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Royal Enfield is coming after Harley-Davidson

By General Posts

In its last financial year before the pandemic struck, Enfield company sold about 824,000 bikes globally. Harley, by contrast, shipped about 218,000.

Last year Enfield company doubled the size of one of its three factories, bringing overall production capacity to 1.2 million motorcycles a year.

To build buzz Enfield company has tried marketing to American customizers and flat-track competitors, and in 2018 it put Cayla Rivas, a teenage motorcycle racer, on a souped-up Continental in pursuit of a speed record for its bike class—and compelling footage for YouTube. (She hit 157 mph on Utah’s Bonneville Salt Flats.)

Although it may sound counterintuitive, “the U.S. and Europe are very important” to making Enfield the aspirational bike of choice for the developing world, he says.

Lal wants to be as big a player in the West as possible, but he argues that Royal Enfield doesn’t necessarily have to sell that many bikes in developed countries for the strategy to be considered a success. What it does need to do is move enough to give them a patina of cool at home and in other emerging markets, such as Southeast Asia.

Read the full article at Bloomberg. Click Here.

Yamaha MT-25 launched, MT-15 previewed

By General Posts

from https://www.thesundaily.my

YAMAHA’s first “hyper naked” (Ed: That sounds a bit naughty!) motorcycle, the MT-09 took the Asian market by a storm when it was launched, just as the naked bike category popularity grew.

Here in Malaysia, there has been a significant increase of interest in the street naked category and on Saturday, Hong Leong Yamaha Motor announces its fulfillment of this void with the launching of the Yamaha MT-25.

Introduced with the usual Yamaha fanfare at the Sofitel Hotel and Resort in Kuala Lumpur, the new model promises to be another hot item in the Yamaha model range.

“The Yamaha MT-25 packs aggressive styling and notable performance and is indeed a cutting-edge new addition to Yamaha’s class-defining naked bike segment,” said the company.

“With high torque performance, high handle bar and upright riding position, the MT-25 will be a comfortable ride in the city. It has all the original Yamaha MT-Series DNA built in with a multitude of innovative features.”

Powered by the tested and proven performance-driven with features ranging from liquid-cooled 249cc,four4-stroke, in-line two-cylinder, DOHC, eight-valve, fuel-injected power plant capable of producing 35.5hp at 12,000rpm of power and a torque of 23.6Nm at 10,000rpm, the MT-25 is “a force to be reckoned with in its class”.

The new “Master of Torque” uses inverted front forks that not only provides sure cornering performance but also supports an agile and comfortable riding style while it’s predator-type dual slant LED position lights plus a central mounted LED headlight, full digital LCD meter panel with shift timing light, sleek LED signal indicators with hazard light functionality makes it an impressive looking bike.

In addition to this, the MT-25 is equipped with the dual channel anti-lock braking system (ABS) for both front and rear wheels, a sought-after feature most Malaysian riders have been waiting for.

Priced at an affordable RM21,500 excluding insurance & registration fees, the Yamaha MT-25 comes in two distinctive MT Series colours – Ice Fluo and Yamaha Blue and will be available at all Yamaha Big Bike dealers from Sept 18 onwards.

Hong Leong Yamaha Motor will so be giving away an exclusive First Edition MT Series pewter key chain for every purchase of the new MT-25.

Crafted by Royal Selangor, the world-renowned pewter craft smiths, the sleek arrow-shaped keychain design symbolises speed, dynamism and movement. In addition to this, every new owner of the MT-25 will receive a safety disc lock with their purchase.

With the constant evolving of the Yamaha Hyper Naked segment, specifically in terms of styling, high tech engine, and electronics, guests at the launch event were also given a sneak preview of another Master of Torque masterpiece, the MT-15.

The single-cylinder, 150cc MT-15 will only be made available in the market in November 2020, when the price will also be announced.

Motorcycle racing in Asia is growing at unrivaled pace

By General Posts

by Renato Marques from https://macaudailytimes.com.mo

The first-ever person of Portuguese nationality to hold the position, Jorge Viegas has served as president of the global governing and sanctioning body of motorcycle racing, the Fédération Internationale de Motocyclisme (FIM), for just over a year now.

In an exclusive interview with the Times last week, Viegas shared his opinions on the development of the sport in Asia and worldwide, speaking also about the ambitions of his presidency. He also offered some advice to Macau motorcycling event organizers, while stressing again that his organization has no jurisdiction over the annual event, part of the Macau Grand Prix.

