This past weekend during Berkshire Hathaway’s annual meeting , CEO Warren Buffet, one of the most successful investors in the world (he is worth 47 billion and receives only a $100,000 salary from his company), said that the US economy is rebounding quickly and that the recovery is accelerating. The same way it takes 2 or 3 quarters to be sure we entered in a recession, it takes the same time or more to realize that we are out of one. The percentage of unemployed (always a lagging economic indicator) is probably going to remain relatively high during a couple of years, but it is worth listening to the so called “Oracle Of Omaha” when he tells you that things are overall improving at a very fast pace. At the same time I am informed that the used Harley-Davidson market is getting strong, much stronger than last year at the same time, and the warmer weather all over the country can’t be the only reason.
Logically many people have preferred to keep a roof above their heads than buy a new motorcycle or keep one and continue to make the monthly loan payments. Consequently we all know that the sales of new and used bikes collapsed, that the huge number of pre-owned bikes for sale or repossessed overwhelmed Harley dealers parking lots. In a former post I predicted that as soon as the official “Consumers Sentiment Index” will turn strongly positive (it happened in March), prices of used bikes will stabilize and increase again to their pre-recession values. The fear of losing their homes and/or jobs is fading away for many Americans. But still traumatized by our deep recession, they learned a valuable lesson. Not to overspend and always to look for value. “Buy what you need, no more as much as you can.”
Financially stable bikers are rushing to Harley dealers looking for bargains, realizing, like for automobiles, that a used motorcycle with low miles, excellent mechanical condition and often still under warranty let them save 25% to 50% versus the same new season model carrying very few, if any, noticeable improvements. From north to south and east to west, many Harley dealers report strong used bikes sales with some complaining of a shortage of them. As a matter of fact some Harley dealers begin to worry that the number of new bikes produced being much lower in 2011, they will not have enough used bikes on the floor to keep their business afloat.
In a former post 3 months ago I predicted that the used market would rebound first with less abundance and firmer prices. And when the used bikes market will become a sellers market, you can be pretty sure that the fewer new models produced by the factory will become again very desirable and sell very well on the showroom. I am convinced that Harley keeping a tight rein on production is the right approach. In addition, and as far as I know, it’s the first time that Harley-Davidson is going to make his new models available to dealers in June, extending their 2011 models selling season. A very smart decision. All this to tell you that I am very confident that Harley-Davidson, with a few more bumps along the way and probably the closure of many more weak dealers before 2010 ends, is going to recover from our recession much faster than what many of you may still think. Let’s just hope for Harley exports that the turmoil in Greece, Portugal, Spain and Ireland, countries already in big financial trouble, will not spread all over Europe. To follow…