HOT NEWS – February 14, 2005

KTM GOES PUBLIC WITH ATV PROJECT
KTM is serious about entering the ATV market, judging by two recent job postings listed on its public Web site, www.KTM.com.
On Jan. 20, KTM said it hoped to find a “head of ATV chassis development” and an “engineer for ATV chassis development.” Both positions will be based in Mattighofen, Austria.
The head of chassis development would lead a team responsible for the chassis development of a new range of KTM ATVs, including the building and development of test units as well as the analysis of testing results.
The person filling this position also would make recommendations for further development and the optimization of the product range, and would cooperate with production and purchasing departments, suppliers and external development partners.
KTM says the engineer for ATV chassis development would assist in the design of KTM’s ATV chassis; construct, maintain and evaluate test mules, including analysis of testing results; provide recommendations for further development; and cooperate with production and purchasing departments, suppliers and external development partners.
To view the complete posting, visit http://www.ktm.com/frameset.asp

KYMCO: NEW NAME, NEW BOSS
STR Inc., Motorsports Division, the exclusive North American importer-distributor of KYMCO product from Taiwan, has changed its business structure and name, and hired a new president and CEO to lead the company.
STR, Inc. Motorsports Division is no longer a division of STR Inc. Instead, effective Jan. 1, 2005, a new South Carolina-chartered corporation, STR Motorsports Inc., is doing business as KYMCO USA, keeping its headquarters and major product distribution and support activities in Inman, S.C.
Eric Bondy was tapped as president and CEO of KYMCO USA, assuming day-to-day responsibility for all operational aspects at the importer.
Bondy spent the past nine years at Arctic Cat, Inc., Thief River Falls, Minn., where he most recently served as regional sales manager for the company’s southern region, working with outside vendors and assisting with the manufacturer’s system-wide computer project.
KYMCO USA says that, as a standalone United States entity, it will be better able to reach agreements with other companies in the motorsports industry, including financing and retailing service providers, plus a growing number of aftermarket accessories manufacturers.
Bruce Ramsey, vice president of sales and marketing, says KYMCO USA dealers will benefit from the new independent status: “We will be able to create new relationships that offer dealers opportunities to increase their revenue, whether through financing packages or accessories sales.”
KYMCO is a brand manufactured by Kwang Yang Motor Co. Ltd. of Taiwan. The company operates five manufacturing plants and distributes to 63 countries. In 2003, Kwang Yang produced 410,000 KYMCO scooters, small displacement motorcycles and ATVs. Full-year revenues were $522 million.
Recent KYMCO introductions include the utility-targeted MXU 250 ATV, and a prototype 500cc scooter named the “Xciting 500.” Approximately 400 KYMCO authorized dealers in the U.S. currently offer 10 scooter models, five ATV models, and the Venox 250 motorcycle.

AMA ELECTION RESULTS
The American Motorcyclist Association (AMA), Pickerington, Ohio, has announced the results of its recent election for the AMA board of directors.
Carl Reynolds (incumbent, unopposed) will represent the Southeast region; Stan Simpson (unopposed) will represent the South Central region, and Arthur More has been elected to represent the Southwest region.
The two new individual directors will be seated at the Feb. 20 session of the AMA board of directors, which will follow the election of corporate directors at the annual corporate member meeting on Feb. 19 in Indianapolis.

VIPER CEO RESIGNS
Clyde Fessler, CEO of Viper Motorcycle Company, New Hope, Minn. resigned from the company, effective Feb 2.
Fessler’s recent marriage and a desire to spend more time with his family in Colorado were key factors in this decision, said Terry Nesbitt, Viper executive vice president.
Fessler joined Viper in the summer of 2004. He previously worked for Harley-Davidson.
For more information about Viper, visit www.vipermotorcycle.com.

ITC FINDS NO INJURIES IN OUTBOARD DUMPING
The International Trade Commission (ITC) has ruled that dumping by Japanese outboard engine manufacturers has not caused injury to manufacturers in the United States.
The 4-2 decision, reached Feb. 2, brought a yearlong debate to an end, leaving Yamaha feeling vindicated and Brunswick’s Mercury Marine division claiming that the United States outboard engine market remains an uneven playing field.
Investigations began in January 2004, after Mercury Marine, a division of Lake Forest, Ill.-based Brunswick Corp., filed a petition with the U.S. Department of Commerce (DOC) and the ITC claiming that Japanese manufacturers of outboard engines violated U.S. anti-dumping laws.
Last December, the DOC lowered the dumping margin for those outboard engines being imported from Japan from 22.52% to 18.98%, making a final determination that Japanese producers of outboard engines had engaged in dumping in the U.S. market. The February ruling was to decide whether U.S. manufacturers suffered injury from the dumping.
“The fact that the ITC sided with Yamaha and rejected Brunswick’s case is good for the whole industry,” says Yamaha Marine Group President Phil Dyskow. “And the good news is that we can all go back to focusing on the business of boating where we should have been all along.”
Mercury Marine President Pat Mackey says that he was attempting to level the playing field for his boat builders and dealers “so that they’re not disadvantaged in the marketplace.”
“If I had to do it again, I would,” he said. “I don’t think it has hurt our relationships with boat builders and dealers. I think the more thoughtful people realize that a competitor is using illegal practices … they recognize that is something that I can’t sit idly by and allow to happen. You have to take action, and that’s what we did. Ignoring it was not an option.”
— Matt Gruhn and Liz Walz

