Harley-Davidson is to kill off its Buell brand and sell MV Agusta because of slumping sales - 21.3 percent down in the third quarter of 2009 compared to the same period in 2008.
That was not as bad as the 30.1 percent collapse in the second quarter but enough to prompt a focus on saving the core Harley-Davidson brand.
Harley will end production of Buell motorcyclesby October 30 although remaining stocks of motorcycles, accessories and clothing will continue to be sold through dealers. Warranty coverage and service will continue as normal and Milwaukee will continue to provide replacement parts.
Net income for the third quarter was $26.5-million ($166.5-million in the third quarter of 2008). Income for the first nine months of 2009 was $163.6-million, down 71.6 percent from the previous year as sales tumbled from 226 898 in January-September 2008 to 187 085 in the same period of 2009.
The decision will cost about 180 Harley-Davidson employees their jobs at a cost to the company about $125-million.
CEO Keith Wandel said: "Our strategy is to strengthen Harley-Davidson for long-term growth and deliver results through increased focus. As our announcement regarding Buell and MV Agusta indicates, we are moving with the speed and decisiveness required to make it work.
"We believe we can create a bright future through a single-minded focus on the Harley-Davidson brand."
Wandell also said the company would immediately put Italian-based sports-bike maker MV Agusta, which it bought with much fanfare for $109-million in July 2008, up for sale.
FOCUS ON HARLEY-DAVIDSON
"Buell has introduced many innovations in motorcycle design and technology over the years and MV Agusta is known in Europe for its premium, high-performance sports bikes.
"However," Wandell said, "our strategy to focus on the Harley-Davidson brand reflects our belief that our investment in that brand is a better use of company resources."
South African Harley-Davidson dealers said the demise of Buell wouldn't affect their staffing as they had no dedicated Buell employees.
What was of more concern was that the company's sales in South Africa had dropped 31 percent year-on-year - though that was better than the industry average of 36 percent for cruisers.
Sales of Buells in South Africa since the brand was launched locally in 1998 totalled 548, according to the Association on Motorcycle Importers and Distributors. Local delalers would not say for how long they would continue to support the brand but customers would not be let down.