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Craft and Punishment

By General Posts

A Tale of Twisted Fates of Artisans

Deus Ex Machina was arguably the most popular and most impressive global brand for custom built motorcycles.

Deus Ex Machina was built upon the development and creation of custom motorcycles. A clothing line got added for those fans of the brand who found it more satisfactory to order a Deus tee-shirt. This motorbike brand is now a luxury apparel handling the biggest names in fashion, peddling dreams to people, nay, to the masses.

“Deus Ex Machina makes high-end motorcycles and loses money on each one” announced the newspapers.

“That’s why we make clothing,” said Deus founder and owner Dare Jennings in that news report. “Otherwise, we’d go broke.”

How could this be true? Why would one of the most successful and iconic custom motorcycle brand of the 21st century lose thousands of dollars on every bike they sell?

CLICK HERE To Read this Photo Feature Profile of Deus Ex Machina.

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Used Volkswagens and Autonomous Cars

By General Posts

Auction Market Growth

This is for those committed to keep driving alive

Never Stop Driving ! Two things are on my mind: A recent sale of a used Volkswagen and a podcast in which Elon Musk said Tesla cars will have Level IV autonomous capability in 2023. I think the two are related. Let me explain.

While I would not mind an autonomous pilot myself from time to time, I am first and foremost a driver. The one thing I’ve had in common at all my gigs is that I have no off-hours from cars. I spend nearly every waking minute either working on cars; driving cars, whether around town or, my favorite, long road trips; racing; or passing on my enthusiasm.

Your humble narrator fathoms deep in the car thing.

–by Larry Webster from Hagerty.com

Read this Editorial Article on Bikernet.com by Clicking Here.

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Motorcycle dealers in Canada blame rising insurance for drop in sales

By General Posts

Robb Hertzog, owner of Prairie Harley Davidson in Regina, inside their showroom.

by Gillian Francis from https://leaderpost.com

“I’m not going to say it’s all because of SGI, but I’d say three-quarters of it is.”

In just over three years, Robb Hertzog, owner of the Regina motorcycle dealership Prairie Harley Davidson (click here), estimates he’s lost well over $1 million worth of sales.

“I’m not going to say it’s all because of SGI, but I’d say three-quarters of it is,” he said in an interview Thursday, adding that skyrocketing insurance rates for motorcycles are leading to a decline in the amount of customers he receives.

Hertzog is one of many business owners in the motorcycle industry who have voiced concerns about the increasing expenses for bike owners. SGI is considering upping insurance rates again, by 15 per cent for insurance premiums greater than $1,000 and by $25 to $150, for those that total $1,000 or less, leaving businesses with increasingly dire prospects.

“They just can’t afford to ride anymore,” Hertzog said. “My younger clients are just not getting into it because when your monthly rate is as much or more than your loan payments, it makes it very, very difficult.”

Earlier this week, an SGI spokesperson told the Leader-Post that increasing fees are part of a plan to rebalance insurance rates. This would lead to an annual rate decrease for some types of vehicles and in an increase for vehicles like motorcycles that are perceived to have higher accident risk. A latest proposed rate increase is being reviewed by The Saskatchewan Rate Review Panel.

Insurance rates for new models with large engines, like Harley cruisers, can range from $2,000 to $3,000 per year. While this is enough to dissuade individual motorists from buying, there is also a chain reaction that extends to other parts of the industry as well.

Hertzog explained the number of motorcyclists attending their community events and fundraisers is down by half, leading to a decrease in charity funding of a few thousand dollars, and his bike repair team is getting fewer clients now that people are riding less frequently.

Collin Cossette, owner of Action Cycle in Moose Jaw, switched from selling street models to off-road bikes, a decision motivated by a variety of factors unrelated to insurance, including losing a franchise. He said the demand for street models is not strong enough for him to want to go back.

The few street bikes he continues to carry, have remained untouched for years, brands that would have sold in the hundreds a decade ago. Most dealerships in his area, he said, have lost around 80 per cent of their sales now that more expensive models come with high insurance.

Rick Bradshaw, owner of Schrader’s Motors in Yorkton, estimated insurance rates have increased around 67 per cent in the past decade, causing their street bike sales to decrease from 50 per year to 20.

Most of the clients who visit Schrader’s are older adults who have more disposable income, while younger cohorts are dissuaded by the expense. Prior to the insurance hike, he said more young women were taking an interest in the sport than ever before, but he believes expense has since reduced this trend.

