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Screen Shot 2016-08-18 at 11.26.49 AMThe “spin” is that Harley-Davidson reached a settlement with the U.S. Environmental Protection Agency (EPA) regarding the sale of its Pro Super Tuner — an aftermarket tuning product used to calibrate motorcycles intended for off-road and closed-course competition.

The 411 is:  Harley-Davidson agreed to no longer sell its competition-only tuner in the U.S.  They also agreed to pay a $12 million civil penalty and spend $3 million on an air pollution mitigation project.  In addition, Harley-Davidson will also have to buy back and destroy the roughly 340,000 “illegal” devices that it sold.  As part of the mitigation of air pollution under the settlement, the motor company agreed to work with an independent third party to replace conventional wood-stoves with cleaner-burning stoves in designated communities, thereby improving future air quality.

Important to note is that the settlement is not an admission of liability by Harley-Davidson.

The EPA took legal action and alleged that by selling the Harley-Davidson Pro Super Tuner through its U.S. dealer network, the motor company enabled dealers and customers to tamper with motorcycles used on public roads. Harley-Davidson disagreed with the EPA’s position, noting that the tuner was designed and sold as an after-market, competition-only product used to adapt engine parameters for use with Harley-Davidson after-market equipment.  The product was sold for more than two decades, under an accepted regulatory approach that permitted the sale of competition-only parts.

Screen Shot 2016-08-18 at 11.28.51 AMIs this government overreach or the administrations regulatory process/approach to public protection in the race/competition-only arena?

Ed Moreland, Harley-Davidson’s Government Affairs Director contends that it was legal to use the Pro Super Tuner in race conditions in the U.S., however, “concern for our U.S. customers and dealers weighed heavily in reaching this compromise with the EPA…”by settling this matter, we can focus our future attention and resources on product innovation rather than a prolonged legal battle with the EPA.”

To settle or not to settle a case often comes down to a corporation’s litigation culture. Harley-Davidson likely determined that legal fees and the possibility of liability/payouts at the end of a losing legal battle meant it was more cost effective to capitulate, remove the product for sale — settle for $15 million and move on.

Harley-Davidson, is one of many suppliers in the aftermarket race/performance parts industry and the legal tactics of the EPA, along with the potential consequences of prolonged legal action with manufactures will have a chilling effect on the performance parts market.

It should be noted that Harley-Davidson’s corporate stance is and has been committed to meeting or exceeding all emissions requirements for its motorcycles in every market it serves.  They have always included clear product labeling of competition-only products and detail on what performance enhancements are considered street legal and for competition-use only, and called out the legal consequences of tampering with emission controls and components, and what enhancements would void the vehicle warranty.

Photos courtesy of H-D.

All Rights Reserved (C) Northwest Harley Blog
H-D new engine -- “Milwaukee-Eight”

H-D new engine — “Milwaukee-Eight”

According to the rumor mill, Harley-Davidson is set to release a new engine in certain touring models for 2017.

The new engine is called the “Milwaukee-Eight”.

The engine will have four valves per cylinder and be increased to 107 cubic inches, or 1753cc.There have been seven distinct engine designs from the motor company since 1914, and Harley-Davidson has been consistent with air-cooled, pushrod driven, two valve per cylinder designs.  The new engine is the eighth in the line and may explain the naming convention. The new engine will be air cooled, but the increase in the number of valves will help make the new engine compliant with increasingly more stringent emissions laws.

The official unveiling is reportedly to occur in a couple of weeks when Harley-Davidson rolls out the new 2017 models.

Photo courtesy of Harley-Davidson and motorcyclelife.com.au

All Rights Reserved (C) Northwest Harley Blog

Screen Shot 2016-08-10 at 11.42.14 AMI’m a bit late getting this information out, but you can read the company press release HERE.

From my experience you know it’s going to be a long day when the financial perspective includes statements about how we’re in challenging times…  “Political, economic and cultural forces working against the confidence and security for people everywhere in the world” — whoa, roll the eerie and scary sound effects!