After one year at the helm of the FIM, Viegas remarked on his success in making the organization more democratic and more transparent. He also claimed victory in his goal to give more importance to the constituent FIM committees, which he said had been “totally left out of decisions” in the past.

“I am very pleased that I [accomplished] a small ‘revolution’ at the FIM at the internal level,” he said. “That was one of my goals and it was achieved.”

Opening the FIM to the world had debunked the impression that the FIM was just “a bunch of old guys that liked to travel.”
“I have been opening the doors of the FIM to the outside and have started to collaborate a lot more with the promoters. Next month, we will, for the first time, host a plenary meeting with all the committees with the presence of journalists. This has never happened before. I want to show what the FIM does.”

“One of the first measures I took was to hold a press conference that took place at Losail during Qatar GP last year, in which I presented everyone from the FIM side that works in a Grand Prix, asking them to explain who they are and what their job duties are.”
“Without going into too much detail, I would say that I managed to bring the FIM closer to the national federations,” said Viegas.
Coming up, more reform is expected, especially in the categories of “Superbikes” and “Endurance”. The president promised that new measures to improve these categories will be announced soon, even as early as this year.

His ultimate goal remains greater engagement of the youth in motorcycle racing, all while ensuring the safety of the sport. Building on his mandate, Viegas reiterated that “every youngster, independent of gender and financial capacity, if they have the talent, passion, and motivation, [ought to be able to] compete in motorcycle racing.” At the same time, the sport must be “as safe as possible,” because only in this way can we “convince parents to let the youth participate in the sport.”

‘Unrivaled’ growth in Asia

For Viegas, “the development of motorcycling in Asia is unrivaled worldwide.”

The Asian continent is the fastest-growing region of the world when it comes to motorcycle racing, and yet its popularity is still far from peaking, he said. The FIM president recalled how the organization began with 16 national and regional federations across Asia. Today, that number has almost doubled, with 28 already accounted for and another three joining the FIM soon.

This trend is perhaps unsurprising given that, in the words of Viegas, “Asia is the most popular continent for motorcycles and where the most are circulating in the streets.”

The president is also impressed with how upbeat everyone in Asia is about the sport.

Addressing the inclusion of a new race in the MotoGP to be held on the island of Lombok, Indonesia in March 2021, Viegas remarked, “the works to build this circuit have just started and [the promoters] have already sold about 30,000 seats for the event.”
The sport is also popular elsewhere in Asia, where circuit racing championships are well-entrenched, according to the FIM president.
However, the continent suffers from a major drawback: its size. As a large and diverse continent, Asia presents a challenge in high traveling costs.

“For example, a rider going racing from China to Japan faces very high expenses,” offered Viegas, referring to transportation and logistics costs. For this reason, FIM tries to financially support the Asian Federation, so that it is possible to maintain competitive championships.

Return to China only a ‘matter of time’

Notably absent from the countries hosting major motorcycle racing events is China, leading some to speculate about disagreement between the organizers and the Chinese government. Viegas was quick to dismiss the idea of any ill feeling between the FIM, the promoters and the Chinese government.

“There is no problem with China,” he told the Times. “I believe that if they want to host an event, they can do it.”

Although there is currently no circuit in China homologated to the standards of hosting any major competitions, “if they want to, they can do that easily,” said Viegas. “It is just a matter of will and making a few works on the [existing] circuits or even building a new one.”

“I was with the Chinese authorities a few months ago and they told me that they wanted to have MotoGP back in China,” he continued. This comes as China has been pursuing other kinds of motorcycle racing categories, such as Motocross. The debut of the FIM Motocross World Championship took place in Shanghai last year, and is set to return this year.

But a return of the MotoGP is not likely within the next few years, according to the FIM president.

“We have a lot more demand than we can satisfy,” explained Viegas. “There are a lot of countries wanting to host MotoGP. This year we already expanded the championship to 20 races, and in upcoming years we can likely grow to [a maximum of] 22, which is enormous.”

Macau Grand Prix needs to review safety

Although the FIM has no jurisdiction over the motorcycle race held during the Macau Grand Prix event, the Times solicited Viegas’s views and insights on the race.

The FIM veteran, who served a number of roles at the organization prior to becoming its president, immediately suggested two logistical improvements that local organizers could adopt.

“There is one thing that the organizers can do to improve the race, which is not running motorcycle events after car events,” he said, highlighting that after a series of car races, track surface conditions may not be ideal. He also mentioned that the light and visibility conditions late in the afternoon can also be challenging for racers and present added logistical complications with race restarts.

