Gee do we really wonder why Harley dealres can not bend over to get us great deals.

15% 300million dollar loan......... WTF , who's idea was that !

The total due now is at $900 million at 15.98%

Read on:
http://www.cnbc.com/id/28998181?__so...ext|&par=yahoo

Tuesday, 3 Feb 2009
Warren Buffett Takes $300 Million Motorcycle Ride With Harley-Davidson, Revving Up the Stock
Posted By:Alex Crippen
Topics:Economy (U.S.) | Warren Buffett
Companies:General Electric | Goldman Sachs Group Inc | Harley Davidson Inc | Berkshire Hathaway Inc.
Warren Buffett's Berkshire Hathaway will invest $300 million in motorcycle-maker Harley-Davidson, getting a very impressive 15 percent annual interest rate for its money.

In a news release today, Tuesday, Harley-Davidson says Berkshire and Harley's biggest shareholder, Davis Selected Advisers, L.P., have each committed to buying $300 million in senior unsecured notes, due in 2014.

The 15 percent interest rate is well above the 10 percent Buffett got out of Goldman Sachs and General Electric last fall. Those were substantially larger investments, of course, in much bigger companies.

 

I hear ya. I was at one of my local HD dealers yesterday and they are simply overflowing with bikes and their response was they would deal, but the discount wouldn't be what you would expect. The salesman there said that they would take $1,000 off MSRP on their remaining 09s while 10s were at MSRP plus tax, title and fees.

It's ridiculous that in this economy with dealer inventory being so high that they wouldn't want to do what they could to sell. Apparently the automotive and motorcycle markets are night and day in comparison. You can buy a car or truck and save up to $15K off MSRP, but you can barely ever get a couple grand off on a Harley. What's wrong with this picture?

Shawn

 

The story was published in February, and the stock price was ~$14. Now, a few months later, production has been adjusted down, resulting in less inventory, resulting in less discounts, and the stock hits ~$25 a share.

Warren Buffet is one of the world's richest investors for a reason.

I think he saw an iconic company (brand), who had a short term financial hangover form the gogo days where anyone could qualify for a HD loan. The mortages dried up, hom equity lines dried up, and the MOCO needed some cash.

Certainly not defending the companies practices, but hey they're still alive, and have taken no Federal money, so maybe it has worked........

 

Agreed: But it makes sence why Harley is not offer $4,500 in discounts for 2008,2009 models sitting on dealer floors. Man...go to Livermore Harley...

Harley maybe should have taken "Our Money" maybe we all have 1.9% Fin. Charges :-)

 

The discount issue is a double edged sword. If HD offers huge discounts of say $4-5K on the leftover 09 bikes it will make the new buyers temporarily happy while pissing of existing buyers that routinely paid at or above MSRP. Additionally, the prices on used Harleys would suffer as well. These types of things are not good for brand loyalty and that's the foundation of what Harley stands for, isn't it??

 

I agree with XKnight.

 

I agree with XKnight as well. While I do believe that alot of this stuff is overpriced, at least Harley is consistent which trickles down to all levels of the used market. Keeping existing owners happy with customer service and quality products is important to keeping the brand legendary.

Few brands reach a status such as Harley and Ferrari and it does not do those brands any good to reach into low end markets by slashing prices or producing inferior models. If they needed the income from those markets they would be better off with a subsidiary producing cheaper products.

I looked up the book value of my trade and of the 2001 Ultra that I was going to look at. I was offered a little more than the low NADA value for my Yamaha and a little less than the high value for the Harley. Seeing all the add-ons the Ultra came with I was comfortable with the deal.

 

One thing that Harley can hold over your head is, they own the bank that can get you a loan when other may make you jump thru hoops. so if they're going to finance your bike they don't want to sell it for less, they would make less. As far as used bikes go, look on ebay which used to be the used Harley mecca. There are bikes being listed 5 and 6 times that aren't getting offers. I tried to sell my'03 ultra in the spring and all I got was bs er's telling me I'm asking too much. I was asking less the KBB and what Nada said it was worth. And when did 25k become "high mileage" on a ultra?. Most people are tapped out or are afraid they might get let go and don't want to have to deal with a loan or a empty bank account if they pay cash. the dealer know one day the right guy or girl will walk thru the door and buy any bike they have in there. Then they will make their profit, with out making a panic sale.

 

Real catch 22, Major debt service and Market price presevation.

Me I am pissed that they had to borrow money. I don't care from who for 15%. It is now coming to roost.(Buell and MV). Also I have no confidence in the stock presently because of this decision and forward volume.

I also hope they don't need to borrow from Berkshire again because they just purchase BNSF for cash and stock(not happy with BRK.A or B since they just diluted our stocks worth with that trasaction). Just hope people figure out sooner or later you can not expand or live on borrowed money.

My comment as a recent but now former investor. I believe in investing in America but now stupidity has unsurp loyalty.

 

I recently heard there are 3 major HD dealers in the Atlanta area that are in serious financial difficulty. Cash flow is king, but these three not only have serious problems, but aren't dealing at all. Maybe I'm wrong, but I'd don't believe a Harley is edible, is it? I guess when they're starving they can just eat their excess inventory!