jrsjr wrote:
Harley Davidson hit the panic button after seeing a precipitous drop in August dealer sales. The sales drop was bad enough to cause The Motor Company to cut their estimated profit for the year and cut production. The timing of this coincides with the demise of the subprime mortgage market, the deflation of the national housing market bubble, and the first net drop in employment in four years, among other things. I hope I'm wrong, but I can't believe this is a good omen for modern Vespa sales. No matter how you cut it, August was a month to forget.
Scooterrific wrote:
An ex motocycle salesman I know gave me this equation to help me understand...
Home equity + desperate, hanging out bastard = Harley Davidson.
The subprime crash affecting HD sales probably proves he is right (about half of it anyway).
Comparing HD to Vespa in the marketplace and their respective niches isn't exactly apples to apples, IMHO:
1. PRICE POINT
Comparing price points, many folks wouldn't have to take out a home equity line of credit or turn their house into a cash/equity ATM to purchase a $5-$7k Vespa compared to a $10k-$20k and up HD. Not that it's unheard of to do so for a Vespa or less expensive motorcycle, but comparatively, HDs barrier to entry is WAY more steep and would more likely need to be fed by creative finance if you take the national average annual income (somewhere around $50-$60k last time I looked) into account.
2. VESPA MARKETING = VESPA IS COOL SECOND CAR OR CAR REPLACEMENT. HD MARKETING = BIG, BADASS AND WORTH EVERY PREMIUM DOLLAR
I don't often hear about people replacing their car(s) with a Harley, but I've often heard of people doing so with a Vespa. Although Vespas are on the premium side of scooter models price-wise, they're still cheaper to purchase and insure than a conventional new car, truck or Harley. The Vespa customer might be more sensitive to the idea of "thrift" compared to the typical HD customer. Definitely an assumption on my part.
3. RISING GASOLINE PRICES
Yeah, I know gas the last few months has come down somewhat, but I think most folks agree in the long run, it's only heading higher. And, if on top of that bad times really hit the economy as a whole (the "R" word), I'd imagine more folks would be looking for ways to spend less than more. If you need to get around, and your situation allows for 2-wheel commuting, I'd imagine Vespas, and scooters in general, have an advantage to bigger bikes as an answer to this problem.
All that said, I do believe the subprime mortgage fallout will have a huge effect on the power sports industry as a whole, but I think it will hit the different segments in varying degrees, ranging from "ouch" to "@#$%!!!". I'd bet on KYMCO and Vespa to be far less affected than Harley Davidson, Ducati, BMW, Victory and the like. The custom chopper builders? I'd imagine they're going to feel some real hurt. Water craft? Pain. Just pain.
Personally, I think Vespa and Kymco could turn this economic downturn into an opportunity if they're smart.