“I think this is the minimum that organizers could do because this will improve a lot of the conditions,” said Viegas.

On a more positive note, the FIM president remarked on the “good choices” made by local organizers in “bringing in riders with a lot of experience and progressively investing in the active safety systems.”

“In the future, we hope the riders will all wear racing suits with an airbag system incorporated as well as FIM homologated helmets,” said Viegas, adding that these additional safety features have been designed to minimize the risk to racers.

For the president of FIM, the only safety issue with the Guia Circuit is the lack of run-off areas.

“The problem of Macau [street circuit] is very simple; there are no run-off areas, that’s all. There are no other problems. This is a circuit designed to host car races, the motorcycles are a complementary race that the spectators enjoy. I just think we should do all that is possible to increase the safety of the event,” he said.

A solution commonly used by the FIM on permanent racing circuits that do not possess enough run-off space is so-called “air fences”- soft-wall safety barriers, which are inflated to cushion impact from riders on otherwise rigid structures.

“When we cannot have run-off areas with the length we need, the circuit must install an air fence and we have seen riders reaching them even in areas with a lot of space,” he explained.

“Here in Macau, it would be needed obviously but again, we are not the entity that controls the safety conditions in Macau. What I wish is that there will be no more serious incidents here.”

Several recent incidents in the motorcycle racing component of the Macau Grand Prix have raised safety concerns once again among race organizers and the general population of the city. In 2017, motorcyclist Daniel Hegarty died in a crash at the Fisherman’s Bend after losing control of his bike. A major crash last year left three riders hospitalized and saw the race red flagged.

“We understand that there are riders specialized in this type of race [road racing] and they are highly experienced as well as highly aware of the risks they are taking. But what I can say is that it’s not this kind of race that the FIM encourages,” Viegas said. “This is not a circuit homologated by the FIM and it can never be, because it cannot fully meet optimal safety conditions.”

Nevertheless, the official recognizes that events like the Macau Grand Prix and the Isle of Manx TT have a long tradition with some races going back to over a century.

“It’s not under FIM competences to say anything against them,” he said. “As for the [Macau] race, it’s great entertainment and the people love it and the riders love it too.”

The global energy problem

Globally, another major challenge is the need to follow the world trend in “energy transition,” according to Viegas, which will necessitate swapping petrol-powered engines to electricity-powered motors.

“This is something that concerns us and that we are working on together with the promoters and manufacturers,” Viegas said, explaining that on motorcycles this swap will be more difficult than on cars as the current batteries are very heavy and very big, making the batteries appropriate for a racing motorcycle not capable of managing great distances.

For the time being, the Moto-E category part of the complementary program of MotoGP in some European circuits only can feature six-lap racing events.

“But as we know, this technology is developing very fast. When the batteries can be of a longer range and become lighter, I am sure we will see some great leaps forward.”

Harley Davidson: The Road Only Goes Downhill

By General Posts

Harley-Davidson delays its first $30,000 electric motorcycle after unexpected findings during final quality checks

  • The company delayed the motorcycle after ‘non-standard conditions’ were discvoered during final quality checks
  • Dealers had begun selling pre-orders of the bike in January
  • Harley-Davidson had forecast shipping 1,600 bikes

Harley-Davidson has delayed production on its first electric motorcycle, called LiveWire.

In an email sent to dealers last week, the company announced it had found a ‘non-standard condition’ in its final quality checks but didn’t elaborate further.

The LiveWire was officially announced for commercial release last fall with a planned price of $29,799.

‘We recently discovered a non-standard condition during a final quality check; stopped production and deliveries; and began additional testing and analysis, which is progressing well,’ the company said in a statement.

The Wall Street Journal reported that the decision came after a problem with the vehicle’s battery charging was discovered. The manufacturer did not say when they planned to resume production.

The company had already begun delivering models of LiveWire to dealers in September.

The company had expected to ship around 1,600 bikes, or an estimated 1 percent of the company’s total big shipments.

The LiveWire is said to go from 0-60 mph in three seconds and reach top speeds of 110 mph.

Harley-Davidson recommends users go to dealers to charge the vehicle rather than trying to use standard electrical outlets in their homes.

It is powered by a 15.5 kWh battery and has a 105 horsepower magnetic engine and a range of 146 miles city driving on a single charge.

