Used Harley-Davidson Models Back In Big Demand

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…

16 Responses to “Used Harley-Davidson Models Back In Big Demand”

  1. 1 Adam May 4th, 2010 at 7:32 am

    Hope you are right Cyril. I think you are right!

  2. 2 Joseph Abry May 4th, 2010 at 9:06 am

    I know a couple of dealers doing pretty good, but a lot are still going to close because financially stretched. You know, the ones who entered the “eldorado Harley market” after year 2000. Consolidation…

  3. 3 Jason May 4th, 2010 at 9:13 am

    I agree on the slow recovery starting with used bikes, but only if it’s placed in a 2 year time context.

  4. 4 ROCKSTAR May 4th, 2010 at 9:51 am

    Warren is talking his book. He’s also praying.

  5. 5 Darin Maltsberger- Instructor@MTI May 4th, 2010 at 12:44 pm

    Great article. I agree with your stance on Buffet. He knows how the economy works,and whether we like what he has to say or not…….he usually has a good grip on what’s going on in the financial world. My students have to take an intro to business and finance course here and his philosophy and business style is among the items that they study. Thanks again for a good update.

  6. 6 fuji May 4th, 2010 at 2:57 pm

    Warren Buffet has the unique ability to make money from other peoples mistakes and greed and does it wth a scensc of humor / SMILE.!

    Time really does make things better and people wiser and cautious. Most of us.

  7. 7 Vision May 4th, 2010 at 8:27 pm

    WB and CH are both knowledgeable guys who put a lot of time and thought into any predictions so I am very happy to see this post. Just the same it is skepticism that has allowed us to survive in this economy so I am gonna hold onto my doubts for the prescribed 2 or 3 quarters.

  8. 8 Seven May 5th, 2010 at 2:18 am

    I love the way a slightly negative post about the US economy gets all the Obama haters out and receives on average 40 + odd comments almost instantly, but anything slightly positive those same people are conspicuous by their silence..

    Must be all the Obama haters are in their shops working hard now the economy is picking up.

    Change, you got to love it.

  9. 9 cwglide May 5th, 2010 at 11:28 am

    Great post, i to agree with what HD decision to scale down production from a value perspective. The the recovery timing of when to ramp production back up to have new models avail to dealers will be the tricky thing i think.

  10. 10 Skipper May 6th, 2010 at 1:09 pm

    I am sure that Warren Buffet is going to put the word out – true or not – that used Harley’s are in demand. He has lent HDFS 650 million dollars at 15% interest to cover there loss. HDFS is repossessing used Harley’s at a fanatical pace due to all the bad loans they made. With all these extra used bikes coming on the market it is sure to depress sale prices. HDFS would be smart to hold on to all the repossessed bikes until things cool off. Right now the newspapers are flooded with used Harley’s. These are all late model bikes with low miles. Warren Buffet wants his 650 million back so I am sure he is going to tell the world that used Harley’s are selling good.

  11. 11 James Pashley May 6th, 2010 at 1:32 pm

    Skipper. You don’t know how to read an article nor you know about finances. Warren Buffet never said that used Harleys are selling! He can’t say anything for legal reasons (SEC). That Harley is doing well or not, Berkshire Hawathay receives 15%. And Warren Buffet doesn’t want to be paid back from the principal, but wants to receive 15% as long as possible. Don’t comment if you know zip.

  12. 12 Robert Toms May 6th, 2010 at 2:52 pm

    Warren Buffet will have to receive 15% as long as possible because Harley Davidson does not have the money to pay back the principal.

  13. 13 Shooter May 10th, 2010 at 11:58 am

    Harley-Davidson is going to make his new models available to dealers in June,??????
    wonder how true this info. is?

  14. 14 Nomad May 12th, 2010 at 1:08 pm

    Check out the Quad City Times. There are all kinds of used Harley’s for sale at very reasonable prices. Most are late model low mileage. The Des Moines Register is full of used Harley’s cheap…

  15. 15 Hank May 15th, 2010 at 12:01 am

    What rebound Cyril?… tell that to the 3 guys we had to lay off this week!

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