Please Harley...Don't Buy Ducati.. We're Begging You.

Please Harley...Don't Buy Ducati.. We're Begging You.

Opinion: Scott Cochran

If history has taught us anything (as it relates to Harley-Davidson) it has taught us the suits who make the decisions in Milwaukee don't do a very good job of managing competitive motorcycle brands once they acquire them.

According to reports, Volkswagen is selling the Italian motorcycle maker, Ducati and HD has hired Goldman Sachs to work on putting together a $1.67 billion dollar takeover deal.

Volkswagen, whose Audi division controls Ducati maker of the iconic Monster motorbike is working with investment boutique Evercore on the sale which will help it fund a strategic overhaul following its emissions scandal.

Based in the northern Italian city of Bologna, Ducati is on the wish list of private equity funds KKR, Bain Capital and Permira, which are all working on the deal, said the sources who declined to be identified as the process is private.

Indian motorcycle firm Hero MotoCorp and its rival TVS Motor Company initially expressed interest in Ducati but were put off by its price tag and decided to walk away, the sources said.

While we're not disputing Ducati may be worth what HD is offering, we're saying HD invariably screws up the marketing for any brand after the deal is done.

Anyone remember MV Agusta?   Harley bought the brand in 2008 for 109 million dollars, and assumed $70 million in balance sheet debt, and less than 2 years later, sold it, (or rather gave it) back to it's Italian owners for $3,98. 

And had to put $26 million dollars operating cash into the company coffers before the previous owners would take it back.

So, that means they had to pay someone to take MV Agusta back, instead of just closing it down, and writing everything off as a lesson learned.

And if that wasn't reason enough for Harley-Davidson to stay away from sport bike brands, anyone remember Buell? 

Many industry insiders believe Buell, the American home grown sport bike brand could have thrived had HD taken the money it wasted on MV Agusta and invested it in Buell.

The CEO of Harley-Davidson at that time was Keith Wandell and he told reporters the reason the Motor Company got ride of it's sport-bike brands was financial.  

"We were allocating our limited resources to different brands and were starving the Harley-Davidson brand."

Duh?  So with domestic sales slipping, Harley-Davidson suddenly has unlimited resources to gamble on making money on a billion dollar deal with Ducati?

And speaking of gambling.  For a lot less than $109 million, HD could've bought the intellectual property rights of Indian Motorcycles from Stellican (before Polaris even expressed an interest) and buried it in the basement in Milwaukee and they wouldn't be losing the domestic market share it's losing today.  

But, hindsight is 20/20.  So hopefully Harley-Davidson will look back at it's past mistakes.

The simple truth is Harley-Davidson dealers can't sell sport bikes.  Remember when Moto-Guzzi started popping up in dealerships?  That was a disaster. Dealers hated them and hated having them on the floor, and salesmen simply didn't know how to talk to potential Guzzi buyers without seeming disinterested or at worst, condescending.

Now I'm pretty sure if HD does ignore our advice and buys Ducati, they won't try to force them on their dealer base.   I'm fairly sure they'll treat it as a separate legacy brand and won't put it's cruisers in Ducati dealerships.  

But, I wouldn't bet against it.  

At this point, when the press is actually reporting about an American motorcycle company with the history and management skills of Harley-Davidson even considering spending over a Billion dollars to buy a sport bike brand when the deal is about as synergistic as mixing oil and water, I guess anything is possible and the future is entirely unpredictable.

But please Harley....please reconsider.  You might not recover from this debacle.  



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