Here is a quick synopsis:

The Bad:

  • Worldwide sales for the quarter were down due to significant declines in the U.S. industry which was a surprise and far weaker than expected. Worldwide retail sales of new Harley-Davidson motorcycles in Q2 were down 1.9%.  U.S. retail sales were lower than expected on surprisingly weak industry results.  Q2 retail sales in the U.S. were down 5.2% versus prior year, behind weak U.S. industry sales.
  • U.S. retail inventory was up at the end of the second quarter.
  • Manufacturing expenses were higher than expected, driven by startup costs related to the implementation of a new ERP system in Kansas City, and costs associated with plant retooling.  In addition, plant efficiencies were lower than expected due to lower production given soft sales in Q2.  This is an overly simple statement because in reality it’s complex planning and execution, including numerous down days, inventory bridges and careful new model ramp plans.
  • The motor company stated they are taking steps to lower expected 2016 shipments which is largely due to continued pressure on industry growth in the U.S.  Third quarter shipments are expected to be approximately flat to down 9% versus 2015 third quarter.

The Good:

  • Revenue was up slightly.  Net income was $280.4 million on consolidated revenue of $1.86 billion compared to net income of $299.8 million on consolidated revenue of $1.82 billion in last year’s second quarter.
  • Q2 market share of 49.5% in the U.S., was up a strong 2.0 percentage points. The gains came in all segments, Touring, Cruisers and the Street/Sportster segment size of motorcycles. And it came from all seven sales regions in the U.S. The market share gains were over double the nearest competitor and came largely at the expense of Japanese competitors.
  • Retail sales in international markets were up in Q2 in all regions except Latin America (Brazil).
  • The company added six new international dealerships in the second quarter and has a goal to add 150+ international dealers over the next 4 years.

Given this current environment one could wonder if Harley-Davidson is positioned appropriately for the flat/declining industry which seemed to surprise them in Q2 — management states they are prepared.

Full Disclosure:  I have NO personal stock holdings in HOG or plans to procure any.

Some parts of the above text are attributable to the Seeking Alpha transcript on July 28, 2016.  Photo courtesy of Harley-Davidson.

All Rights Reserved (C) Northwest Harley Blog

Jesse James And The NRA

Screen Shot 2016-08-10 at 10.42.54 AMNot long ago Jesse James of West Coast Chopper (WCC) fame left California for the more gun-friendly state of Texas.

On the motorcycle front there’s no denying that he is a master marketer and craftsman.  But, motorcycle craftsman to custom firearms entrepreneur?  Not everyone was thrilled.

Keep in mind that it’s been 16 years since Discovery channel chronicled his every move in Motorcycle Mania.

Meanwhile, some in the firearms community were reluctant to accept his custom line of guns (JJFU — Jesse James Firearms Unlimited) as anything other than being overpriced “customization.”  But, hand-made firearms blended with multiple layers of different metals in Damascus style craftsmanship is an art form and now with months of product backlog after a couple years of forging his own work, those allegations don’t hold true.

Now the National Rifle Association announced a new licensing deal with Jesse James that will venture into Second Amendment-themed apparel with a branded clothing line called NRA Originals.

The Jesse James “outlaw persona” has without a doubt gathered a fan base over the years and one the NRA is looking to tap into.

Photo courtesy of NRA Originals web site.

All Rights Reserved (C) Northwest Harley Blog

You Are What You Ride

Screen Shot 2014-06-04 at 2.35.53 PMDo you agree with the adage — “You are what you ride?”

While I don’t claim the axiom is foolproof, there are many observable examples that support the concept — from the successful lawyer driving to the office in a tire-shredding German sedan and then rides a chopped and stripped down Forty Eight on the weekends, to the general contractor who most days is in a tool-ridden F-250, but prefers to ride a CVO Limited, the grand American cruiser for the long road trips.

I fell hard for Harley-Davidson (over 20 years ago now) and it took me more than three models later to acquire the current riding spirit of the Road Glide.

