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Harley-Davidson 3rd Quarter Profits Fall 84%

Thursday, October 15, 2009
Retail Harley-Davidson Motorcycle Sales Decline Moderates from 2nd Quarter

 Operating Loss at Finance Unit Impacts Profit

Strategy Focuses on Extending Harley-Davidson Brand, Emphasizes Productivity and Strengthening Core Business
 
Company to Discontinue Buell Product Line, Divest MV Agusta


Harley Davidson Motorcycles
Harley-Davidson released its 3rd Quarter Results today and the outlook isn't too cheery for The Motor Company.
Harley-Davidson, Inc. (NYSE:HOG) announced decreased revenue, net income and earnings per share for the third quarter of 2009 compared to the year-ago period, while reporting a moderation in the decline of retail new Harley-Davidson motorcycle sales compared to the second quarter.
 
Worldwide retail sales of new Harley-Davidson motorcycles declined 21.3 percent in the third quarter compared to last year's third quarter, an improvement from the 30.1 percent decline in this year's second quarter. An 84.1 percent decline in net income and an 84.5 percent decline in diluted earnings per share from the year-ago quarter reflected lower motorcycle shipments and the effects of the economy on retail and wholesale loan performance at Harley-Davidson Financial Services.

Harley-Davidson also unveiled major elements of its go-forward business strategy to drive growth through a single-minded focus of efforts and resources on the unique strengths of the Harley-Davidson brand, and to enhance productivity and profitability through continuous improvement. As approved yesterday by Harley-Davidson's Board of Directors, the Company will discontinue its Buell product line and divest its MV Agusta unit as part of this strategy.

"While the environment remains challenging for us, we are mildly encouraged by the moderation in the decline of dealer retail Harley-Davidson motorcycle sales," said Keith Wandell, Chief Executive Officer of Harley-Davidson, Inc. "And moving forward, our strategy is designed to strengthen Harley-Davidson for long-term growth and deliver results through increased focus.
 
"As our announcement regarding Buell and MV Agusta indicates, we are moving with the speed and decisiveness required to bring our business strategy to life," said Wandell. "The fact is we must focus both our effort and our investment on the Harley-Davidson brand, as we believe this provides an optimal path to sustained, meaningful, long-term growth."

Third Quarter and Nine-Month Results

Net income for the third quarter was $26.5 million, compared to $166.5 million in the third quarter of 2008, on revenue of $1.12 billion, compared to $1.42 billion in the year-ago period. Diluted earnings per share were $0.11 for the third quarter of 2009 and $0.71 in the year-ago period.
 
Through nine months, Harley-Davidson, Inc. reported net income of $163.6 million, down 71.6 percent and diluted earnings per share of $0.70, down 71.4 percent from the year-ago period. Revenue through nine months was $3.57 billion, down 17.1 percent from the same period last year.
 
"Delivering Results Through Focus" Strategy

A key element of the Company's go-forward strategy is to focus on extending the Harley-Davidson brand by leveraging unique Harley-Davidson strengths. The strategy focuses company resources on Harley-Davidson products and experiences, global expansion, demographic outreach and commitment to core customers. In addition, the Company will continue to expand its initiatives to enhance profitability through continuous improvement in manufacturing, product development and business operations.

"We are refocusing our business with the expectation that we can provide growth that is both profitable and sustainable over the long term," said Wandell. "We believe we can create a bright long-term future for our stakeholders through a single-minded focus on the Harley-Davidson brand." 

Details of Buell and MV Agusta Actions
 
The Company will discontinue production of Buell motorcycles. Remaining inventories of Buell motorcycles, accessories and apparel, while they last, will continue to be sold through authorized dealerships. Warranty coverage will continue as normal for Buell motorcycles and the Company will provide replacement parts and service through dealerships.

The decision will result in a reduction over time of about 80 hourly production positions and about 100 salaried positions at Buell. Employment will end for a majority of Buell employees Dec. 18, 2009.
Harley-Davidson, Inc. expects to incur approximately $125 million in one-time costs related to the discontinuation of the Buell product line. The Company expects to incur approximately $115 million of that amount this year.
Relative to MV Agusta, the Company will immediately commence efforts to sell the business, which is based in Varese, Italy.
In the third quarter, Harley-Davidson, Inc. recorded a one-time fixed-asset impairment charge of $14.2 million related to Buell and a goodwill impairment charge of $18.9 million related to MV Agusta.