Harley-Davidson had told potential customers to charge the bike only at registered dealers and not in their homes.

The bike was first shown in The Avengers: Age of Ultron as a sleek prototype ridden by Scarlett Johansson’s Black Widow character.

The LiveWire promised a slew of advanced technical features, including what PR Manager Paul James descried as ‘twist-and-go.’

‘Because it’s all-electric, it’s twist-and-go,’ Paul James, PR Manager at Harley-Davidson, told Dailymail.com at the Las Vegas Convention Center earlier this year.

The LiveWire’s battery is said to have a range of 146 miles of city driving.

‘There’s no transmission, there are no shifters, no clutch – it’s very easy to ride.’

LiveWire is equipped with a full suite of electronic lateral aids, with a slew of sensors and programmable touch controls.

It also has cellular connectivity, making it the first mass market motorcycle in North America with the capability.

This means it can alert the owner if the bike has been tampered with or moved. It also has built-in GPS for location tracking.

As for the sound, Harley says its electric powertrain will produce a ‘new signature Harley-Davidson sound,’ with minimal vibration, heat, and noise.

The ‘twist-and-go’ bike ditches the traditional shifters and chirps out a turbine-like whir in lieu of the characteristic rumble. The company is hoping this will usher in a ‘new signature Harley-Davidson sound,’ with minimal vibration, heat, and noise.

LiveWire will also launch in Canada and most of Europe later this year, Harley-Davidson says.

  • Harley Davidson sales have been on a decline the past five years hurting the company’s bottom line. The company has introduced new initiatives to buck this trend.
  • Despite the new strategy Harley Davidson will have a hard time attracting millennial customers and will face stiff competition in Asia.
  • Harley Davidson is highly levered and not trading at a large enough discount to warrant an investment.

Harley Davidson (HOG) has been having a rough last couple of years, with its current stock price nearly half of where it was in 2018 as it fell from around $50 per share to its current price of about $35 per share. The company is an American icon, with the Milwaukee-based motorcycle maker being founded more than 100 years ago, and conjures up a certain type of imagery – that of big bikes, loud engines and groups of somewhat older riders riding together in large groups.

This level of brand loyalty and, dare I say, cult following has been a cornerstone of Harley Davidson’s strategy for years. However, Harley Davidson’s sales have begun to slump in recent years after reaching a high in 2014 with this trend set to continue in 2019. In Q2 2019, the company delivered nearly 69,000 bikes for the quarter, down 5% compared to the same period a year earlier and overall sales fell 6% to $1.4 billion.

The brand loyalty that Harley Davidson has cultivated has become its weakness as its core demographic of rider’s ages the company struggles to attract the new millennial rider and re-align its brand messaging to match what that segment is looking for.

UBS conducted a survey of more than 2,000 people between the age of 21 and 34 in an attempt to figure out why Harley-Davidson stock has fallen 32% in the past 12 months. While their findings are bad news for big expensive cruisers and touring bikes, they are actually good for other parts of the industry. Unlike older buyers who considered a bike “as a hobby” or because “motorcycles are cool” Millennial responders want them for “ease of transportation.” Young buyers are interested in practical and affordable bikes, for now, partially because many of them don’t have a lot of money. There is no telling if hooking Millennial customers now with affordable and practical might lead to selling them a big touring bike when they are older and have more time and money. Among the young target demographic, the second most common reason listed for buying a bike was “it goes with their self image” so the important thing might be to not try to sell them their dad’s motorcycle.

Harley will have difficulty attracting the millennial audience

I struggle to see how 10 years from now a millennial who would have values such as being more frugal, more minimalistic and more environmentally conscious would not opt for a sleek, sporty high-tech Ducati and go for a big, loud, chrome-plated Harley Davidson. Therefore, it makes sense that Harley Davidson would try to shift its brand away from this older image and embrace something more modern. And the fact is, the company is well aware of that. On July 30, 2018, the Company disclosed its “More Roads to Harley-Davidson” plan to accelerate the Company’s strategy to build the next generation of riders globally. Under the plan, the Company intends to introduce new products including electric motorcycles, a new middle-weight platform of motorcycles that includes adventure touring, custom and streetfighter models with engine displacements ranging from 500cc’s to 1250cc’s; and smaller displacement motorcycles for emerging markets. The Company plans to introduce these new motorcycles between 2019 and 2022, starting with a new electric motorcycle, LiveWire, in the second half of 2019.

