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Shocker: BMW AG PURCHASES HARLEY-DAVIDSON

Weak US dollar, struggling economy lead to German takeover of American Biking Giant

In what is likely the largest, and most unusual, takeover in motorcycle history BMW Motorrad AG (Munich) announced this week its planned purchase of Harley-Davidson Motorcycles.

Berkshire Hathaway's Warren Buffett apparently was instrumental in brokering the arrangement.

Many analysts had quietly seen this coming.

"After riding high for two decades, the company that makes Hogs is sputtering," explained Josiah Harbor of the Rand Corporation. "Harley's core customers are graying baby boomers, whose savings, in many cases, have gone up in smoke in the market downturn. And that came back and bit H-D in the backside."

"These are big days for BMW," says Dr. Norbert Reithofer, Chairman of the Board of Management of BMW AG in Munich. "With the purchase of Harley, BMW stands ready to be the world's largest and most diverse motorbike company."

Dr. Reithofer says Harley-Davidson will become a wholly-owned subsidiary of BMW AG, similar to Husqvarna. "The H-D brand will remain, the US facilities will remain. But BMW AG and BMW North America will now manage the company."

Why now? Blame it on the economy and interest rates.

In a pattern similar to that of the housing bust, Harley goosed sales by luring many buyers with no-money-down loans. A subsidiary created about 15 years ago, Harley-Davidson Financial Services, made those loans and packaged them into securities to sell to investors. As the credit market skidded, so did this subsidiary.

As much as one-fourth of the $2.8 billion in loans issued by Harley-Davidson Financial Services last year were subprime, with interest rates as high as 18 percent. As the downturn took hold, some borrowers started defaulting on loans and investors stopped buying the securities, forcing Harley to write down $80 million of debt last year, analysts said. Although it recently tightened lending standards, the company is still chasing buyers by offering credit.

And things kept getting worse. For example, last week Harley-Davidson laid off 250 workers from its Springettsbury Township plant. The job cuts were in conjunction with the company's previously stated layoffs, in which Harley-Davidson plans to eliminate about 425 local positions by the end of the year.

In large part because of loan problems, though, profits at Harley fell 30 percent last year, to $654.7 million on revenue of $5.6 billion. Operating income of the financial subsidiary fell 61 percent, to $83 million.

Concerns about Harley's future grew after the departures of its two top executives were announced. In December, Jim Ziemer, 59, said he planned to retire as C.E.O. this year. In early January, the company announced that Saiyid Naqvi, the head of the finance unit, was resigning after less than two years at Harley. Since September, Harley's stock has plunged 70 percent, to under $13, compared with a 36 percent decline for the Standard & Poor's 500.

April fools!!!

Now so fast there, Nathan!

Word was that right after BMW AG's CEO Norbert Reithofer shook hands over this deal with Willie G. Chamberlain...err...I MEAN, Willie G. DAVIDSON, it was rumored that the german gentleman was overhead saying something under his breathe like..."Today Milvaukee, Tomorrow ze Vorld."

(but these reports ARE unsubstaniated at this point in time, mind you)

So it will now be BMW/Harley Davidson instead of AMF/Harley Davidson?

HD actually made an opposed twin for WW2



WW2 article




And while looking for a shot of that I saw this one that I didn't know about from 1922.


article

It wasn't just the chain problem, the V twin design also was over heating and the opposed twin cools very well. Part of why they seem to run forever in my opinion. I think they get extra oil to the piston from splash too compared to any other design but that is just a guess on my part. My 64 BMW has never been apart, it leaks from every rubber part because the rubber is dry and hard as a rock now from age. Not going to take it apart just to put new rubber parts on it though. I didn't have it out at all last year, I need to dig it out and clean it up and run it some this year.

And BTW, you probably ALSO know then that Indian Motorcycles of Springfield MA also designed and built a few models that they hoped the U.S. Army would buy that kind'a sort'a resemble a Moto Guzzi motorcycle, where instead on opposed-cylinders the cylinder heads where at a V-Twin configuation and which also ran a shaft to the rear wheel.

Word was that because of certain design flaws in it, the U.S.Army went with the Harley BMW-clone model instead, and because of the expense in the R and D of this machine, that that was one of the reasons that Indian Motorcycles found themselves in some financial strain in the Postwar Era, and never seemed to be in financial health from that time to when they ceased production in 1953(I think it was).

IIRC Indian made a p-twin

I didn't know that R & D on the Guzzi like bike had anything to do with the financial problems but I think I remember them doing something like that. I could be thinking of the Scout they were making to compete with HD during WW2 though.

I also heard BMW is going to come out with a 6 cylinder K replacement to compete with the Honda Goldwing. Isn't that a car?

I almost bought an Indian vertical twin at Carlisle a few years back. I thought the guy wanted a little too much for the condition the bike was in though so I didn't. He said it was a Scout and I really don't know enough about Indian to dispute that.

From what I've heard about 'em, maybe it's a good thing you didn't buy it.