"Buell and MV Agusta are great companies, with proud brands, high-quality exciting products and passionate enthusiasm for the motorcycle business. Buell has introduced many innovative advancements in motorcycle design and technology over the years and MV Agusta is known in Europe for its premium, high-performance sport motorcycles. However, our strategy to focus on the Harley-Davidson brand reflects the fact that we believe our investments in that brand are a better utilization of overall company resources," said Wandell.

Motorcycles and Related Products Segment

Third Quarter. Revenue from Harley-Davidson motorcycles during the third quarter of 2009 was $803.3 million, down 22.1 percent compared to the year-ago period. The Company shipped 54,236 Harley-Davidson motorcycles to dealers and distributors worldwide, down 27.4 percent from the third quarter of 2008 but in line with previous guidance of 52,000 to 57,000 units. Revenue from Parts and Accessories totaled $221.8 million during the quarter, down 14.4 percent and revenue from General Merchandise was $70.7 million during the quarter, down 15.9 percent compared to the year-ago period. Gross margin was 33.1 percent of revenue for the quarter compared to 34.0 percent in the year-ago quarter. Operating margin was 9.5 percent compared to 16.4 percent in the third quarter of 2008. Operating margin was affected largely by lower gross margin, restructuring charges and impairment charges.
 
Nine Months. Through nine months, revenue from Harley-Davidson motorcycles was $2.62 billion compared to $3.23 billion in 2008 on shipments of 187,085 Harley-Davidson motorcycles, compared to 226,898 motorcycles in 2008. Revenue from Parts and Accessories totaled $623.1 million during the first nine months, down 11.8 percent and revenue from General Merchandise was $215.5 million during the nine-month period, down 12.0 percent compared to the year-ago period. Gross margin was 34.6 percent and operating margin was 14.1 percent, compared to 35.4 percent and 18.9 percent respectively in the year-ago period.

Retail Motorcycle Sales. During the third quarter, retail sales of Harley-Davidson motorcycles decreased 21.3 percent worldwide, 24.3 percent in the U.S. and 13.1 percent in international markets, compared to the prior-year quarter. Industry-wide U.S. retail heavyweight (651cc+) motorcycle sales declined 35.9 percent during the quarter, compared to the year-ago period.
 
For 2009 compared to 2008 through nine months, retail sales of Harley-Davidson motorcycles decreased 22.9 percent worldwide, 25.5 percent in the U.S. and 16.5 percent in international markets. Industry-wide U.S. retail heavyweight motorcycle sales declined 38.7 percent year to date in 2009, compared to 2008.
 
Harley-Davidson Financial Services

Harley-Davidson Financial Services recorded an operating loss of $31.5 million for the third quarter of 2009 compared to an operating profit of $35.6 million in the third quarter of 2008. This decrease of $67.2 million was due to a higher provision for credit losses in both the retail and wholesale portfolios as well as increased interest expense. Year to date through the third quarter, HDFS reported an operating loss of $110.8 million, compared to operating income of $107.7 million for the prior year period. The nine-month operating loss includes two non-cash charges recorded in the second quarter of 2009: a $72.7 million credit loss provision for a one-time reclassification of motorcycle loan receivables; and a one-time $28.4 million charge to write off goodwill associated with HDFS.

HDFS continues to successfully access the credit markets to fund its lending activities. On October 9, HDFS completed a $700 million term securitization transaction with a weighted average interest rate of 1.2 percent.
 
Update on Restructuring Activities
 
On a combined basis, the Company expects previously announced restructuring activities, together with the discontinuation of Buell operations, to result in one-time charges of $215 million to $245 million over 2009 and 2010, or an increase of $55 million from the estimate provided July 16, 2009. The Company estimates annual ongoing savings from restructuring of approximately $140 million to $150 million.

The Company continues to pursue its previously announced "two path" study to determine whether additional major restructuring at York, Pa. facility can make those operations competitive and sustainable long term, or alternatively, whether the Company will relocate those operations to another U.S. location. As part of the restructuring analysis, the Company has begun contract talks with the union representing employees at York and expects to make a final decision on the status of the York operations by the end of this year.