These plans are hitting a bit of a snag, as the company is seeing soft demand for its Livewire electric vehicles. These electric motorcycles, which are aimed at millennial customers and billed as a way to attract a new generation of riders, come with a sticker price of $30,000 nearly as much as a Tesla model 3. It’s as if the company ignored the main necessary selling points (i.e. “practical” and “affordable”) for this demographic. Harley Davidson does make some decent, affordable bikes in their Street lineup. But they still have that stigma, of being expensive toys. In the sub-$10,000 motorcycle market, Harley can’t compete in terms of bang-for-the-buck with the likes of Triumph, Ducati, and the Japanese big four that’s been cashing in on cheap Harley alternatives since the 1980s.

Harley to face stiff competition in the emerging markets

Harley Davidson’s other area for potential growth is through expanding in emerging markets, particularly China and India. The company announced a collaboration with Qianjiang Motorcycle Company Limited (“Qianjiang”) to launch a smaller, more accessible Harley-Davidson motorcycle for sale in Harley-Davidson dealerships in China by the end of 2020. Motorcycles have been a presence in Asia for years with brands like Honda and Yamaha, along with local country-specific brands, dominating the sale of smaller vehicles.

There is a difference in motorcycle riding philosophy between the US and Asia. In many Asian countries, a motorcycle is considered a legitimate transportation option. A motorcycle is easier to park in the densely packed cities, can squeeze right through traffic, and is far more affordable than a car. Fuel in many Asian countries is also more expensive, and the taxes and permit fees for motorcycles are much lower too.

Given these considerations, in my view for Asian customers the main selling point of these motorcycles would be affordability and reliability as the next “tier” in terms of status symbols would be purchasing a car. The way I see it, Harley Davidson’s Asian motorcycles will slot in a premium category as is typical with other Harley products. The question then becomes for the Asian customer who may not be as familiar with the Harley brand and who do not view motorcycle riding as a “hobby” is that will they be willing to pay for that premium.

Harley Davidson is highly leveraged

Looking over at the financials, the company is trading at a low forward GAAP P/E of about 13. This is justified though as the company’s revenue has declined by 8.21% from 2014 to 2018 and its Net income has declined at an even faster rate of 37% in the same timeframe. The company is not trading at a cheap valuation.

Even more worryingly, the company is highly leveraged at 82 percent of total liabilities to total assets and with a debt to equity ratio of 4.62. Furthermore, a large portion of the company’s assets (nearly 70%) are finance receivables i.e. amounts owed by customers who have bought Harley Davidson motorcycles on finance. As we have seen in the experience of Kraft Heinz (KHC), a large amount of leverage would limit the flexibility of the company to make the necessary changes to its strategy. Given the headwinds the company faces due to declining sales and the need to change its strategy, I am quite bearish on Harley Davidson. The company is not trading at a large enough discount to warrant an investment.

NEWS SOURCE:
https://seekingalpha.com
https://www.dailymail.co.uk
https://www.wheels24.co.za

Royal Enfield enters South Korea

By General Posts

The iconic British motorcycle manufacturer arrives in Korea with its first flagship store, commencing its full operation, including after sales, spares and service.

Cult motorcycle maker, Royal Enfield on Friday has announced its entry into South Korea, with Vintage Motors (Kiheung International) as its official distributor-partner in the country.

The iconic British motorcycle manufacturer arrives in Korea with its first flagship store, commencing its full operation, including after sales, spares and service, the company said in a statement.

Vimal Sumbly, APAC Business Head, said, “Our focus is to sustain and expand our reach in International markets especially in Asia pacific region. Royal Enfield has seen consistent growth in the APAC region with a 20% year-on-year growth. Korea is an important chapter in the growth story and we are thrilled to commence business here. We fully committed to focus all our energies on becoming part of the fabric of this country’s rich motorcycling culture.”

This strategic announcement is in line with Royal Enfield’s focused international thrust of leading and expanding the global mid-sized motorcycle segment (250-750cc).

Pablo Lee Jr, CEO, Kiheung Motors said, “Royal Enfield motorcycles will offer Korean two wheeler riders an opportunity to upgrade to a robust long-distance, leisure riding culture with its modern-classics machines, that are brilliant for long rides on the highway at the same time perfect to commute in heavy traffic in the city”.

Royal Enfield enters South Korea, with line-up of three of its widely popular models featuring single-cylinder engines currently up to 500 cc: Bullet (500cc), Classic (500c), and Himalayan (410cc).