Modern Vespa

I was off a bit but my point was good company sometimes fall on hardtimes
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Under new ownership
In 2003, the company found itself close to bankruptcy. Continual management changes and millions spent on many different plans and products had saddled Piaggio with crushing debt and left it vulnerable to competition from cheaper Asian rivals.

In 1959 Piaggio came under the control of the Agnelli family, the owners of car maker Fiat SpA. Vespa thrived until 1992 when Giovanni Alberto Agnelli became CEO, but Agnelli was already suffering from cancer and died in 1997. In 1999 Morgan Grenfell Private Equity acquired Piaggio, but a quickly hoped-for sale was dashed by a failed joint venture in China.

Then came Roberto Colaninno: A lot of people told me I was crazy. Piaggio wasn't dying. It just needed to be treated better. Piaggio's finances were in a bad shape, but its brand was still well-known and its products were featuring in more Hollywood films thanks to the Vespa ET4. In October 2003 Colaninno made an initial investment of 100 million euros through his holding company Immsi SpA in exchange for just under a third of Piaggio and the mandate to run it. Chief executive Rocco Sabelli redesigned the factory to Japanese principles so that every Piaggio scooter could be made on any assembly line.

Colaninno laid down some rules and made quick changes; all bonuses for blue-collar workers and management were based on the same criteria: profit margins and customer satisfaction. He didn't fire a single worker-a move which helped seduce the company's skeptical unions. Air conditioning was installed in the factory and he gave the company's engineers, who had been idled by the company's financial crisis, deadlines for projects. They rolled out two world firsts in 2004: a gas-electric hybrid scooter and a scooter with two wheels in front and one in back which grips the road better.

One of Piaggio's problems Mr. Colaninno couldn't fix from the inside was its scale. Even though Piaggio was the European market leader, it was dwarfed by rivals Honda and Yamaha. A year after rescuing Piaggio, Colaninno decided to salvage another Italian brand: scooter and motorcycle maker Aprilia. On July 11, 2006, shares of Piaggio & Co., became available to the general public through listing on the Milan [Italy] Stock Exchange or Borsa Italiana. Piaggio share prices, converted to US Dollars, may be found under the trading symbol: PIAGF

Harley Davidson also has a long-term problem.

*Many of their customers (baby-boomers) has lost a lot of their wealth due to plummeting home values, battered 401k plans and losses in their stock portfolios (if they even had one). Many of their customers that have jobs are afraid to commit to a large purchase because they don't know if their job is next on the chopping block.
*Many younger riders do not see Harley Davidson motorcycles as a product that they aspire to own. They want faster, flashier & cheaper motorcycles. Harley has the right idea with the V-Rod for these customers but it's too expensive.

High end products of all types all around the globe are having a tough time and it's not going to get any better any time soon. I suspect that Harley will show a loss next quarter despite the layoffs and cost cutting and then, they'll have another round of cost cutting. The next move will be to move one or more of the factories to the south where they can hire cheaper labor and start outsourcing more of their parts to Chinese suppliers.

To me, this is the core of HD's problems. They can choose to remain focused on their current aging demographic, perhaps shrink to a boutique brand and try to keep margins high, but that's a tough pill to swallow for shareholders.

Let's face it, their brand has hit a wall, their target audience is aging and perhaps are financially-handicapped by the economy, and above all else, they have ZERO products that target the 20-something market for future growth. Now, they may think the Nightster fills that hole, but in reality, it isn't so much a Nightster vs. Ducati Monster contest for the younger set's appeal, as much as it's a cruiser vs. sportier-bike contest.

Meanwhile, the "kids", if you will, are barraged with the stunt culture, moto X-Game-like stunting, MotoGP, and of course all the fashion brands associated with it all (FOX, Thor, ICON, Dainese, Alpinestars, SHIFT etc.). What does HD have to offer? Black. Orange. Studded rivets. Repeat. I'm not saying those other subcultures/segments are any "better" than the HD appeal, but they certainly are more relevant to younger audiences.

If HD is comfortable remaining as the "Golf" segment of power sports, then so be it. Personally, I've got nothing against them or their image, and even like a product or two of theirs, but I do think they're in real danger of brand-obsolescence if they don't find a way to be relevant and appealing to younger audiences. Unless MV has a Monster 696-priced bike in their line-up (Brutale Jr.?), they aren't going to be much help to HD's predicament.

interesting that harleys financial situation is partly because they tried to change their image and increase profits by courting higher income groups and generally distancing themselves from traditional bikers. Guess one could argue that they had to in order to stop from folding in the eighties in the first place.

So true...my son and his friends are good examples...the younger generation (if they have the funds) are out there picking up sportbikes...it's not for not having $'s they cost just as much or +...HD will need to adjust their marketing strategy.

Moving manufacturing south?...in the business I'm in (heathcare) this happened decades ago...we're now into Dominican Republic and China. Moving manufacturing south of the border is not as bad as some folks may think..it's how the facilities are managed...

young riders get old and will buy something more fitting as they age, Weather it HD,Victory, or a metric bike. I do agree that the old and young line will make awave for harly someday.