Income Tax Rate

The Company's third-quarter effective income tax rate was 61.8 percent compared to 38.2 percent in the same quarter last year. This increase was due primarily to the tax implications of MV Agusta, including the non-deductible write down of goodwill, and the impact of reduced Company earnings. The Company expects its full-year 2009 effective tax rate on continuing operations, excluding MV Agusta, to be approximately 59 percent due to the previously reported one-time charges for the Wisconsin tax law change and the non-deductible goodwill write-off for Harley-Davidson Financial Services, as well as the impact of reduced earnings for the remainder of the year.

Cash Flow

Cash and cash equivalents totaled $1.52 billion as of Sept. 27, 2009, compared to $504.4 million at the end of the year-ago period. Cash provided by operations was $511.1 million and capital expenditures were $89.4 million during the first nine months of 2009. For the full year, capital expenditures are now expected to be $125 million to $145 million, including $15 million to $25 million related to restructuring activities.
 
Guidance

The Company is narrowing its guidance for full-year 2009 shipments, and now expects to ship 222,000 to 227,000 Harley-Davidson motorcycles to dealers, including 35,000 to 40,000 during the fourth quarter. The Company continues to expect full-year gross margins to be between 30.5 percent and 31.5 percent.
 
Company Background
 
Harley-Davidson, Inc. is the parent company for the group of companies doing business as Harley-Davidson Motor Company (HDMC), Buell Motorcycle Company (Buell), MV Agusta and Harley-Davidson Financial Services (HDFS). Harley-Davidson Motor Company produces heavyweight custom, touring and cruiser motorcycles. Buell produces American sport performance motorcycles. MV Agusta produces premium, high-performance sport motorcycles sold under the MV Agusta(R) brand and lightweight sport motorcycles sold under the Cagiva(R) brand. HDFS provides wholesale and retail financing and insurance programs primarily to Harley-Davidson and Buell dealers and customers.
Forward-Looking Statements
 
The Company intends that certain matters discussed in this release are "forward-looking statements" intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such because the context of the statement will include words such as the Company "believes," "anticipates," "expects," "plans," or "estimates" or words of similar meaning. Similarly, statements that describe future plans, objectives, outlooks, targets, guidance or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated as of the date of this release. Certain of such risks and uncertainties are described below. Shareholders, potential investors, and other readers are urged to consider these factors in evaluating the forward-looking statements and cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included in this release are only made as of the date of this release, and the Company disclaims any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

The Company's ability to meet the targets and expectations noted depends upon, among other factors, the Company's ability to (i) execute its strategy and successfully exit certain product lines and divest certain company assets (ii) effectively execute the Company's restructuring plans within expected costs and timing, (iii) successfully achieve with our labor union partners flexible and cost-effective agreements to accomplish restructuring goals and long-term competitiveness, (iv) manage the risks that our independent dealers may have difficulty obtaining capital, and adjusting to the recession and slowdown in consumer demand, (v) manage supply chain issues, (vi) anticipate the level of consumer confidence in the economy, (vii) continue to have access to reliable sources of capital funding and adjust to fluctuations in the cost of capital, (viii) manage the credit quality, the loan servicing and collection activities, and the recovery rates of HDFS' loan portfolio, (ix) continue to realize production efficiencies at its production facilities and manage operating costs including materials, labor and overhead, (x) manage production capacity and production changes, (xi) provide products, services and experiences that are successful in the marketplace, (xii) develop and implement sales and marketing plans that retain existing retail customers and attract new retail customers in an increasingly competitive marketplace, (xiii) sell all of its motorcycles and related products and services to its independent dealers, (xiv) continue to develop the capabilities of its distributor and dealer network, (xv) manage changes and prepare for requirements in legislative and regulatory environments for its products, services and operations, (xvi) adjust to fluctuations in foreign currency exchange rates, interest rates and commodity prices, (xvii) adjust to healthcare inflation, pension reform and tax changes, (xviii) retain and attract talented employees, (xix) detect any issues with our motorcycles or manufacturing processes to avoid delays in new model launches, recall campaigns, increased warranty costs or litigation, and (xx) implement and manage enterprise-wide information technology solutions and secure data contained in those systems.