“You can be a high performance car enthusiast and buy a $100,000, loaded-up, 600 horsepower BMW car and you don’t pay any more for that car based on value … But for motorcyclists with the same zero clean record and no accidents, if that bike happens to have a bigger engine or more horsepower all of a sudden you’re penalized dramatically,” he said.

As for Hertzog, he thinks raising awareness of the issue is key to creating change.

“We’ve got to find a way to get people out riding and enjoy life, but it will be a bit of a cost on SGI,” he said. “But the cost of that is worth a lot because I think the industry and the sales and the amount of jobs that were lost are way more money than SGI will ever have lost.”

Why shortages of a $1 chip sparked crisis in the global economy

By General Posts

by Bloomberg from https://auto.economictimes.indiatimes.com

The chip crunch was born out of an understandable miscalculation as the coronavirus pandemic hit last year. When Covid-19 began spreading from China to the rest of the world, many companies anticipated people would cut back as times got tough.

To understand why the $450 billion semiconductor industry has lurched into crisis, a helpful place to start is a one-dollar part called a display driver.

Hundreds of different kinds of chips make up the global silicon industry, with the flashiest ones from Qualcomm Inc. and Intel Corp. going for $100 apiece to more than $1,000. Those run powerful computers or the shiny smartphone in your pocket. A display driver is mundane by contrast: Its sole purpose is to convey basic instructions for illuminating the screen on your phone, monitor or navigation system.

The trouble for the chip industry — and increasingly companies beyond tech, like automakers — is that there aren’t enough display drivers to go around. Firms that make them can’t keep up with surging demand so prices are spiking. That’s contributing to short supplies and increasing costs for liquid crystal display panels, essential components for making televisions and laptops, as well as cars, airplanes and high-end refrigerators.

“It’s not like you can just make do. If you have everything else, but you don’t have a display driver, then you can’t build your product,” says Stacy Rasgon, who covers the semiconductor industry for Sanford C. Bernstein.

Now the crunch in a handful of such seemingly insignificant parts — power management chips are also in short supply, for example — is cascading through the global economy. Automakers like Ford Motor Co., Nissan Motor Co. and Volkswagen AG have already scaled back production, leading to estimates for more than $60 billion in lost revenue for the industry this year.

The situation is likely to get worse before it gets better. A rare winter storm in Texas knocked out swaths of U.S. production. A fire at a key Japan factory will shut the facility for a month. Samsung Electronics Co. warned of a “serious imbalance” in the industry, while Taiwan Semiconductor Manufacturing Co. said it can’t keep up with demand despite running factories at more than 100% of capacity.

“I have never seen anything like this in the past 20 years since our company’s founding,” said Jordan Wu, co-founder and chief executive officer of Himax Technologies Co., a leading supplier of display drivers. “Every application is short of chips.”

2021-semiconductors-chips-shortage-inline
The chip crunch was born out of an understandable miscalculation as the coronavirus pandemic hit last year. When Covid-19 began spreading from China to the rest of the world, many companies anticipated people would cut back as times got tough.

“I slashed all my projections. I was using the financial crisis as the model,” says Rasgon. “But demand was just really resilient.”

People stuck at home started buying technology — and then kept buying. They purchased better computers and bigger displays so they could work remotely. They got their kids new laptops for distance learning. They scooped up 4K televisions, game consoles, milk frothers, air fryers and immersion blenders to make life under quarantine more palatable. The pandemic turned into an extended Black Friday onlinepalooza.

Automakers were blindsided. They shut factories during the lockdown while demand crashed because no one could get to showrooms. They told suppliers to stop shipping components, including the chips that are increasingly essential for cars.

Then late last year, demand began to pick up. People wanted to get out and they didn’t want to use public transportation. Automakers reopened factories and went hat in hand to chipmakers like TSMC and Samsung. Their response? Back of the line. They couldn’t make chips fast enough for their still-loyal customers.

A year of poor planning led to carmakers’ massive chip shortage
Himax’s Jordan Wu is in the middle of the tech industry’s tempest. On a recent March morning, the bespectacled 61-year-old agreed to meet at his Taipei office to discuss the shortages and why they are so challenging to resolve. He was eager enough to talk that interview was scheduled for the same morning Bloomberg News requested it, with two of his staff joining in person and another two dialing in by phone. He wore a mask throughout the interview, speaking carefully and articulately.

