| Author | Message | ||
     Ratgin |
There was lots of profit in these bikes for the dealership. When i bought mine before the fire sale one dealer was firm on 15,500 for an 08 and would not budge Drove 500 kms and got an 09 for 5000 less. Lots of money to be made but poor sales practices in dealerships where HD sales are first priority. Seeing the same issue with XR1200 line. They sit in the corner all dusty and arnt selling because they refuse to sell them for less then full MSRP. Then because they "dont sell" they wont import the new XR1200X. | ||
| Curve_carver |
Now That I recall my dealer stated he bought 10 of them for 6500k a piece.They sold me mine for 9k. They strongly stressed to me not to disclose this info. They had a hard time selling one and I was the first they have ever sold. They stated we need one to get on the streets and were willing to give me a break on mine if I showed up at quaker state and lube on bike nights for that month. I agreed at 9k and said we have a deal. Keep in mind bulk is the key to price drops. I bumped into the harley salesman a year after. At this point he was laid off. But he said that the bikes were not selling and they were having people showing up at their doorstep for warranty repairs and they sold only 2 bikes. The following month they gave one away at quaker steak and lube in a raffle. The guy sold it for 7k on ebay. I hope I didn't ruffle anyone feathers. | ||
| Jdugger |
When was this Curve? I saw some dealer cost numbers, too, when I bought my second 08 model. I was out-the-door for around $8k (including TT&L), and the dealer actually lost a little money. This was well, well before the closing announcement. By the time of the blowout, dealer cost was obviously quite a bit lower. Even if your numbers are correct, and your number DOES NOT include TT&L, dealer markup is less than 40%, not 200-300% You aren't ruffling any features, I'm just saying your statement about dealer markup isn't accurate. No where even close, in fact. The only thing close to 200% dealer marup is the exaggeration of it you made! | ||
| J_copeland |
In July of 09,I was looking at the 1125R's at MSRP,I told the dealer there was no way I was paying that for a second bike.He came back with a offer of 8,499.00 plus tax and title.One heck of a discount.I decided to wait and got one at the fire sale price.So,I'd say dealer profit was a lot more than 1,000.00 | ||
| Nuts4mc |
From Froggy's post Profit margins aren't as huge on vehicles as it is on consumables like batteries and ink cartridges. quote: what components are utilized on the Buell line and could a HD supplier make the parts for the new division (those parts cost could be leveraged with a lower purchased price as the supplier may see orders for both HD and Buell Funny you say that, right after Buell was bought by Harley, they were forced to switch to things like Showa suspensions, because thats what Harley used. Most likely a very “Bitter Pill” to swallow by the Buell Team – unfortunately it’s what happens when a big fish takes over a little fish…someone was smart enough to see the “Big Picture” and allowed the changes to take effect…( I’ve been taught that the relationship between Big fish/Little fish is more like a Shark and a Remora – they mutually benefit) The only other variables we haven’t discussed are tooling and labor; Tooling can be depreciated by US tax laws, so I would guess HD owns the tooling (big question will be will they pay to maintain it?), Labor to build the “top assembly” can’t be too high as there is an abundance of manufacturing engineers in the plant’s location that would help keep efficiency high. It will be interesting to learn the price of the new bike (1190) …too bad it’s not homologated in time for Daytona….good luck Mr. Buell – we’re hoping and watching for a phoenix type rising. Food for thought guys...big companies make money when you finance the purchase - it's what cause the depression we're in - it's what caused HD to shut down Buell - the dealer margin cannot be high but the incentive to finance the purchase thru HD finance would be - bean counters rule the world - I shoulda been an accountant. | ||
| Freezerburn840 |
Most businesses like the one I work for use the term (gross margin percentage) markup or (gm%). In which you divide the cost of an item. You mark it up anywhere from 0% to 100%. So lets say the motorcycle cost $6000 and you wanted to mark it up 40% you would divide the cost by .60 which would be 10,000. Net percentage mark up you would (times it) by .40 in which case you would sell the bike at 8,400. Net percentage is what most of you are talking about. I don't think Harley is using net. So its a decent figure that harley's cost was around $8,000. That would be around 25 percent profit for Erik and his staff. Net would be 7,500 cost to the dealer (x) by .25. You make more using gm% method. Now my overall thought is Erik made 25% to 30% and Harley made anywhere from 30% to 45%. The manufacturer typically makes less percentage but they make it up in volume sales and if you pump out enough bikes you can do well. Harley may have to eat more costs. Freight, tax, title license etc. Fire sale profits had to be close to their costs maybe 5% to 10%(gm%) big maybe. | ||
| Freezerburn840 |
When you add in financing the dealer wins big time. | ||
| Curve_carver |
Early 09 and the dealer had alot of buells. Heck they still have a bunch of used ones with low miles. | ||
| Court |
Interesting. I'd disagree a bit perhaps . . While Buell did, 3 years after hooking up with Harley-Davidson, change from Marzocchi to Showa I'm afraid folks might not properly understand the dynamics of "why" and would improperly assume Buell incorporated cheap parts. Suffice to say . . . Buell ended up with the same shocks and suspension Ducati would eventually "upgrade" to in bikes like the 749, 999, 1098 and so forth.