In addition, the Company could experience delays or disruptions in its operations as a result of work stoppages, strikes, natural causes, terrorism or other factors. Other factors are described in risk factors that the Company has disclosed in documents previously filed with the Securities and Exchange Commission. Many of these risk factors are impacted by the current turbulent capital, credit and retail markets and our ability to adjust to the recession.
The Company's ability to sell its motorcycles and related products and services and to meet its financial expectations also depends on the ability of the Company's independent dealers to sell its motorcycles and related products and services to retail customers. The Company depends on the capability and financial capacity of its independent dealers and distributors to develop and implement effective retail sales plans to create demand for the motorcycles and related products and services they purchase from the Company. In addition, the Company's independent dealers and distributors may experience difficulties in operating their businesses and selling Harley-Davidson motorcycles and related products and services as a result of weather, economic conditions or other factors.
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Comments
Joe Average -How to help Harley Davidson  December 30, 2009 05:06 PM
I have a suggestion for all of the Harley Davidson faithful. Why not donate one day of your life and go work for Harley for free. Considering the aptitude of the average HD owner, I would estimate that they will euthanize Harley Davidson in short order. Giddy up now an' git over thar....
Richard Pocklington -Harleys  December 12, 2009 10:16 PM
I lived in the UK for over 50 years and never met any one who rode/owned a HD, most UK bikers would fall about laughing if you told them you owened a HD, only one up from a mobility scooter!, nearly all high performance sports bikes, but here in New Zealand there is thouands of Barley Harvesters,and I just dont get it, you pay $30,000 to $60,000NZ for a bike, then spend an other $20,000 to finish it off,an other$10 to $20k to make it go, an other $5k to try to make it stop, and that has taken them 106 year to get this far, on one group ride 15 rubber bands snapped at $1000 a pop, plus they start in gear and you can set off with the stand down, it is 2010 soon! I have a Triumph Rocket 3,not bad for a first attempt at a cruiser, and my mates in the UK think thats a tractor!! I just dont get it, but I am just a thick Limmy! Cheers richard Her in doors has two V Rod, a 2003 Anniversary and a 2005 Sqwarking Chichen which I won on Ebay for $15600US,they were $56,000NZ here, she rode it from Dallas TX to the docks in LA, we had a great time in Yankyland, loved the Yanks, food, roads
Alan -Love my 02 FatBoy  October 27, 2009 07:46 AM
I do not have any complaints about my Harley. I like the way that it looks and feels. I'm 50 years old and have been riding since I was 15. I am not concerned with what's going on with the company and I don't go shopping at the dealership.
z34 -HD  October 25, 2009 04:11 PM
I bought my first harely at 15 yrs old, then bought one 1977 its was a 1976 electric glide.. I still own it also had 87 and now a 94 harley and a gold wing. i have never been a snob ,, i dont care what bike you ride,, we all bleed the same color red if we get hurt, but i will say this i was not impressed in the gold wing.and u r all right when it comes to price.. way too much,, back when i stsrted to ride there was so such bikes around just the harley,indians, well good to all and remember we are all bikers,, no matterwhat we ride ...
Louis -16% Profit  October 17, 2009 10:47 AM
"Harley-Davidson 3rd Quarter Profits Fall 84%" Which means they still made a profit of 16% Is that so bad in this economy? I think they're still ahead of Honda.
xrguy72 -Mike get a new nick name  October 16, 2009 01:30 PM
HD = Heavy Death!!!
rob t -hate to see any cycle go away  October 16, 2009 01:17 PM
i hate to see any cycle go under as i love them all.but H.d is in real trouble as they are loosing thier core riders to age and the younger riders coming up EXPECT a cycle to do more than just run correct!!! hope they can hold on as i love them all.(even though i own a goldwing lol
x2468 -image  October 16, 2009 01:14 PM
HD needs to get their "cool" image back. Back in the day if you rode a harley it was a pretty badass thing. But no one cares anymore. The looks are dated, the technology is dated, they're underpowered and the only people that ride them are over 50. They need to come up with something fresh and edgy. Both in the looks department and in the motor department.
Merkel -old#7,buffalo,ny  October 16, 2009 11:30 AM
“.i also need to point out that they also hold their value better than most bikes on the market today.this is very evident when you go on the nada website and go back just 5 years and look at most of the other brands resale value”

Dude, this is not the 1990s anymore. Check NADA, are you serious? Who pays the NADA price for any bike or car when you buy it used. How about you check Ebay and craigslist; here is where you will find the true value of a Harley or any used machine for that matter. Used bikes are only worth what people are willing to pay. And from what I’ve seen in the past few years people are not willing to pay good money for used Harleys and why should they when the dealerships are loaded with current and non-current inventory that have finance incentives and deep discounts.

