Posted on 04/26/2009 7:34:09 AM PDT by BraveMan
Run off the road in a bad economy, scores of Harley-Davidson motorcycles are being sold through auctions and occasional tent sales.
Many of the bikes are from Harley-Davidson Financial Services, the motorcycle company's consumer lending arm. It uses multiple auction services to resell motorcycles after the owners fall behind on payments and are forced to turn over the keys.
Several million dollars worth of repossessed Harleys are coming from Navigator Remarketing Group. It's having a tent sale Thursday in Indianapolis to sell about 120 motorcycles at near-wholesale prices.
Only a few years ago, someone selling a late-model Road King, Fat Boy or Softail could get nearly the same price they paid for it.
Some people traded bikes every year, knowing they wouldn't lose money on the deal.
Tent sales and auctions weren't on these sellers' radar screen.
"The biggest thing driving the premium prices for used bikes was the waiting period for new ones. In was up to about 14 months," said Jeff Haig, an Electra Glide rider and member of the Kettle Moraine Harley Owners Group chapter.
Now, Navigator has a $130 million motorcycle loan portfolio, mostly for Harleys, from a Colorado lender that fell on hard times.
It has a showroom filled with repossessed Harleys, including 2008-model bikes with fewer than 100 miles on them.
"The marketplace is replete with broken deals" and repossessed vehicles, said Bobby Lazenby, president of Navigator Holdings Inc., the parent of Navigator Remarketing.
Global audience
As part of its loan collection efforts, Harley-Davidson Financial Services has stepped up auctions of repossessed motorcycles.
It has a deal with Manheim Inc., which claims to have the world's largest wholesale vehicle marketplace with 145 locations in 19 countries on five continents. It also has a deal with Copart Inc., a Fairfield, Conn., firm that specializes in vehicle auctions and also has a global audience.
If your Hog is repossessed in Milwaukee, its next trip could be on a boat to Armenia - a former Soviet Republic and one of 86 countries where Copart sells cars, trucks and motorcycles.
"Motorcycles do really well in Eastern Europe," said Marla Pugh, a Copart spokeswoman.
The company recently opened its online-auction site to the public, increasing the number of buyers.
"We get bids from all over the world. That's a big part of our sales angle," said Rob Vannuccini, a Copart senior vice president.
Navigator hopes to sell repossessed Harleys for about 15% above the wholesale price, thus reducing losses in the loan portfolio.
"This is music to any investor's ears," Lazenby said.
Navigator recently sold 44 Harleys through a wholesale auction. It has leased a former Chrysler car dealership in Indianapolis to sell repossessed bikes from the loan portfolio.
"It's kind of counterintuitive, but even in this economy there seems to be no shortage of people with $8,000 to $12,000 to spend on a nice Harley," Lazenby said.
Harley-Davidson Financial Services, one of the largest lenders for Harley motorcycle purchases, doesn't disclose figures for repossessed bikes. But its loan losses have widened as the recession has deepened.
"Essentially, we will run an auction every few months," said Thomas Bergmann, HDFS president and Harley's chief financial officer.
Lenders don't publicly reveal how much money they recover on repossessed motorcycles, although they say used Harleys fetch a higher price than some other bikes.
"Whenever you repossess a motorcycle, you don't fully recover the loan. Typically it is a loss of anywhere from 30% to 35% on the loan value," former HDFS president Saiyid Naqvi said in a July 2008 conference call with analysts.
Only licensed vehicle dealers can participate in many auctions. But anyone can buy a Harley from Navigator, and Copart now allows the general public to bid on motorcycles through the company's registered agents.
"That's a big plus for Harley-Davidson because it brings in a whole new group of buyers," Vannuccini said.
"It's a reality of Harley's business. They want to maximize the return on bikes they've had to repossess," he added.
Dealer reaction
Some Harley dealers aren't thrilled about lenders setting up tent sales and public auctions in their territory. The practice cuts into a dealership's sales and creates a competitor that doesn't have to offer customer service and other dealer amenities.
"It doesn't sound too appealing to me," said Ryan Mitchell, sales manager at Indy West Harley-Davidson in Indianapolis.
But some dealers benefit from buying repossessed motorcycles through auctions and reselling them to the general public.
There are online auctions exclusively for dealerships, said Rob Hastings, owner of Milwaukee Harley-Davidson.
"Sometimes those work out for us, and sometimes they don't. Typically, those bikes go to the hottest markets," Hastings said.
For the consumer, buying a repossessed motorcycle through an auction or lender sale comes with risks.
Test rides usually aren't allowed prior to bidding, and sales are generally final.
"It's a wholesale environment. We don't offer warranties," Vannuccini said.
Navigator says it has hired mechanics to check over each Harley before it's sold at the tent sale.
Before bidding on a bike, prospective buyers can start the engine to see how it runs.
But they won't know much about the bike's history, how it was maintained, or whether it was sabotaged by the previous owner before being returned to the lender.
"No one is going to beat a repossessed motorcycle on price. Still, I want to go back to the dealership" if there's a problem, said Laurence Richardson, editor of Clutch and Chrome, an online motorcyclist magazine.
A story for the FMH . . .
Well, at least neglected Harleys can’t suffer and die. I keep thinking about the gruesome stories of all those horses whose owners can no longer afford to care for them.
Oh, I dunno—makes the neighborhood a lot quieter when the Trailer Queens can’t play as much as they used to.
I would rather push my Harley than ride a Jap bike
I would rather push my Jap bike than push my Harley . . .
Depends on what turns you on. If you want blinding acceleration, top end performance and rock solid reliability; ride a Jap bike. If you want to primp and pimp along like some wanabe one percenter and put a piece of cardboard under your bike at night to catch the oil drips; ride your Harley.
It’s either go on a diet or buy a Harley.
check the bottom of my profile ... my Streetglide has yet to leak even one drop of oil at 2 years old 56,000 miles
As you both push your Harley or Japanese bikes along, please don’t get in the way of my speeding along in my evil SUV. Thanks! (P.S. I don’t get bugs in my teeth while driving should I smile as I watch you guys push along!)
Actually Harleys are well built now. They don’t leak. But after owning 4 Hondas that I never had a problem with, I don’t need to buy Harley underware, tee shirts and bandanas to ride a bike.
I think that's better than being a Tom Cruise in Top Gun wannabe... ;-)
This is my 14th bike .... many Honda’s Kawiis Triumph Norton this one is the best I ever had hands down
Rump Rumble Bump.....
If you met Mrs Clamper you would really think I died and went to hog heaven ... looks great in leather
He has a spare tire attached.
The common ‘joke’ from the Japanese aficionados is that Harleys leak oil. The KLR leaks fasteners. I've used up an entire trial size bottle of Locktite on the thing. A month ago I received a Service Bulletin from Kawasaki warning me to check the muffler can mounting bolt. It made me laugh; I lost that bolt the third day.
A blown voltage regulator left me at the mercy of a towrope in South Dakota; no easy feat fifteen miles into the woods.
The philosophy of the Japanese manufacturers is to pound out as many units as cheaply as they can, thereby winning on price. It works for them. It worked on me; I bought the KLR instead of spending $3000 or $4000 or more on a much better quality (non-japanese) machine. None of my Harleys, including my 1982 FXRS, have ever left me stranded. Nearly every Japanese bike I've owned (7 total), at one time or another, has left me walking.
Amenities?? Like overpriced parts and apparel? I ride an '07 Road King but I haven't bought a Harley Tee shirt or a jacket from a HD store in years. Ebay is a different story.
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