I’ll admit it.  I enjoy the attention that comes with owning motorcycles of the Harley-Davidson caliber — parking lot discussions and drive-by salutations from strangers.  Sure it sounds pretentious, but I’ve spent way too much time behind the handle bars of a Honda and Yamaha to resist metaphorically blowing my own horn.

Right or wrong, many of us place a great deal of importance on what we ride. Critiquing others freely, we are likewise judged by the sheet metal of our ride.  Because, like it or not, motorcycles are a reflection of ourselves — a view into our wind in the face wandering soul.

Think about it.

We often purchase what fits our current character and life status. Everything from the color to the style and model is carefully and deliberately selected.  Much of our riding and our life for that matter, is spent developing this ride persona — and it evolves as we do.  Our environment may change from year to year where a mortgage or a kid in college influences what sits in the garage — as would the line of work, the economy, the community and our circle of friends.  Whether we currently own the motorcycle of our dreams does not mean the statement is any more or less true.

As we know, not everyone can live with a Harley-Davidson status symbol — whether they intended to or not. Just go to any dealer and look at the low-mileage castaways in the used area. Those owners moved on to a more practical ride or abandoned the entire motorcycle “lifestyle.”  An association with a Harley-Davidson motorcycle is an extension of ourselves and a natural consequence of the freedom of the road culture. Like clothing, we dress in leather, steel and rubber, the same as we do with cotton or silk. Color, texture, design and shape — we’re being seen in public with our best “outfits.”

But, there is one great equalizer for all this pomp and circumstance activity — the gas station!  It’s the one place where we gather like creatures in the desert at the waterhole, replenishing empty tanks. The perfect spot to critique both motorcycle and rider while staring through polarized shades at the others from a distance.  I might dismount and swipe a credit card at the pump as fellow bikers draw conclusions based on my re-fueling habits.  I’m not bothered by that — after all, I’m doing precisely the same thing they did just minutes earlier.

Vanity comes in many forms, and even the modest will present their motorcycle with some defiance — like wearing blue jeans to a formal event.  It’s just a different perspective.

You may deceive society by how you look and the way you dress, your manner of speech and education, the neighborhood you live in or the reach of your bank account, but none of this really matters in a material world.  Because in that moment of judgement, you are inevitably what you ride.

Photos courtesy of H-D
All Rights Reserved (C) Northwest Harley Blog
Indian Motorcycle 2017 Line-Up

Indian Motorcycles

Could this be a historic mark on Sturgis?

Seventy-five years after Ed Kretz dominated the first motorcycle race on the sands of Daytona Beach, Indian Motorcycle announces the 2017 line-up just days before the start of the 76th Sturgis Motorcycle Rally and just hours before Harley-Davidson’s Q2’16 financial results.

Indian states the 2017 lineup includes the recently released Scout Sixty, Indian Springfield and Chief Dark Horse models with new color choices.

A new and the industry’s largest and brightest touch-screen information and entertainment system has a 7-inch display with turn-by-turn navigation, Bluetooth audio and USB flash drive support. The Chieftain bikes come with 100 watts of audio, while the more expensive Indian Roadmaster has 200 watts.  The screen is glove compatible with two-finger touch capabilities, according to the company.

Indian has grown at a brisk pace, introducing nine new models since its relaunch in August 2013.  The motorcycle industry is looking to be flat this year, so Indian and Harley-Davidson are in a share battle.  For the full year, Polaris sees motorcycle sales increasing in the high teens on a percentage basis.

Time will tell if it’s a brand, a dealership or a bike thing as the two companies slog it out in the back half of the year.  On the surface it looks like Indian will once again challenge its main rival.

If you are headed to the 76th annual Sturgis Motorcycle Rally,  riders can view the entire new 2017 lineup at the Indian Motorcycle Factory display on Lazelle St. or experience them firsthand with a Factory Demo Ride at 2100 Whitewood Service Road (I-90 at Exit 30) from August 6 – August 12 from 9 a.m. – 5 p.m. daily.

Photo courtesy of Indian Motocycles.