Wu founded Himax in 2001 with his brother Biing-seng, now the company’s chairman. They started out making driver ICs (for integrated circuits), as they’re known in the industry, for notebook computers and monitors. They went public in 2006 and grew with the computer industry, expanding into smartphones, tablets and touch screens. Their chips are now used in scores of products, from phones and televisions to automobiles.

Wu explained that he can’t make more display drivers by pushing his workforce harder. Himax designs display drivers and then has them manufactured at a foundry like TSMC or United Microelectronics Corp. His chips are made on what’s artfully called “mature node” technology, equipment at least a couple generations behind the cutting-edge processes. These machines etch lines in silicon at a width of 16 nanometers or more, compared with 5 nanometers for high-end chips.?

The chip’s makers have seen their shares soar with strong demand
The bottleneck is that these mature chip-making lines are running flat out. Wu says the pandemic drove such strong demand that manufacturing partners can’t make enough display drivers for all the panels that go into computers, televisions and game consoles — plus all the new products that companies are putting screens into, like refrigerators, smart thermometers and car-entertainment systems.

There’s been a particular squeeze in driver ICs for automotive systems because they’re usually made on 8-inch silicon wafers, rather than more advanced 12-inch wafers. Sumco Corp., one of the leading wafer manufacturers, reported production capacity for 8-inch equipment lines was about 5,000 wafers a month in 2020 — less than it was in 2017.

No one is building more mature-node manufacturing lines because it doesn’t make economic sense. The existing lines are fully depreciated and fine-tuned for almost perfect yields, meaning basic display drivers can be made for less than a dollar and more advanced versions for not much more. Buying new equipment and starting off at lower yields would mean much higher expenses.

“Building new capacity is too expensive,” Wu says. Peers like Novatek Microelectronics Corp., also based in Taiwan, have the same constraints.

That shortfall is showing up in a spike in LCD prices. A 50-inch LCD panel for televisions doubled in price between January 2020 and this March. Bloomberg Intelligence’s Matthew Kanterman projects that LCD prices will keep rising at least until the third quarter. There is a “a dire shortage” of display driver chips, he said.

LCD Prices Are Surging
Aggravating the situation is a lack of glass. Major glass makers reported accidents at their production sites, including a blackout at a Nippon Electric Glass Co.’s factory in December and an explosion at AGC Fine Techno Korea’s factory in January. Production will likely remain constrained at least through summer this year, display consultancy DSCC Co-founder Yoshio Tamura said.

On April 1, I-O Data Device Inc., a major Japanese computer peripherals maker, raised the price of their 26 LCD monitors by 5,000 yen on average, the biggest increase since they began selling the monitors two decades ago. A spokeswoman said the company can’t make any profit without the increases due to rising costs for components.

All of this has been a boon to Himax’s business. Sales are surging and its stock price has tripled since November.

But the CEO isn’t celebrating. His whole business is built around giving customers what they want, so his inability to meet their requests at such a critical time is frustrating. He doesn’t expect the crunch, especially for automotive components, to end any time soon.

“We have not reached a position where we can see the light at the end of tunnel yet,” Wu said.

Harley borrows Detroit’s used-car playbook to pursue younger riders

By General Posts

from https://www.channelnewsasia.com

Harley-Davidson has decided the best way to get younger customers to buy a new motorcycle is to sell them a used one first.

The Milwaukee-based company plans to roll out a certified pre-owned bike program, known as H-D Certified, adapting a strategy carmakers have been following for years to position well-tended used vehicles as a substitute for low-margin, “entry-level” new models.

Harley’s embrace of used bikes is part of a new five-year turnaround strategy under Chief Executive Jochen Zeitz, and is the latest effort to expand the brand’s appeal beyond middle-aged and affluent riders.

The 118-year-old American brand has been steadily losing US market share amid declining retail sales for six years.

But the demand for used Harleys, which are less expensive, has remained strong. Some dealers told Reuters that pre-owned bikes last year outsold new ones by three-to-one.

Melissa Walters, owner of a Harley dealership in Fresno, California, says the coronavirus pandemic has led to an increased demand for outdoor recreational activity, but dealers are hard-pressed to find bikes to sell to customers.

“People are tired of staying home,” she said. “They want to go out and do something.”

That sentiment was echoed by over a dozen dealers in six states.

