Finally! Harley in bid to acquire Ducati | FerrariChat

Finally! Harley in bid to acquire Ducati

Discussion in 'Motorcycles & Boats' started by rdefabri, Jun 22, 2017.

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  1. rdefabri

    rdefabri Three Time F1 World Champ

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  2. Wade

    Wade Three Time F1 World Champ
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    I know that you've been advocating this for awhile, and see it as a benefit to HD. But ultimately it will come at a loss to Ducati.

    I'm sensing the beginning of the end (if Harley buys Ducati).

    Can you imagine the usual HD types attending World Ducati Week?

    http://www.ducati.com/world_ducati_week.do
     
  3. rdefabri

    rdefabri Three Time F1 World Champ

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    Keep it as a wholly owned subsidiary - if Harley is smart, they leave Ducati alone. That's the way I would play it. I see some similarities in this as with the debate on Le Mans / manufacturers - this is business. Harley needs to grow, and their core has single digit growth (at best). They can expand into geographic markets and/or non-core markets (at one time, Harley owned Holiday Rambler).

    The geographic expansion, in my opinion, is difficult for a brand like Harley. It's uniquely American in terms of appeal, and while I know they sell in Europe, I think it's a bit like Pachinko machines in the US - limited market.

    If they need to move more units, and geographic expansion won't deliver the double digit growth, then they need to move into non-core markets. Sport bikes are the logical way forward. We know from Buell that Harley can't have a direct connection - Buell bikes were awesome, but they were impacted by the Harley relationship / engines / dealer network. It simply won't work.

    They need a brand that is known, that is desirable, that sells in volume (read - NOT MV Agusta :D), and has synergies with Harley (unique heritage, little product line overlap, twin cylinder engines, etc).

    HD isn't a stupid company - they've made mistakes here before and I'm hoping they've learned from it. DO NOT SELL DUCATI BIKES AT HARLEY DEALERSHIPS!!! The company MUST remain a wholly-owned subsidiary, without a lot of interference from the parent.

    It can work - I'm hoping it will.
     
  4. Wade

    Wade Three Time F1 World Champ
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    Sure, they may try all of that at first. But then the inevitable cost-reducing consolidation ploys come to play.

    HD's marketing strategy has always been to buy and absorb, until it doesn't work. Then dissolve the acquired entity thereby "forcing the market to buy HD" (where the profit margins are).
     
  5. rdefabri

    rdefabri Three Time F1 World Champ

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    Oh yes, a lot of companies fall prey to this. I'm really surprised at how well VW has managed their brands, it's a lesson others should look at. Lamborghini has thrived under VW and they have largely left it be (outside of engineering support).

    My guess is that HD is smarter than this and won't mess with Ducati too much. The lessons of Buell and MV Agusta are on their mind, and they didn't integrate Holiday Rambler (although that was under different leadership).

    Time will tell - they need to win the bid first. Let's see what happens!!!
     
  6. Texas Forever

    Texas Forever Seven Time F1 World Champ
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    Never happen. Why would Harley buy Ducati and leave it alone? Do you think they are making a financial investment? Besides, while I'm sure there are some stand alone Ducati dealerships, they are rare. The numbers are not there from a dealership perspective. Moreover, do you think HD is going to let potential Ducati buyers walk into Honda dealership? Never.
     
  7. GuyIncognito

    GuyIncognito Nine Time F1 World Champ
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    at least in the US, most Ducati dealers are also BMW dealers. I've always wondered why BMW didn't buy them. although now their product lineups are too overlapping.

    HD buying Duc makes some sense, they don't overlap at all, could get some synergies, Ducati has all the latest tech in their bikes that Harley will eventually need to adapt, HD has a big problem with boomers aging out of bikes and young(er) people not being into the brand.

    My guess is if the latest attempt (Street 500/750) by Harley to get new/younger riders doesn't work, they'll have to buy someone or they'll be a takeover target themselves.
     
  8. Texas Forever

    Texas Forever Seven Time F1 World Champ
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    Texas!
    Be kinda fun to see HD and Duc be sold side-by-side.
     
  9. rdefabri

    rdefabri Three Time F1 World Champ

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    Of course they are making a financial investment! I just spelled it out above, it's really not that complex.

    HD is a public company, it needs to grow and grow profitably. It can ONLY do that by:

    - expanding into new geographic markets
    - expanding into new product markets

    Expanding geographically with their current product line is extremely limited for them. They have strong share in the heavy cruiser market in the US and in APAC, but very small in EMEA. The chances of them increasing the share enough to materially impact the top line growth is low...market is largely saturated.

    However, they could increase that share if they expand their product line. Face it - they need to have a comprehensive offering or they are in trouble. Even Porsche realized they needed to expand (hence the SUVs), HD is not a unique case. Sport bikes are core business, but not a core product offering for HD...Ducati fits that mold perfectly.

    They did not mess with MV Agusta at all. Nor did they with Holiday Rambler, and Aermacchi at the time. History does not show they will try to meddle with traditional Ducati business, and my gut says they won't.

    You say it's never going to happen, but they've instructed Goldman Sachs to broker the deal. I think they are pretty serious about this.
     
  10. rdefabri

    rdefabri Three Time F1 World Champ

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    That would be the kiss of death. No one is walking into a HD dealership to buy a Ducati. HD knows this, it's a big reason why Buell failed.

    They did NOT put MV Agusta bikes in HD dealerships (at least not in the US). I know the Ducati dealer network imploded a few years back, but I can't see them doing this long term.
     