DEALER ACQUIRES HISTORIC H-D EXHIBIT
A.D. Farrow Co., the country’s oldest Harley-Davidson dealership, has acquired a major museum exhibit celebrating the Motor Company and its history. In January, A.D. Farrow Co. took possession of “The Heroes of Harley-Davidson” exhibit from the Motorcycle Hall of Fame Museum in suburban Columbus, Ohio. The museum, affiliated with the American Motorcyclist Association, is located just east of Columbus in Pickerington, Ohio.
A.D. Farrow Co. will use the 8,100 sq. ft. exhibit as the centerpiece of a dealership expansion now in the design phase.
The exhibit demonstrates the evolution of Harley-Davidson from its beginnings in a 10-foot by 15-foot shed under the leadership of four founding fathers, William S. Harley, Arthur Davidson, Walter Davidson Sr., and William A. Davidson, to an international dealer network. The exhibit also showcases the successes enjoyed by racing pioneers such as Harry “Otto” Walker and Jim Davis, Class C racers and hillclimbing competitors, as well as the first women motorcyclists, among them Bessie Stringfield and Dot Robinson.
A.D. Farrow Co. Harley-Davidson was founded in 1912 by Alfred D. Farrow (1889 -1927) in Nelsonville, Ohio. After his untimely death in 1927, Farrow’s widow, Lillie, controlled the dealership and is believed to be one of Harley-Davidson’s first female dealers.

CYCLE SALES PLUMMET IN UK
The Motor Cycle Industry Association (MCI) reports that 133,938 new two-wheelers were registered in the United Kingdom in 2004, a decrease of 14% compared to figures tallied for 2003.
Cycle sales in the UK have dropped 6% since 2000, when 170,000 units were registered.
Two-wheeler sales were led by scooters, which account for 34% of all new registrations, and sportbikes, which account for 28% of new bikes.
Dual-purpose machines account for approximately one in seven new bikes.

BRAZIL POSTS RECORD CYCLE OUTPUT
Brazil’s motorcycle industry produced 1.057 million units in 2004, according to data released by the Brazilian Association of Motorcycles and Bicycles (Abraciclo).
Domestic sales totaled 911,000 units last year, up 7.5% from 2003. Exports jumped 56% to 157,000 motorcycles by the same comparison. These figures make the South American country the world’s fifth largest motorcycle market, and the second largest cycle exporter behind China.
For 2005, Abraciclo forecasts production of 1.146 million units, an increase of 8% from last year. Domestic sales during 2005 are expected to rise 4% to 936,000 units, while exports are expected to rise 12% to 176,000 units.

HONDA ITALIA RETAILS 95,000 UNITS
Honda Italia Industriale S.p.A., the Italian subsidiary of Japanese carmaker Honda Motor Corp., sold approximately 95,000 motorcycles and scooters in 2004.
The company generated sales of 659 million euro ($859.9 million) in 2003, up 3.0% from revenues in 2003. Some 750 employees work at Honda Italia’s units in Rome, Bologna and its factory at Atessa, in central Italy. A total 198 official dealers sell Honda vehicles.
The company claims a 22% share in Italy’s two-wheel market.

PATRIOT SPONSORS MX TOUR
Patriot Motorcycles Corporation, Dana Point, Calif., has teamed up with one of the fastest-growing spectator sports in America — freestyle motocross.
The premier event in this sport is the annual Freestyle MX Tour, featuring world-class riders.
The Yamoto by Patriot brand of off-road dirt bikes and ATV’s recently signed an exclusive agreement to be the “Presenting Sponsor” for the upcoming Freestyle MX Tour 2005. The 2005 Freestyle MX Tour will be seen at 70 venues with expected attendance ranging from 50,000 to 300,000 per event.
As the presenting sponsor, Yamoto by Patriot will receive on-site signage and will be included on all national and local advertisements for each Tour stop.

DEALERSHIP BREAK-IN
Police in Lake Wales, Fla., are investigating the theft of 26 vehicles from Sky PowerSports, a Bombardier, Kawasaki, Suzuki and Yamaha dealer.
The incident occurred sometime Jan. 30. PowerSports General Manager Dave Farina estimates the value of the missing motorcycles, ATVs and scooters at $100,000.
Three of the stolen units were found several blocks from where the business is located.