3/14/2011-Putting his sport bike theory to test

INDIANAPOLIS – Are consumers really looking for, and desiring, an American-made sport bike?
The $70 million-plus sales downturn of Buell Motorcycles in 2009 and its eventual closure would indicate otherwise. But a recent Facebook experiment may suggest that downturn was merely a byproduct of a recession and not indicative of the enthusiasts’ true wants.
When Buell founder Erik Buell posted a sneak peek at his latest creation — an image that showed mere inches of a newly designed sport bike — more than 150 enthusiasts felt compelled to comment. Dozens more commented as other sneak peeks of the bike were unveiled on Facebook in later days.
“I think the interest in a real American sport bike is really substantial,” Erik Buell told Powersports Business in an interview that explored the end of his long-time relationship with Harley-Davidson and the beginning of his new business, EBR.
Buell and EBR— the company will be known as the acronym rather than Erik Buell Racing — showed off the new high-performance, high-end sport bike at Dealer Expo in Indianapolis. The first EBR unit will be a limited edition model. Buell, however, has bigger plans for EBR, including creating a dealer network that he anticipates will be selling thousands of units in 2012.
Moving on from H-D
Erik Buell has come a long way in the 16 months since the brand bearing his name was shutdown.
Buell Motorcycles’ first bike in 1983 was a RW750 for the AMA Formula One motorcycle road racing championship. The brand grew for more than two decades, building its 125,000th motorcycle in November 2008. However, sales from 2008-2009 dropped from $135 million to less than $60 million, and Harley halted its operations.
As a result, 180 employees were laid off. Suppliers and dealerships also made job cuts due to the closure.
“You’re letting people go that you know and you love and you care about,” Buell said. “You know their families, so that’s pretty devastating.”
Before the shutdown, the business relationship between Harley-Davidson and Buell Motorcycles was ever-changing, Buell said. At times Harley wanted to be more involved with the brand, while at other times, it stepped away.
“What they tried to play with the business was, ‘Let’s go a little bit toward sport bikes with Buell, but without the Harley name,’” Buell recalled.
Though Buell was hurt personally by the loss of the brand, he doesn’t hold a grudge against his former employer. “They didn’t shut down Buell because they were mean,” he said. “They shut down Buell because they had to because of the business direction they were taking.”
Starting a new business
When Buell left Harley-Davidson, he did so with a number of restrictions for a period of time. The Buell Motorcycles brand name remains with Harley and cannot be used by Buell himself, but other agreements have since dissolved.
“There’s no current relationship between us at all,” Buell said.
Within two months of his departure from Harley, Buell started EBR. The goal of the company, as he reported at the time, was to produce 1125R-based race use-only motorcycles under a Harley-Davidson license as well as supply race use-only Buell parts, preparation services and customer support.
Starting the new company was somewhat easy for Buell, considering he had been in the industry for decades.
“People ask me, ‘So is this like starting all over in the garage?’ And the answer is no. There’s absolutely no comparison of what I know now from what I knew then,” he said. “You have a tremendous amount of experience and knowledge. You know suppliers; you know business better, so you can make decisions fast.”
Though EBR has a much smaller staff than Buell Motorcycles did, Buell hired some of his former colleagues when establishing the new company. The group started in racing, but the goal was always to get back to street bikes.
“We race to build the brand, to prove the technology, to get credibility, so that people can see our stuff out there on the racetrack,” Buell said.
EBR focused most of its 2010 publicly on the track, while working on the street bike back at its East Troy, Wis., facility. The company supplied a German race team with prototypes last year, and the team won all but one race. That sparked a buzz, which was the goal of putting bikes on the track.
“People are really interested even though we’re not really doing any advertising or anything,” Buell said.
The 1190RS
While EBR’s prototypes were racing, the company was studying them to prepare the consumer-ready 1190RS.
“One of the great ways to test something, and I believe this very much, is racing because you break things that customers never would, and you want to do that and fix it, so that then your bike is completely bulletproof,” Buell explained.
What came out of those tests is EBR’s first street bike, a model that Buell beams about.