  11. Texas Forever

    Texas Forever Seven Time F1 World Champ
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    You misunderstood. I'm sure HD will try to close the deal (particularly with Goldman advising). This is a classic case of a mature company that realizes investing in itself is a waste of time. But, if they close the deal, I can't see HD letting potential buyers walk into BMW, Honda, Yamaha, and so on dealerships. I came "this close" to opening a BMW dealership several years ago. Every BMW dealer I talked to about adding Ducati, said, "Don't. The additional traffic compared to the PIA of dealing with Ducati ain't worth it."
     
  12. Texas Forever

    Texas Forever Seven Time F1 World Champ
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    Sorry, MV is just a pimple on HD's butt. HD sells 150k - 200k units a year? MV sells what? If they close the duc deal, I can see them rolling them up.

    Moreover, HD has required dealers to spend a lot of money upgrading over the years. Like an idiot, I passed on a HD dealer for $700k in 2001. I think the upfront money today is more like $2 million, maybe more. Bottom line is you don't see any Hell's Angels hanging out at HD dealerships anymore.
     
  13. rdefabri

    rdefabri Three Time F1 World Champ

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    You are right, they won't let people walk into other dealerships - Ducati's sales channel is crap, and they need help. HD will surely do something there to build that out, they have to if they want it to succeed in the US. The easy answer would be to sell them through HD dealerships, but I don't see that working out. Different clientele all together, and it will bite them in the ass. I might be wrong here, but I can't see them making the same mistake(s) they've made in the past...they know better.

    But that's not what I meant about them messing with the company. I mean more about the production and strategy of the product. They won't bother with that, they haven't ever done that with any company they've owned OTHER than Buell (and that failed).

    I see it much like VW and Lamborghini. I'm pretty sure you CAN'T go into a VW dealership and buy a Huracan!
     
  14. rdefabri

    rdefabri Three Time F1 World Champ

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    I agree but they still market the image to bring in traffic. The traditional HD buyer isn't buying a Ducati, and you won't get the Ducati buyer walking into an HD dealership.

    Plus, as you pointed out (I know at least one HD dealer well), they made a lot of dealers invest in upgrading. Those that didn't were pushed out. It didn't come without some heartache though, and I don't think you'll easily convince dealers to carry product that won't move...it's a cost to them and they'll be skeptical.
     
  15. rdefabri

    rdefabri Three Time F1 World Champ

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    By the way, I think Ducati moved about 55,000 units in 2016? Their market share in the US is extremely low, so I'm not sure HD even cares about the brand in the US - so long as it performs well on a global basis.

    If I'm not mistaken, they are profitable units - on par or close to HD on a per unit basis. Makes very good business sense IMHO, even without building out a dealer network.
     
  16. Texas Forever

    Texas Forever Seven Time F1 World Champ
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    Problem is, unless things have changed, the only way Ducati can only work outside of being fluff in a major line dealership is to be sold through a boutique dealer. Not saying HD doesn't have the culture to do this, but...
     
  17. Texas Forever

    Texas Forever Seven Time F1 World Champ
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    Maybe the ROW market is the key. The US is a tough market for non-cruiser bikes. When I looked at the BMW dealership, BMW had a roughly .005% market share in Houston. Dallas was a little better, but not by much.
     
  18. rdefabri

    rdefabri Three Time F1 World Champ

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    More we discuss it, more I see this being true. I haven't found the exact numbers, but their market share in the US is very, very low. They are big in Italy and in Argentina (!!!), I haven't found much else.

    But if all they care about is ROW, then surely they'll leave it be.
     
  19. BMW.SauberF1Team

    BMW.SauberF1Team F1 World Champ

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    That sucks that VW doesn't want to sell it, but has to due to the emissions scandal and fines it needs to pay.

    I know Ferrari/Fiat won't buy it, but I always felt that would be a good place to sell the Ducatis. A combined Ferrari, Maserati, and Ducati store...
     
  20. rdefabri

    rdefabri Three Time F1 World Champ

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    I do think Ferrari would be a good parent for Ducati - there's a history there!!
     
  21. Wade

    Wade Three Time F1 World Champ
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    It's a given, HD needs younger customers. So they're intent is to buy Ducati customers and turn them into HD buyers instead. Harley wants to sell Harleys, nothing more.
     
  22. rdefabri

    rdefabri Three Time F1 World Champ

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    I'm sure they do, but they know the market is saturated - growth in heavy cruisers is single digits.

    That's why they are going after Ducati. They aren't going to rebrand Ducati, and we've established that the Ducati dealer network is worthless, if not dead.

    It's all about corporate growth - 55,000 profitable units per year in ROW markets is where it's at.
     
  23. Wade

    Wade Three Time F1 World Champ
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    See? You've confirmed exactly what I'm saying, buy and absolve Ducati.

    From my first post here:

    "I know that you've been advocating this for awhile, and see it as a benefit to HD. But ultimately it will come at a loss to Ducati."

    Cruisers aside, what HD product do you think Ducati fans and customers would be interested in as an alternative to a Ducati.

    But speaking of cruisers, do you think that XDiavel buyers would prefer a "Geezer Glide"? ;)
     
  24. rdefabri

    rdefabri Three Time F1 World Champ

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    How did you interpret that from what I posted? :D

    They will buy Ducati and leave it as a wholly owned subsidiary. In doing so, they just "grew" by 55,000 units per year, quite profitably I might add. If they do NOTHING, they don't have to worry about a dealer network in the US, the brand is established in markets they won't succeed in (e.g., Europe).

    They won't dissolve or absorb Ducati. It operates just like it did under VW, just a different parent.
     
  25. Wade

    Wade Three Time F1 World Champ
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    We shall see, one way or another. ;)
     

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