Friday, 16 October 2009

Two Worlds Collide

The same week that JP Morgan Chase announce that their profits have soared some 75% since the dark days of Autumn last year, and that it's happy days all round with ludicrous bonuses for the red-braced parasites: In what I would consider to be the real world things are very different - Harley Davidson yesterday announced a 21% fall in sales - with production of the Buell range stopping at the end of this month, 180 jobs going with it, the sale of the recently acquired MV Augusta brand and a question mark over the future of the plant in York Pennsylvania.

Much as I admired the classic Italian sports bikes, MV Augusta seemed like an odd bed-fellow to HD, the only thing that they had in common was a long heritage and a premium price tag. Buell on the other hand is a great motorcycling story - Erik Buell started a cottage industry building performance bikes using HD parts that was so successful that he sold up and became one of their chief designers. Ironically it might have been the reflection of his involvement in the latest 'performance' Sportster, the XR1200, that put the nail in the coffin for the Buell range. I never had one myself, but I can see how the thinking behind the Buells was a modern updating of the concept of the Sportster fifty years ago.

That's very much a European view though; in the heartlands for HD sales, blue-collar America, the drying up of easy 'sub-prime' credit for lower income consumers is the real reason for the current problems. There's always been a tension between the image of Harleys as a middle class toy and the icon of a 'real' bike for the working man and I for one would hate to see the balance now tip the wrong way. HD are now talking about concentrating on core product - I hope they remember that this means motorcycles not branded aftershave.

And if things get worse for HD it will be interesting to say if there is the same willingness to bail out the Moco with government intervention as there was with the banks. If the Obama administration shies away from this it would be a scandal given that the last time that a US government took such a 'socialistic' measure to help the quintessentially American company was under Reagan.

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