Data from industry consultant JD Power shows Harley was the most sought-after brand in the used big bikes market last year, boosting bets the certified program will draw in new customers.

For Harley, it offers a way to build brand loyalty and attract new customers without engineering and manufacturing new lower-cost bikes, which tend to have lower profit margins.

“We believe this program will drive Harley-Davidson desirability, increase sales and margins, and enhance the overall customer experience while supporting growth,” Zeitz told Reuters.

Under the pre-owned bike program, which was revealed last month, Harley will certify motorcycles up to five years old with up to 40,234km. Certified bikes will be inspected and backed by a 12-month limited warranty, and can be financed by Harley’s financial arm, distinguishing them from other used Harleys.

While the heavyweight motorcycle maker has a similar program in the United Kingdom, this is the first time it is entering the used marketplace in the United States – its biggest market.

The program will be launched in late April and over 300 dealers have expressed interest in participating so far, Harley told Reuters.

“It’s going to draw new riders … and will give them entry into the Harley-Davidson world,” said Brad Conn, marketing coordinator at an Indiana-based dealership that plans to sign up for the program.

A POTENTIAL REVENUE STREAM

In the auto industry, according to JD Power, similar programs offer higher profit to dealers with faster inventory turnover. JD Power’s data also shows the programs are more effective in cultivating brand loyalty and tend to generate more business for the financial arms of automakers, which fund the vehicle purchases.

James Hardiman, an analyst at Wedbush Securities, said the secondary motorcycle market has become a big business over the last decade and could be a “significant” revenue stream for Harley.

In 2017, online retailer for pre-owned vehicles RumbleOn pegged the value of the used motorcycle market in the United States at US$7.5 billion a year, with Harley bikes accounting for more than half of sales. The study also showed customers aged 18-34 were buying three used Hogs for every new one.

NEW VERSUS OLD

A booming demand for pre-owned Harleys until now has been a drag on the company’s US retail sales, which have declined by nearly 40 per cent since 2014.

As its motorcycles do not wear out or go out of fashion quickly, used Harleys tend to be more in demand vis-à-vis pricey new models.

Zeitz has tried to address the problem in the past year by tightening the supplies of new bikes. Leaner new inventory together with the increased demand for outdoor sports have driven up the prices of pre-owned bikes.

Still, the company estimates there are 3 million unsold used Harleys in the United States, far more than the approximately 80,000 new bikes it shipped last year.

“The biggest competition for a new Harley-Davidson bike is not an Indian bike or a Honda, or a Suzuki bike, but is a used Harley-Davidson bike,” said Hardiman.

Faced with a similar situation in the 1990s, automakers launched certified programs to resell thousands of returned leased vehicles to first-time and budget-minded buyers.

The programs allowed them to scrap less-expensive entry-level models, which had razor-thin profit margins, freeing up resources for more profitable products.

Harley is pursuing similar goals. It has done away with some of the cheaper entry-level models and will ramp up investment in touring, large cruiser and trike bike segments that drive company profit.

It is also looking to increase sales of ancillary products such as accessories, general merchandise and financial services by leveraging the certified bike program.

Michael Uhlarik, founder and lead consultant at Motorcycle Global, reckons the certified program is aimed at replacing lost motorcycle revenue from falling shipments.

Harley’s bike shipments to dealers in the United States have dropped more than 60 per cent from the 206,000 units in 2008.

“It will never be a 200,000 vehicle-a-year company,” said Uhlarik. “They have to replace that lost revenue somewhere.”

Harley-Davidson to Begin Selling Used Motorcycles Next Month
by Rich Duprey from https://www.fool.com

Riders will be able to buy a used Harley-Davidson (NYSE:HOG) motorcycle from dealers beginning in April under a program called H-D Certified as a means of introducing new riders to the Harley-Davidson brand and developing new revenue opportunities.

CEO Jochen Zeitz announced the new initiative during last month’s earnings conference call as part of The Hardwire five-year strategic plan, telling analysts, “There are two distinct parts to this market: new bikes and used bikes, both of which present opportunities which we will pursue.”

Amid declining industry sales, Harley-Davidson has been hit especially hard. U.S. sales fell 15% last quarter, hitting levels not seen in decades.

One problem that has plagued Harley has been used-motorcycle prices; because used bikes have been substantially cheaper, it has made selling new ones more difficult. Gone are the days when demand for Harleys was so high that there were shortages of new bikes, and used bikes could be sold for close to what they cost new.