Quick tangent: I have one particularly pesky neighbor that throttles up his HD around the corner of my house. It is a bit annoying and I wonder if these painfully loud exhausts are standard and DOT approved, or if they are modified. Any substantiated opinions or even facts on this?

Except if you work at one of the plants here in the U.S.! It seems all our manufacturing jobs are gone or going away - not good.

@ 91% profit reduction Harley is in for a rough ride.
It will be a bit difficult to operate on 9% of last year's profit.

Perhaps a merger between Hummer, Chrysler, and Harley into a really BIG brand. Ta Ta motors and Fiat can manage it.
It should have a really HUMONGUS sounding name like -

- Chry-Hum-Har - or - Har-Humm-Ler

A thousnad watt solid state digital exhaust amplifier will come standard (to beef up the analog exhaust). The sound a Chry-Hum-Har rider needs to survive at the flip of a switch for when the rider is feeling unsafe, ignored, insecure or just plain wants to annoy. Also handy to broadcast the rider is enjoying a Chry-Hum-Har to all living creatures within a 3 mile radius so the event does not go un-noted

Hehe, reminds me of a spare tire cover I saw on a Land Rover yesterday: Hummer Recovery Vehicle.

LOL, maybe they can pull them out of the mud, but to see that on the epitome of unreliability...

Not quite sure if there is a national "noise standard" here in the states like there is in the EU. However, in CA they are technically illegal (95dB limit), though it's rarely enforced.

Here's my understanding...the stock exhaust on the HD is not that bad...however it seems that almost every HD you see on the road does not have the stock exhaust. Talked to one of the HD sales rep. and he told me that some will purchase a new HD and have the exhaust upgraded prior to pick up. I don't know why...IMO the stock exhaust sounds the way I thought this was the trademark HD "sound"...

I put the screaming eagle slip-ons on my Street Glide within a week or two of getting it. A few reasons for this... significantly more power, Harley brand accessories installed within 60 days of purchased are covered under the bikes 2 year warranty, stock touring model exhaust is whisper quiet (think stock Vespa) and I wanted something with a bit more bark but still neighbor friendly.

My brother is a Harley guy. He has the stock exhaust on his '08. He says Harley corporate is actively trying to discourage the standard "drag pipe upgrade" stuff most guys do. It's not a good thing to piss off so many potential customers. On the other hand, my boss rides a Harley Springer, and I once saw her make fun of a guy on a Harley with a stock pipe.

Some of them claim the loud exhaust makes them safer by announcing their presence to car drivers. If one more Harley rider announces his presence in my neighborhood by blasting the throttle at 2 in the morning, I may announce my presence via my 12 gauge...

So I can safely conclude that the extra-loud HDs have a modified exhaust. I now have to find out whether that is legal where I live. I'm afraid it all boils down to dB levels, and to prove something, you need to measure with an approved device. I wonder if HD sells those too That's what I feel like, and I don't even have a 12 gauge.

Harleys are a non essential luxury purchase you buy when you have expenable cash. It was perfectly logical and predictable they would not have a good year. On the other hand, I look at a scooter as more of a reasonable every day tranportation source that justifies a capital expenditure.

Also its a little difficult to pull out a home equity loan to live beyond ones means when your $200K in the hole on your home.

buy american while you still can.

True, but I believe something similar has been written on many corporate gravestones over the years.

Indian is back in business. And more expensive than ever! I checked them out at the dealership and they are really nice, but with the base model STARTING at $26k and the Chief Vintage starting at $36K with no extras, I dont know how long they will stay in business.
http://www.indianmotorcycle.com/default.aspx

I had the same experience: An Indian dealer opened up near me last year. I rode on up (on my scooter, of course!) and checked them out. When I noticed that there wasn't a single price tag to be seen, I knew they would be expensive...and how!

I wish them well...I really do. (I have a lot of empathy for anyone who puts it all on the line to start their own business.)

To my eyes, it's a stunningly beautiful machine...you can see where the money went. But to date, I've only seen one on the road since then.

That's not completely true.

They have a marketing plan towards a 20-something market.

It just fails.

Dark Custom

Well, Harley changed their style, view, and price point from once being that of an everyday working man's bike to a luxury machine affordable to only higher income earners. And in a recession/depression, luxury items are the first things to become unneccessary to people.

IMO just about the same thing has happened to Detroit. IN 2003 I got me a new Toyota Echo for $12K that gets 36/40 MPGs and is comfortable and enjoyable while doing so. -Detroit, ignoring the handwriting on the wall, had nothing like it!
(And still doesn't, in 2009???)

