaser would have to sign agreements with HD for the production of the air cooled engines.  If the Buell business failed it would likely be the end of BRP and I don't think the owners would be willing to take that risk.  It would be easier and less expensive to design their own motorcycle and use the already known Can-Am brand.  Again, the Rotax built engine is a whole different thing and something that BRP would probably like to have.

[Brad1445]

......... It would be easier and less expensive to design their own motorcycle and use the already known Can-Am brand.  .....

BOOM goes the dynamite!
And they could pay some Italian guy to make it sexy.

[Snowbird]

I have to stop drinking and posting.....

2:00am to boot.

 

 

[discochris]

You need to check your history of this deal a little better.  Bombardier, Inc. purchased the Johnson and Evinrude assets at an auction in a joint bid with Genmar Corp., who took the boat portion of OMC, for a combined total of $95 million.  This was in 2001 and prior to BRP being spun off of Bombardier, Inc.  At the time this was a great deal for both companies as Bombardier, Inc. was able to add known brands to it's recreational line and had a ready buyer of the engines in Genmar.  As in interesting sidebar, Genmar sought bankruptcy protection in June of 2009.

There is a big difference in what took place with the purchase of the OMC assets and the purchase of Buell.  OMC was bankrupt and it's assets were sold at auction.  Bombardier, Inc. and Genmar Corp. were under no obligation to keep employee's of OMC nor were they obligated to honor warranties or supply parts.  Both companies did offer warranties for the 2000 and 2001 model years and Bombardier, Inc. also recalled and repaired some engines.  This was done to instill consumer confidence in the brands, which was a smart business move on their part.

If Buell were purchased, the cost of doing business would be significantly more then the purchase price because employee contracts would have to be transferred, warranties would be in full force and parts would have to be made available.  This means that the purchaser would have to sign agreements with HD for the production of the air cooled engines.  If the Buell business failed it would likely be the end of BRP and I don't think the owners would be willing to take that risk.  It would be easier and less expensive to design their own motorcycle and use the already known Can-Am brand.  Again, the Rotax built engine is a whole different thing and something that BRP would probably like to have.

You clearly do have more info than I do. I actually had a hard time finding detailed info on the deal, since it was nine years ago.

I did know Genmar was part of the deal (and since I live in MN, I'm very familiar with the bankruptcy) - didn't know the details.

If the reports are true though, I still think it would have been a good deal for all parties involved. HD wouldn't have had to eat the shutdown costs and would have received some payment, Buell might still exist, and BRP would have an existing line of bikes, using their own motors, to sell. The point with OMC, even if it was a bankruptcy sale, is that it shows a history of doing the right thing and resurrecting a damaged brand, and successfully. I don't know that they would have continued to sell the XB line, but I don't think it would have been a bad idea short-term, and HD would have made money on engine sales.

Clearly BRP could make their own bikes if they wanted (and it would probably be a better idea than building the Spyder), so why make an offer for a company that people here seem to think wasn't worth saving? Probably because they thought it was a good investment.