Harley to Cut 1100 Jobs

[Bruce McCrary]

That's just the tip of the iceberg, there are so many hidden costs that most folks would never think about.

For instance, on the Harley side of things; A few years ago Harley REQUIRED their dealers to buy and use a Harley specific Dealer Management System (operations software that helps to manage inventory, sales, service etc). I'm told this cost the dealers $50K. The fun part here is that (1) It didn't work. (2) 99%of them were already using a commercially available system that did (and costs about $40K). Until the bugs were worked out of the Harley system most of their dealers had to operate using BOTH.

On the Yamaha side of things; Did you know that the official colors for Yamaha in the U.S. is changing from blue and white to red and white? Because of this every Yamaha dealer in the country is REQUIRED to change ALL signage to reflect the new color scheme. The costs? Roughly $5K per dealership.

The list of these kinds of things go on and on and on.

Bruce

 

[Hellgate]

That is actually pretty common among franchises, HD says they are not but if it walks like a duck...

I looked seriously into three franchises and they all used a proprietary POS or DB. All claim that is one of the key to their business model.

Lost is on, gotta go.

 

[Silverback]

Maybe they should lower the prices of their bikes, they might sell more.:spank:

Remember, HD don't just make money from selling bikes, but lifestyles..!!! The merchandise they sell is a HUGE earner and apart from Ducati no-one sells the PACKAGE like these guys....

 

[Hellgate]

Remember, HD don't just make money from selling bikes, but lifestyles..!!! The merchandise they sell is a HUGE earner and apart from Ducati no-one sells the PACKAGE like these guys....

That is a very good point Silverback. Harley sells some very nice clothing and gear. Most of my daily gear is Buell. I've used if for a year now and it is excellent quality and functionality. When I was looking for a convertible textile suit the majority I looked at didn't have the features of Buell's Adventure suit.

 

[Bruce McCrary]

True, there are profits to be made in PG&A (Parts, Garments & Accessories), but not as much as you might think, and the percentage of sales of PG&A to units is more lopsided than you'd probably imagine too.

Every month I get an industry news related magazine and they do a feature on a different dealership in each issue. They go into great detail about the dealership including what percentage of their income comes from which department, where advertising money is spent, etc. This month it's an HD dealer in Illinois, and they are pretty much typical of every Harley dealership that I've ever heard or read about.

Income by Dept;

8% service
13% used units
20% apparel
49% new units

Now obviously 20% of anyone's business is a huge segment, but it would take a huge amount of retail apparel sales to make up for any loss of new unit sales.

As a side note, in most metric dealerships the numbers are much more skewed to unit sales. In most cases PG&A and service combined only amount to roughly 25% of generated income.

Bruce