www.CVOHARLEY.com
CVO Social => In The News => Topic started by: VaEagle on January 21, 2019, 10:51:56 AM
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Interesting new article on changes at H-D...
https://www.yahoo.com/finance/news/harley-davidson-invites-wall-street-230400672.html
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It's all about the money and this is a way for HD to get more of it. Private equity firms will allow eventually an easy path for an investment banker firm to take over Harley - hostile or friendly. Then it's either parted out, split up, & sold off to make more money for the investors or the HD bottom line becomes even more important than it is today.
Automotive Group type scenario as to dealer network is another possibility - a Motorcycle Mall type dealer.
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Statements and my comments from the article...
"though the motorcycle company says it is not trying to adopt the auto dealership owner model"
Not true... IMO it has adopted that owner model. The attitude of owners, GM's, sales staff of some dealers is the mirror image of some auto dealerships.
"In the auto dealer model, the car manufacturer sets the tone for how the dealer operates and the incentives that should be offered to meet financial objectives. It is a top-down structure in which the dealer is really more of a general manager than an owner who calls the shots."
And Harley doesn't do the same. :nixweiss:
"Allowing private equity firms to buy dealerships only accentuates that profit-at-all-costs mentality, as streamlining, cutting costs, and squeezing margins out of every corner takes precedence over good employee, customer, and community relations."
Just when you think things can't get any worse. :( >:(
:pumpkin:
Ride Safe,
Fired00d
:fireman:
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Statements and my comments from the article...
"though the motorcycle company says it is not trying to adopt the auto dealership owner model"
Not true... IMO it has adopted that owner model. The attitude of owners, GM's, sales staff of some dealers is the mirror image of some auto dealerships.
"In the auto dealer model, the car manufacturer sets the tone for how the dealer operates and the incentives that should be offered to meet financial objectives. It is a top-down structure in which the dealer is really more of a general manager than an owner who calls the shots."
And Harley doesn't do the same. :nixweiss:
"Allowing private equity firms to buy dealerships only accentuates that profit-at-all-costs mentality, as streamlining, cutting costs, and squeezing margins out of every corner takes precedence over good employee, customer, and community relations."
Just when you think things can't get any worse. :( >:(
:pumpkin:
Ride Safe,
Fired00d
:fireman:
agree!!
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Barne's is a prime example of the downhill slide.....but...that's just my opinion!
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Maybe there is a reason for this. I think that the current crop of owners are quickly seeing their dealerships tank due to HD company policy and dropping motorcycle sales and are looking to exit the business before they lose their shirts. HD has an incentive to keep as many dealerships open as that is major selling point against Indian.
A Private Equity firm is only going to accelerate the decline of HD.
:oops: :nixweiss:
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I wonder if Harley is to far gone to save. Sold my stock years ago.
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This breaks my heart. I worked with auto dealerships starting in 73. It was great until the mega chains took over. AutoNation as one example. It really changes everything. Nothing is personal. Everything is about the bottom line. Part of the joy was the relationship. Riding with the owner, coffee and donuts always available.
This will make walking into a Harley dealership the same as walking into a Dodge store. Sad
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I'm not worried about this. Bikes for the most part are a luxury and arguably not needed (whereas most people do need a car for daily transportation/work). If new owners start treating people like crap they'll either go to another Harley dealer or simply switch brands.
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I'm not worried about this. Bikes for the most part are a luxury and arguably not needed (whereas most people do need a car for daily transportation/work). If new owners start treating people like crap they'll either go to another Harley dealer or simply switch brands.
I'm on a Island with one dealer that has alienated me. If I get an 'new' bike......it'll probably be a gently used, low km TC with known AND fixable issues...but...that's at least a couple years away....things change.
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With the current state of bike sales, and the dim outlook for that improving, I'm not sure why a private equity firm would buy HD dealerships when there has to be better investment opportunities, like funeral homes.
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In my opinion this is very Bad for the Motor Company. They need to push dealers to be more like Smoky Mountain Harley. Opened in 2004. Very Active on site owner. Sales managers ride, service manger rides, salesmen ride. Owner has pushed hard for repeat sales and a warm welcoming environment. Has a concert venue on site, shows every Saturday from April to Oct. Some fridays also. Restaurant bar on site. Worked his way up to Number 1 dealer in the USA.
I have 3 other dealers closer to my home. Chattanooga owned by a few investors. Treated my like crap in 2002 when trying to buy a 2003 Fatboy. Bike was marked up 5K I asked if we could work a deal. He asked me if I could read. I have not spent a penny in the store since. I have bought 16 new Harleys between my wife and I since. They were recently bought as business was not good.
The other dealer closer to me, has been struggling since SMHD opens. Owner can be nice one day and a jerk the next. Not often in the stores.
The article seem to push for a dealer like Chattanooga which I will never spend a penny in, rather than the model like SMHD which is what made Harley after the AMF years.
Not looking good for the Motor Company at all, with this change and the lack of quality and prices going up.
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They've already crossed over to the auto dealership model. An RV dealership bought a very large dealership in Central California, Eagles Nest and it is hugely different from the minute that you pull in the parking lot it's obvious that something has changed. That dealership parking lot used to be full of vehicles and that dealership had many, many bikes new and used and there was always a lot of people there. Now it's an empty parking lot, few bikes, very slow serviced dept. and exorbitant price mark up and labor rates. That dealership is just one example.
The MoCo is focused on return to the stock owners and have clearly lost site of their customers.
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Like Dave said I like dealership that are own by a person not a group of people looking to get rich. The dealership I use the main owner was kill in a motorcycle accident his wife many it . She's the owner now she come by some days because the accident left her in a wheelchair. This dealership is a 150 miles one way from my home. But they always treat me great.
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This change will work for a few years, after that i really question. These dealers will focus on the uninformed, charging over msrp as often as possible. I was once told by someone in the business that he'd rather sell one unit with a ten grand profit than ten with a one grand profit. That mentality only last so long. When customers figure out they were had it sours the whole experience.
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Reminds me of the saying, you can shear a sheep a dozen times but you can only gut it once.
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Reminds me of the saying, you can shear a sheep a dozen times but you can only gut it once.
Bingo!
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As someone that's spent my life & career in a similar industry, mostly on the "OEM Management side" intimately involved with company-dealer relationships, I found this a very interesting article.
I found the "no more than six dealerships" particularly fascinating. Expanding that to ten is not so alarming - but the change from requiring a single, majority ownership (one person must hold at least 50.1% ownership) to allowing private equity group type ownership is a real paradigm shift. It will be interesting to see what that does to the end-user pricing structures - as in my experience large, well-managed multi-state operations tend to earn "lower but more consistent" new machine sales margins while focusing on higher dealership absorption rates through efficient parts, service, accessory & financing business.
I'm not sure how allowing PE ownership within the dealer network would necessarily translate into a hostile takeover of The Motor Company. But it's certainly an interesting topic, and one that will be worth watching.
And, I also found the requirement that for a dealer to expand his/her ownership footprint, they have to be in the one-third of dealers performance-wise to be intriguing. From a sales growth and manufacturer-dealer business point of view it makes sense - however that doesn't necessarily provide the customer base more, better SERVICING dealers.
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This change will work for a few years, after that i really question.
Didn't even work for a few minutes here!