Zeitz pointed out there are approximately 3 million used Harleys on the road, a million of which are seven years old or more. It wants to focus on those that are five years old or newer, with no more than 25,000 miles.

He says that’s the sweet spot of the market, offering “the highest potential to also get them engaged in new motorcycles in the future.”

While used-bike prices have been rising, Harley is looking to capitalize on the opportunity to bring new riders into dealerships by giving them an option on what they want to buy. It’s also a chance to get a customer in the door, since the program will be completely run at the dealer level.

The used bikes will be professionally inspected, verified as mechanically sound, and backed by a 12-month limited warranty.

Harley-Davidson swings to Q2 loss, plans overhaul of operating model with new 5-year plan

By General Posts

by Ciara Linnane from https://www.marketwatch.com

Harley-Davidson Inc. shares HOG, -0.75% slid 2.9% premarket Tuesday, after the iconic motorcycle company swung to a loss in the second quarter and unveiled an overhaul of its business that will see it exit certain markets and streamline its product line. Milwaukee-based Harley swung to a loss of $92 million, or 60 cents a share, in the quarter, after a profit of $196 million, or $1.23 a share, in the year-earlier period. Its adjusted loss per share came to 35 cents, short of the FactSet consensus for earnings of 11 cents a share. Revenue fell 47% to $865 million from $1.633 billion, ahead of the $761 million FactSet consensus. U.S. motorcycle sales fell 27% to $31.3 million, EMEA sales fell 30% to $11 million and Asia Pacific sales were down 10% to $6.9 million.

The company is not offering guidance, given the uncertainty created by the pandemic. Harley is planning a ‘Rewire’ restructuring of its global operating model, that will impact all areas of the business from commercial operations to center-led support functions. That process will build to a new five-year plan, to be called ‘Hardwire.’ “Building on our strong brand legacy, we are reinvigorating our core profit driving business — powered by our strongest dealers, most exciting products and careful inventory management, while focusing on the most important opportunities for future expansion,” Chief Executive Jochen Zeitz said in a statement.

The plan includes 700 job cuts that were previously announced and a streamlining of motorbike models by about 30%. The company will focus on about 50 markets in North America, Europe and Asia Pacific that currently account for most of its volume and growth potential. The company is planning a marketing campaign featuring “Aquaman” actor Jason Momoa. The company expects too save $250 million in cash in 2020 and to book a $42 million restructuring charge. Shares have fallen 21% in the year to date, while the S&P 500 SPX, -0.64% has gained 0.3%.

 

Harley-Davidson’s stock tanks as motorcycle sales continue to slide

By General Posts

by Paul R. La Monica from https://edition.cnn.com/

New York (CNN Business)Harley-Davidson has a big problem. Americans aren’t riding its trademark hogs nearly as much as they used to do.

Shares of Harley-Davidson (HOG) fell 3% in early trading Tuesday after the company reported sales and earnings that missed Wall Street’s forecasts. The stock is now down more than 10% this year.

Most alarming: Demand for Harley’s bikes continued to fall in the United States — even as they rebounded overseas.

Harley’s retail sales in America were down 3% in the fourth quarter. That’s the 12th consecutive decline. US sales fell more than 5% for the full year.

Sales were up slightly internationally, led by a more-than 6% jump in Asia. But that wasn’t enough to lift Harley’s worldwide motorcycle sales, which fell 1.4%.

The weakness in Harley’s home market is particularly disappointing given that the United States and China have now reached a “phase one” trade truce. Harley has been complaining about tariffs put into place by the Trump administration for the past few years.

President Donald Trump has also been critical of the fact that Harley — based in Milwaukee — had shifted some of its production outside of America to avoid tariffs in Europe that were put into place on the company in response to US tariffs on steel and aluminum. Trump even supported a boycott of Harley by US consumers in 2018.

But Harley clearly has bigger problems than global trade policy. The company is trying to revitalize its sales with the launch of its LiveWire electric motorcycle.

Harley CEO and president Matt Levatich struck a hopeful tone in the company’s earnings release.

“We see 2020 as the pivotal year in the transformation of Harley-Davidson. This year we will broaden the reach of our brand and build more committed riders as we enter new and growing segments in motorcycling and eBicycles,” Levatich said. “More and easier access to two-wheeled freedom on a Harley is well underway.”