HD did however, making at that time something pushing 300,000 bikes a year, had great bargaining power and economies of scale with Showa which uniquely allowed Showa to produce a suspension that other brands, say Ducati, could never sell at a reasonable price absent those advantages. | ||
| Anonymous |
Boy your numbers are so far out it's shocking. Is this really what some people think it costs to build a motorcycle of the caliber of an 1125R? That there is 50% margin for the dealer and manufacturer? It's OK to think that as long as you recognize that you are clueless and aren't even remotely correct. To argue that you are right is pretty f'ng crazy. BTW there were a few Chinese parts on the bike, but that did not mean they are all that inexpensive. For example..radiators. Bought from an American radiator company who had a plant in China...guess who made the profit. | ||
| Curve_carver |
I started this thread out of curiosity to see what people know about the motorcycle manufacturing process. To my knowledge every dealer payed a different price depending on the quantity they ordered. my source simply stated that the cost of a1125r was 6500 a piece on a order of ten. That would give the dealer a profit of 3500.00 and the manufacture a profit of 2000.00 or more. These are just my observations and my sources could be wrong. I would love to know the what the actual base price of an 1125r costed OTD crated . I know Erik Buell Racing won't be able to duplicate the prices we endured through the Harley dealers. The power Harley had with vendors is what made this bike possible. I would like to take a moment to salute Harley Davidson and thank them for producing a bike we could afford as blue collared workers, military personal, journalists, college students, and you cant forget the drunk Harley techs that work on our bikes. :-) In all this time I've been hearing Harley screwed us. But did they? Harley is the company that made this bike even possible. Think about it I really hope that the new 1190RS will be an entity of it's own and not a reflection of the 1125r. I would hate to see people buying a bike that had a previous msrp of 6500.00 at a lot of ten but instead pay 20000.00 or even 40000.00 for a RS . Why would any consumer pay for a torn down and rebuilt engine "1190" when they can get a Heavily equipped KTM for less than 20k. Well I guess the tail of the RS tail looks a KTM ? | ||
| Froggy |
Curve, sometimes dealers buy them from other dealers. It is possible that your dealer got a boatload of bikes cheap from another dealer that did not want to continue selling Buell and wanted to cut their losses. | ||
| Dirty_john |
Lucky you lot in the USA, The MRP in UK was £8500 Sterling when I bought my 09 in Nov 08. Apart form some minor issues it makes me grin as much if not more than my Firebolt | ||
| Johnnys999 |
The good news for me I sold my 1125CR last week for $6K, I paid $6.1K in Nov 09 for it. So I rode it around (plus T&L) for over a year for only $100. I did put some mods on it, maybe $250 so at this time if you bought during the fire sale in the low 6s then resale is OK, thats if you can attract a buyer. I really liked the bike but I wanted more of a cruiser and the ongoing stator and parts issues didn't help matters. I think that will only get worst. | ||
| Court |
>>>>I started this thread out of curiosity to see what people know about the motorcycle manufacturing process. So . . . . . what did you conclude? How much do folks know about the motorcycle manufacturing process? How, after reading this, credible do you feel your "source" was? | ||
| Curve_carver |
Since harley had an enormous amount of venders to choose from I'd say that they can be produced for right around 4500.00 . That puts 10000 bikes made at oh 20,000,000 profit. And by the time they payed everyone there probably wasnt much left. | ||
| Curve_carver |
They weren't selling em for 6500.00 at the fire sale for no reason. Thats what the dealers probably paid. This correlates with my sources figures. | ||
| Jdugger |
Curve, The firesale was done with manufacturer's rebates. Seriously, I think your numbers are way off. The only piece of data I have to support that is the Gross Margin figure quoted in HD's public SEC filings. That was around 30%. That, and it would be incredible for a vehicle manufacturer to have even a 100% gross margin. | ||
| Court |
>>>Seriously, I think your numbers are way off. My personal opinion . . . is that they are off by several orders of magnitude. I think the "source" is ill informed. But then . . . I'm a construction worker. | ||