All Rights Reserved (C) Northwest Harley Blog
Sturgis Rally 2016 -- 76th

Sturgis Rally 2016 — 76th Year

Life is about choices. What to wear, what to eat, where to ride… And if you pondered each one in advance, trying to get it exactly right, you’d be left far behind and barely make it out of your house.

There’s something unique about touring by motorcycle whether it be spontaneous or calculated.  Some riders want a state-by-state listing of the best motorcycle roads with in-depth descriptions of each highway and ratings for the road’s scenery, surface quality, and a description of the best greasy food stops.  They obtain motorcycle maps, get motorcycle trip tips, reviews, suggestions, and more.  Others are just fine to point the front wheel in a direction with back roads, freeways and cornfields without ever looking at a map.

I’m having some personal restlessness and feeling a bit starved for rides this year. I was aiming for Laughlin, Sharkweek/Sturgis and Reno, but circumstances eliminated the first two.  I don’t need to worry about Reno, yet. Although, when I last looked, I see all the local hotels have already raised their rates for those dates.  Then I remind myself that the best rides I take are never the trips to any of the big rallies anyway.

And speaking of the heightened motorcycle adventure called Sturgis (August 6-13th) — prep is in full swing for the 76th Rally celebration which starts in a couple weeks.

Last year Harley-Davidson announced that the motor company is now the “official motorcycle” of the annual Black Hills Rally in Sturgis, South Dakota (through the year 2090!). And until November 2015, nobody had ever successfully trademarked the name of a city, but Sturgis Motorcycle Rally, Inc. is the official sponsor of the Sturgis Rally and it has trademarked “Sturgis,” “Sturgis Motorcycle Rally,” “Sturgis Rally & Races,” “Take The Ride To Sturgis” and “Sturgis Bike Week.” The corporation has also trademarked the official Sturgis rally logotype or picture mark. The oldest of these trademarks dates to 1997 and the most recent was registered in 2011, just before their suit was filed.  The Sturgis Motorcycle Rally, Inc., won that trademark infringement case against Walmart.

But, I’ve moved off topic where every American should try at least once the Legendary Steak Tip Dinner at the Loud American Roadhouse (no colors policy strictly enforced).

Harley-Davidson dropped a press release to outline all their plans at the 76th Sturgis Rally (HERE).  A quick re-cap is:
  • The Harley-Davidson Rally Point is a their permanent year-round space in Sturgis that will feature events and live music daily from the stage.
  • Kick-off Party for the 76th Sturgis Motorcycle Rally, Friday, Aug. 5, at 3 p.m.
  • Rides:
    • Mayor’s Ride featuring Grand Marshal Ben Bostrom, Monday, Aug. 8.
    • Harley-Davidson Editor’s Choice Bike Show, Tuesday, Aug. 9- Registration 8 a.m./Awards 4 p.m.
    • First Ever Angel’s Ride, Friday, Aug. 12 – The number of women riders is on the rise.
    • Free Motorcycle Demo Rides on the 2016 line-up.  Staging for demo rides takes place in the parking lot behind the Community Center
  • The Project RUSHMORE Experience is a behind-the-scenes and hands-on look at H-D’s latest touring motorcycle technology
  • H-D Fit Shop and Genuine Motor Parts & Accessories area is new this year will have a “Quick Install” area for 30-minute or less installations of selected accessories for your motorcycle.
  • Better than a selfie stick!  Pro Bike photos taken of you/your bike to post on social media and an option to purchase the photo as a keepsake.
  • Hollywood Harley Bikes from the movies Captain America and Avengers will be on display including Steve Rogers and the hero bike from FX’s Sons of Anarchy TV show will be located on a red carpet area

In addition, there are many, many other “not-to-be-missed” activities around town, in the camp grounds and at various music venues.

Whether you are spontaneously twisting throttles to South Dakota or making a road trip that is highly calculated — Enjoy!

@HarleyDavidson social media is providing wall-to-wall coverage at #LiveYourLegend.  The official H-D Sturgis App, is at:  www.h-d.com/sturgis.

Photo courtesy of H-D.
All Rights Reserved (C) Northwest Harley Blog
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