“It has the very best of everything,” he said. “It’s a hand-built exotic work of art that’s also functional.”
The sport bike has a high-performance engine with titanium valves. It also features a magnesium sub-frame, magnesium wheels, forced air brakes, Ohlins suspension and an exotic radiator design, among other features, Buell said. MSRP for a standard model will be $40,000, and only 100 will be produced worldwide, starting in mid-March.
“This bike is definitely a limited edition,” Buell said.
Though the MSRP is significantly higher than other sport bikes, Buell says enthusiasts who appreciate the technical aspects will buy in.
“The guys that go through it say, ‘Holy smokes. How did you do that for $40,000?’” he said.
The bike will be available to dealers beginning in late March or in April.
Starting a dealer network
As a new manufacturer, EBR is looking to build a dealer network.
Though the pre-production model shown at Dealer Expo was barely finished, parts were still coming in to the factory and brochures had yet to be made, Buell made sure EBR had a booth at the show.
“I wanted to meet people and look them in the eye because we’re starting up a new dealer network, and I want our dealers to be very sport bike-oriented,” he said.
EBR is looking only for sport bike enthusiasts to sell its motorcycles. Drawing from the dealers’ passion is something Buell learned while working for Harley-Davidson.
“The H-D dealers who just love cruisers and touring bikes are the most successful Harley dealers,” he explained. “Some of the Harley dealers also loved sport bikes, and they did well with Buell. What I learned from them was the dealers that have success are the ones that love what they’re doing, love the product, identify with the customers.”
Enthusiastic dealers, he says, will give the customer the best treatment and buying experience.
“In the sport bike business you need great technology; you need a great motorcycle, but the business is most successful when the customer’s delighted, so we want to build a bike that delights them. But their experience with the dealer needs to be the thing that really bonds them to our brand,” Buell said.
Buell didn’t share a target number of dealers for EBR to seek in 2011, only saying it will be more than five.
“It’s got to be just rational for everybody,” he said. “It’s got to make sense for the dealers; it’s got to make sense for the customers. We have to be in enough areas that people will be able to get their bikes serviced.”
Especially with a limited release of only 100 1190RS bikes, EBR plans to be careful before bringing dealers in. “We don’t want to sign you up and not be able to give you a bike, so we’ll be signing dealers throughout the year,” Buell said.
EBR hasn’t finished drafting a contract, but one will be available soon. Gene Ostrom, who spent 20 years at Honda and 10 with Harley-Davidson, is vice president of sales and marketing and will be heading dealer recruitment.
“We’ve had a number of (interested) dealers, even dealers who have contacted us prior to coming here (to Dealer Expo), but we haven’t signed anybody,” Buell said.
Though exact terms have yet to be worked out, EBR plans to offer parts and support within its dealer program.
“Customer satisfaction is huge for us, so we will make sure the dealers get the parts and support they need,” Buell said.
What’s next
As the dealer network begins to build, EBR will be shipping out the 1190RS units. The company will then inform interested customers where the nearest dealership is and how they can get their hands on the bike.
Though only one EBR model has been shown so far, others are in the works. EBR hopes to sell a couple thousand bikes in 2012.
“We want to grow the business a lot,” Buell explained. “This is not about selling these 100 bikes; it’s about establishing ourselves and those dealers as well.”
With the first model already designed and heading into production, engineers have begun working on other models.
“We know how to make different models and derivatives. We know how to make bikes that are even down under $10,000 and make money at it. That’s going to take some time to get there, and I’m not talking months,” Buell said.
EBR’s goal is to eventually have more affordable models to reach a variety of consumers.
“We produced a lot of innovative bikes over a short period of time with Buell (Motorcycles), and we’re ready to do it again,” Buell said.
When he was released from Harley-Davidson, Buell said he saw opportunity and seized it immediately.
“I know there’s no animosity,” Buell said of his relationship with Harley-Davidson. “I know now that I’m going in a very different direction from what they are, so I’m not competing with them.”
Instead, he’ll be once again seeking to prove that a market for an American-made sport bike exists and is viable for the future. PSB

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