1st off Harley Davidson and AMA want loaud pipes to go away.
2nd thing I see post on this site all the time about exhust upgrades.
3. Harley has a price point for just about everyone,
this topic has gon off course a bit. but I like it. the other thing if you have not road one then don't talk about them like you know all about them. windbreaker 84dba is the nation wide standard

I do know 1 thing forsure Harleys are good Scooters are good its about people who enjoy 2 wheels not a brand name.

one more thing I bet people hate loaud scooters too.
And the Harley sportster will get 60 MPG

Harley's primary design philosophy is to remain true to their roots and heritage. That means an air cooled, 90 degree vee twin & noisy shifter in a heavy weight MC. They have ventured into a water cooled, V-Rod and a sport bike, Buell. Both have some positives and many negatives, and ultimately, don't sell very well. HD may introduce an Electra-Glide with a v-rod type, water cooled motor for 2010 (their dealer meeting is right around the corner) in an effort to become modern. As for pipes, a lot of people equate power with sound, louder=more powerful. Not true. There is a fine line between pleasantly loud and obnoxious and it's different for everyone. These are my opinions, but they are stated with some previous experience. I've been on Harley's all of my adult riding life and was a dealer from 2002 to 2007.

Fact - Harley sales have decreased 35% compared to last year.
Fact - Large Japanese motorcycle sales have decreased by 48% over the same time frame.

So what's their excuse? Their sales are worse than Harleys! Can't use the aging demographic angle as they also make lots of bikes aimed at younger riders - sport bikes, dirt bikes etc.

Could it be, gasp, the economy?

Exactly. That's what I was trying to say with the sentence that followed: If I were master of the universe, I'd focus HD's efforts on targeting the youth market with $7,000-ish sub-500lb cafe racer rocker-style bikes. Essentially, a cheaper, American version of a Triumph Thruxton that's easily customizable. Scooters? Definitely NOT.

http://www.motorcycle.com/manufacturer/harley-davidson/2009-harleydavidson-sportster-xr1200-review-87709.html

here it is

Could be the economy, but the economy doesn't explain their increasingly aging customer base: I'd say it's time to start worrying.

So, let me get this straight, when HD sales drop 35%, it is the end of the line for them, but when Japanese bike mfgs over the same period's sales drop by 48%, that's a non-issue?

Looking around it really looks like the Japanese bike mfgs' age demographics are rising too. Anyone have any stats on that? This wouls make sense, seeing that many of their 'beginner' bikes (they aren't really but are viewed that way by many) - the 600s, start at $10K. Most kids do not have $10K to spend on a toy.

My first bike in college was $600!

I do aree with you, they need to find younger riders, I'm 40 and feel like I don't belong with the HOG Chapters, same with scooters I see more older riders in the picturs more offten then not. I just think the whole market is changing.its also hard to feel like you belong when the older riders keep calling new riders names like rubs.

580.0 lbs wet. Starts at $10,799.

Pass.

somthing like 336lbs wet and $6,200 I'm sure thats what the guys buying cjunk are saying too. bottom line that XR will sell for 10k or more someday.
http://online.wsj.com/article/BT-CO-20090703-705538.html

Economy has hit everyone

That's why I think they need to reinvent without throwing the baby out with the bath water. Scooters? Nope. Sportbikes or off-road bikes? Leave that to Buell and MV Agusta. The cafe/rocker segment is growing per my observations, and they could easily slide their air-cooled V-twins and spoked wheels into that market with little harm to their overall brand positioning. In fact, I think it extends the brand quite naturally. Make them lighter, a bit sportier and a good bit lighter and cheaper, and I think they'd have a winner.

Stick a Sportster plant in something like this and price for less than $8k, and I'd trade up ASAP:



In my strange, fantasy world, this is the type of bike I could see HD making that would grab the attention of the non-pirate non-chaps-wearing crowd. And look, it even comes in black.

Single cylinder, 34 horses, cheaper than a Vespa LXV. Folks don't see Harley as trying, but they are.

http://www.buell.com/_media/images/bikes/blast/gallery/regular/wallpaper_blast_1.jpg

I have 5 Harley dealers within a 20 mile radius, and from what I have seen in each dealership is that the dark customs are the only bikes they cant keep in the shop. When I bought mine, they kept trying to steer me away from the few dark customs they had in stock. The other guys I know had the same experience. There are waiting lists for the Iron 883, and they all go for above MSRP, and the Cross Bones and Nightsters are few and far between. So I wouldn't say the dark customs failed. If anything, they are keeping them afloat.

I agree, the cafe racer market is wide open to them. The bobber market is really thriving now too. They should make a few more bobber type bikes.

Indian has a real cult following, which has it's pluses and minuses. On the plus side, people in "the cult" will pay anything for them. On the minus side, the vast majority of riders aren't in "the cult".

Well The Vespa's will be staying around for a while then.

Dropped in on local Dealer handling BMW, Yamaha, Honda, Ducati. Sales Manager (personal aquaintance) indicated that trade journal indicates every make had a drop in sales except for Ducati...~10% increase.

FYI. Still has Honda SH150 on showroom floor from my last visit...has only one on hand...not too confident on price point set by Honda...waiting for the 125cc...no details yet.

Supermotar is hot hot hot, well placed in movie yes man.