You must be one of those Harley owners that still think their 1995 Fat Boy is still worth $15K or maybe $15,500 if you put new tires on it.

The used market is FLOODED with Harleys and so is the new market, hence the reason Harley is cutting way back on production. Weak demand + big supply = poor resale and lower prices…check NADA…that’s a good one LOL.

drh43 -...  October 16, 2009 10:41 AM
So Harley-Davidson is the Rolls-Royce of motorcycles. That's rich.
WildBill-MASS -HD reliability  October 16, 2009 10:39 AM
old#7,buffalo, I respectfully disagree with you. Ask your parts guy how many crankshaft position sensors he sells. Also how many Throttle position sensors (call them TPSs) and you might be amazed. All of these sensors: crank pos., cam pos., exhaust (2 ea), air temp sensor ( makes it idle higher on start up. Add to this fuel injectors and you have a host of low bid items that can leave you beside the road. I owned a 1983 FLHTC, 1986 FLHTC, 1989 FLHTC, 2001 Road King (note the gap when they wanted me to wait 18 months for a new bike) and a 2006 FLHTC. I also own a 1998 FLSTC currently. The 2006 has been the worst turd I have owned, worse than my 1975 AMF Superglide. I will likely switch to the Victory next time- too many problems and too many dealers and the "Motor Company"'s F%#K them attitude for crappy items. The engine top end is sound, the cam p[late/ oil pump design is still a fiasco, but the $450.00 kit (plus labor) will fix that?????? Switch to Fueling pump, and S&S or Andrews cams for a better engine. Harley is trying to hold onto high prices in a recession. I don't think T-shirt sales will do it this time.....I have had it.To all you Pro-HD types: "If Harley made an airplane, would you fly in it?" I know I wouldn't, and I'm a pilot and jet engine engineer.