| Ratbuell |
The fire sale was HD corporate GIVING the dealerships $5,000 for every 1125 they sold. Remember that onepointwhatevermillion HD spent to close Buell? Where do you think the $5k came from? It was a Factory Incentive. It had NOTHING to do with the actual cost of producing the motorcycles. It was solely an expense they chose to incur in the name of getting "those" motorcycles out of their showrooms. Call it marketing, call it whatever you want...they CHOSE to spend it. The $5k was put on the dealer's ACCOUNT as a credit. See...dealers have a floorplan account with HDFS, that allows them to stock motorcycles for sale. They make payments on that account just like you and I do as the end consumer. Rebates and spiffs are credits to that account. Dealers didn't get charged "less" for an 1125...they just received a bonus to their account when they sold one. There were no "quantity discounts" as far as I'm aware. Bike cost was bike cost was bike cost. Period. ...I love internet assumptions.... | ||
| Court |
There was no "quantity discount". In fact, I think if you looked at the dealer contract you'd find that may not be allowed. Try telling your HD dealer he/she is paying more than the shop down the street. Don't take this to mean that HD doesn't play games for favored dealers. The above explanation is accurate in my personal opinion. Be aware that there were LOTS of bikes sold for a LOT less than the fire sale prices. HD's mandate was to "get rid of the inventory". It's already been written off and they just wanted to clear the physical inventory. Some folks got some REALLY good deals. | ||
| Stirz007 |
Would someone please drive a stake through the heart on this string? Surely, the production cost of an 1125 was established at some point, so the list price could be set. So....what was the production cost of an 1125? J-money. | ||
| Curve_carver |
I still dont know jay. I figured a buell historian such as court would know this. | ||
| Jdugger |
Curve, What we need is a Buell P&L statement. If I had that I could tell a LOT about Buell's business. I could make some darn good guesses at gross margin, ratios of labor to parts content in the cost of the bike, actual dealer cost, engineering costs, and so on. It's the financial Rosetta stone. Since HD didn't report Buell independently, outside of someone like Flickinger or EB himself posting it up, I'm not sure how we would know. | ||
| Court |
>>>I figured a buell historian such as court would know this. I'm a construction worker and not terribly bright. | ||
| Blake |
You don't set the price of a product based on cost. You price it at what folks are willing to pay for it. No more, no less. If the margin isn't there, you stop selling it. | ||
| Ratbuell |
I'm a construction worker and not terribly bright. But you're damned good with a box-o-coffee  | ||
| Stirz007 |
I can't quite 'buy' that last statement, Blake. Maybe it just came out wrong. Any business, that wants to stay in business, has to at least break even. Under that premise, you would ALWAYS consider cost before setting price. Then try to maximize your margin by setting the highest price the market will bear. Another way of looking at it is to consider what volume you can expect at a certain price point. Then you have to develop a program that will deliver the product at a low enough cost to make a decent margin. Cost and price are not mutually exclusive, but closely linked in any business model (except non-profits, or subsidized shops). | ||
| Stirz007 |
After further thought - I didn't think of the loss-leader scenario: you set a price to get market share or penetration, with the idea that as you establish yourself in the market, volume increases, cost per unit decreases until you pass break-even to profitability. Takes pretty deep pockets to do that sometimes. Maybe now the light goes from dim to lit: I guess my earlier question should not have been "what was the production cost?" (because it would vary with number of units made) to "what was the target production cost/unit for the initial production run?" I'm thinking that HAD to be part of the business plan.... Now whether the target was actually hit is another question for another day. | ||
| Black |
I once heard a similar discussion on automobile profit margins. I was left with a quote, "Only God, the manufacturer, and the IRS know the actual costs." Hi Ratbuell....when are we going riding? |