Bill let the grenades begin
old#7,buffalo,ny -harley quality  October 16, 2009 08:58 AM
harley davidsons quality is better then ever,better materials,better engineering,they have evolved into a great touring bike,that said,they are a little under powerd for the sport touring crowd that love to bash harley.i also need to point out that they also hold their value better than most bikes on the market today.this is very evident when you go on the nada website and go back just 5 years and look at most of the other brands resale value.almost half of their value in just a few years.. if you dont like harleys,dont buy one.
KIng man -real riders  October 16, 2009 08:15 AM
I rode hd in the 1990's but the sound of cell phones ringing in the dealers was too much for me I went to thumpers where real bikers live
Eric -Buell Demise.  October 16, 2009 05:33 AM
I remember waaayy back,when Buell first came out with his concept bikes. An American sportbike - very nice, I thought. Like Bimota, Buell was considering other engines (read - non-Harley) to power his new creation. Word spread that he was to start using Suzuki TL1000 engines in his new frame - an excellent choice. Now, I can't be sure - but I have a feeling that left a really.. really bad taste in the mouths of the Harley executives. So, almost like magic, I read that Erik Buell had sold 51% of his company to Harley. I remember feeling dissapointed that he would 'Sell Out', so quickly. Sad. Naturally, he (Buell) was then directed to use that horrific sportster engine in what otherwise could have been an excellent bike. Imagine if he would have went with the real (er. Suzuki) engine? Anyway, I would like to wish the best of luck to all the Buell employees and their families.
WildBill-MASS -HD $$ woes  October 16, 2009 04:22 AM
as a long time HD owner/rider, I suggest the "Motor Company" regain themselves by LOWERING the prices- not raising them in a recession. As to the *NEW* Ultra lassic Limited, do they really think we need a $25K Harley???? All they obviously did was look at the immediate accessory sales (dealer profit) and offer those things and new paint and more $$$. With all the sensors on the engine, they are less reliable than the older HDs. IF I were in the market for a Harley today, I would search the 'net for a low miles pre 1999 FLHTC. They were the best.
Sam -milwaukee (Moron) mike  October 16, 2009 12:55 AM
Quality: HAHHAHAHA very funny! Tradition: It's getting old don't you think? HD a Real Riders: HAHHAHAHAHHAHAHA Milwaukee (Moron) Mike you must be a comedian. I like you Mike..you're Stupid but funny :)
Sam -S  October 16, 2009 12:42 AM
"Relative to MV Agusta, the Company will immediately commence efforts to sell the business, which is based in Varese, Italy." YES!!! I lost interest in MV Agusta the day HD took over. Now let's hope the Boot shape country buy it back...so i can buy one in the future.
GB -milwaukee mike  October 15, 2009 10:05 PM
HD riders want quality??? now that is the funniest comment your brainwashed mind has ever made. there are so many jokes there i don't even know where to start!!! LOL!!!
Bryan -Real riders?!!  October 15, 2009 08:03 PM
That ignorant and narrow minded view that a lot of Harley snobs have about how they are "real riders" and the perception of the brand that results from this is one of the reasons that your company is failing. You have to ride Harley to be a real rider? A real rider doesn't depend on the brand of their bike to distiguish themself, they do it through their riding. Also, a "truely premium product?" Seriously, I would never ride Harley because I would never want to be associated with the snobbery that I've experienced on so many occasions.
Allen-Grand Rapids -real riders  October 15, 2009 05:14 PM
So if you own a Harley you are a real rider? LOL!
Ron-Michigan -Harley's losses  October 15, 2009 05:11 PM
About a year a ago I was in the market for a new bike but the one thing it needed to be was comfortable for my wife to reide as a passenger. I really wanted to buy an Electro-Glide Classic, so I in to two local dealers to try to do a test ride. I was told by one that I could wait a month for the demo trailer or rent one. The other dealer said they wouldn't have a demo for a couple of monthes.They were also arrogant enough to tell me I should buy one without riding it as several years ago people were doing so. I was discouraged and went to a dealer that sold Yamaha's and Honda's and asked them about demo's. They took a new Star Venture and Honda Gold Wing off the floor for my wife and myself to ride. I ended buying the Star Venture and love it. I saved approx. $7000.00 versus buying the Harley and have a 5 year unlimited mileage warrenty.
With the arrogance I was shown by the Harley dealers I don't know that I will ever purchase a bike from them and wonder how often this happens in the dealerships.
Jim -Buell Blast Commercial  October 15, 2009 04:12 PM
Why did they waste advertising money showing Eric Buell crushing a Buell Blast into a tine square? What was the message they were sending to people who purchased Buell Blasts? You spent your money on our product which we think is a piece of junk! Bad judgement.
JB -...  October 15, 2009 02:46 PM
I gotta think that the real problem here was Harley giving out loans to anybody with a pulse over the past few years, then basing decisions based on the loans, not on hard profit.

Just like every bank in the country has paid the price for this type of bad business, so too must HD.nThat and the fact that anyone could see the supply and demand for HD here in the states getting upside down for a few years now. Sad, but not surprising at all.

It just sucks that Buell and MV are the collateral damage left behind.
Burlington -HD  October 15, 2009 01:29 PM
“Strategy Focuses on Extending Harley-Davidson Brand, Emphasizes Productivity and Strengthening Core Business”

How do you “extend the brand” when you cut off two brands like Buell and MV both of which would have helped Harley “extend”into new markets?
How do you “strengthen core business” when that “core” is leaving the motorcycle market for good and its not being replaced?
No matter how much productivity, core strengthening, and brand extending VCR makers did would have helped them avoid the inevitable.
Well at least Harley’s statements sound good to the investors on Wall Street who don’t understand a single thing about Harley or the motorcycle industry/culture to begin with.

All that money spent to buy MV and in Buell to develop or to pay someone to develop new bikes thrown away within 1 ½ yrs. after doing it. Makes you wonder why. Makes you wonder what Harley really has in mind for its future.

milwaukee mike -84% loss  October 15, 2009 01:21 PM
There will always be a market for a truely premium product. By divesting itself of MV and Buell HD can concentrate on it's core market (those riders that appreciate a real motorcycle).

HD riders want quality and tradition, just as the buyers of Rolls Royce automobiles. Buells and MVs were for those "Walter Mitty" types that dilute the pool of real riders.