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Why H-D is in trouble, and why killing Buell was a mistake


Bill_Walker

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Here is an interesting analysis of the deep trouble H-D is in for the foreseeable future, and why killing Buell was exactly the wrong thing to do. Keep following the links pointing to the right at the top for the continuing story.

 

The executive summary (by me) is what we've heard before: H-D's customer base is primarily older white men, and they've done nothing to attract younger generations, who are now coming into their expensive-motorcycle-buying years, to the brand.

 

But the detailed analysis, and explanation of generational booms and busts (not in the first article), is interesting.

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I really enjoyed reading all of that Bill. I also found many links to items I've added to Favorites. Thanks! :wave:

 

Interesting corner that HD painted themselves into, and at times it seems as if they had to do it by choice? It was so easy to figure out what would be coming if they kept on that path. Convenient that they can play the recession card with the stock holders.

 

Baby Boomers used to be year 1950 and older, then 1955, and now it's beyond 1960? What gives with that moving target?

 

 

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Bill:

 

An excellent read, thanks for posting. It really makes BMWs recent moves (into racing, the GS franchise, the smaller bikes) look a lot smarter. It'll be interesting to see if they can pull it off. At the same time, I would love to see the engine size drop a bit--an 800RT or ST might the fit the pocketbook and size for younger/smaller riders a whole lot better.

 

 

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Interesting series; made for good reading. Whether it's true, or not, remains to be seen, but from my anecdotal observations, I think he's zeroed in on the real issue -- H-D has done little to attract a new generation of buyers, be they women, minorities or younger white males. Looking at where BMW's been heading in the last few years, it would appear that they've seen the writing on the wall and decided to do something about it.

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The executive summary (by me) is what we've heard before: H-D's customer base is primarily older white men, and they've done nothing to attract younger generations, who are now coming into their expensive-motorcycle-buying years, to the brand.

BMW's demographic probably isn't much different, but at least they seem to be trying to introduce new models to attract those who think that an opposed twin is boring.

 

I'm willing to quibble with one of Moonrider's statements:

 

A few years ago Buick found itself in the same position as H-D: the young avoided the make like the plague. In an attempt to counter that, Buick ran a series of commercials that bluntly said it “wasn’t your father’s car” anymore.

It was Oldsmobile, not Buick, that ran this campaign, and we all know how that came out. Buick, on the other hand, hired Tiger Woods as its spokesman -- apparently to great effect.

 

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Cadillac is an excellent example of a marque that had an older demographic and reinvented itself. They build cars for younger hipper people now and completely changed their image.

I thought the hot rod CTS was going to be my next car, until I checked out the 335i hardtop convertible... 300 hp, 300 ft/lbs, open air.... what's not to like?

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I'm willing to quibble with one of Moonrider's statements:

 

A few years ago Buick found itself in the same position as H-D: the young avoided the make like the plague. In an attempt to counter that, Buick ran a series of commercials that bluntly said it “wasn’t your father’s car” anymore.

It was Oldsmobile, not Buick, that ran this campaign, and we all know how that came out. Buick, on the other hand, hired Tiger Woods as its spokesman -- apparently to great effect.

 

You're right about the slogan being Oldsmobile's, but the demographic problem is still with Buick as far as I can tell from the ones I see on the road. Buick drivers around here have two kinds of hair: white and none.

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Buells have been nothing big pieces of crap. Its about time Harley ditched the brand. I think if anything the name has hurt Harley. If they want a brand that attracts the youth then they need to make a bike the youth wants, will ride and can aford. I know, I used to own one. Its was a big pile of junk that in the end was eventually bought back. The lack of reliability, ugly designs and being treated like a red headed step child at the dealers have been huge turn offs.

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"Harley’s dependence on yesterdays demographic is having consequences that demonstrate how far out of touch HD is with today’s reality."

 

To me, this nails it. Harley's appeal has been of nostalgia. As the years go by, nostalgia remains only a couple of decades in the past. Just look at music. Today's oldies are tomorrow's ancient history. Harley-Davidson offers nothing to the aging population except the same old motorcycling paradigm experienced in the imaginations of aging people trying to capture the "romance" of days long gone. Yeah, they are nice bikes, but technology and innovation have long ago rendered them obsolete. As the baby-boomers quietly retreat into old age, the HD allure will surely diminish even further. It's forward-thinking companies like BMW and Honda that will carry motorcycling into the future, not Harley-Davidson.

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Ditto.

 

HD is GMC. Similar mistakes, though without the Union baggage I believe.

 

Harley is just a few steps behind Chrysler & GMC on the bankruptcy timeline.

 

Even if Harley survives, it will continue to represent a HUGE opportunity missed and an iconic company lost. Sad.

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John Ranalletta
It was Oldsmobile, not Buick, that ran this campaign, and we all know how that came out. Buick, on the other hand, hired Tiger Woods as its spokesman -- apparently to great effect.
The local joke around here is that the best selection of late model Buicks can be seen in the parking lots of the local cafeteria-style restaurants frequented by retirees.
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John Ranalletta

No purchase is as discretionary in the US as a motorcycle; and, few other industries rely so much upon cheap, easy credit and perceived value.

 

Remove any one of these factors and the company will falter. Even if it redesigned products and entered different market segments, it would still be competing for a bigger slice of a much smaller pie.

 

HD is faced with excess production capacity, new and used inventory overhang, loss of financing; worse, customers who are trying to extinguish debt and accumulate cash.

 

I'd rather own Kymco than HD stock for the next decade.

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Buick was saved rather than Pontiac, despite selling fewer cars. This was due to Buick being a top seller in China.

 

Harley priced their bikes much too high. Virtually everyone had to add a couple thousand worth of extras/upgrades be to happy. I like the look of Harleys and love the heritage but to get any performance you would have to get screaming eagle upgrades. Most buyers could not afford this option. imo.

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Nice n Easy Rider
You're right about the slogan being Oldsmobile's, but the demographic problem is still with Buick as far as I can tell from the ones I see on the road. Buick drivers around here have two kinds of hair: white and none.

When I see a line of cars being held up by an American-made car I assume it's a Buick. And I'd say I'm right probably 80% of the time and as Bill said, it's virtually always a "gray- (or white- or no-) top". :grin:

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BMW may be doing the right thing in attempting to penetrate new demographics, but they've be shooting a lot of blanks. Take a look at the previous 650's (now discontinued) and current 450 for the dirt bike crowd. Overpriced and non competitive. It will be interesting to see how the new crotch rocket goes over. The lack of attention to their quality issues and failure to accept responsibility for after warranty failures due to known design or manufacturing defects should be the first thing their marketing people correct.

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Take a look at the previous 650's (now discontinued)...

Just an FYI; the 650 has re-appeared as the G 650 GS (yes, the previous single-cylinder. Not to be confused with the parallel twin 800cc F 650 GS). MSRP of the G 650 GS is $7900 US.

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Take a look at the previous 650's (now discontinued)...

Just an FYI; the 650 has re-appeared as the G 650 GS (yes, the previous single-cylinder. Not to be confused with the parallel twin 800cc F 650 GS). MSRP of the G 650 GS is $7900 US.

 

What has been a dud is the G650X line. X-Country, X-Moto, X-Challange. Not many takers. The G650GS is a good seller.

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You're right about the slogan being Oldsmobile's, but the demographic problem is still with Buick as far as I can tell from the ones I see on the road. Buick drivers around here have two kinds of hair: white and none.

I can't argue with that. My 87-year old father-in-law drives an Olds.

 

The one auto brand that really has re-invented itself and moved its demographic is Cadillac, which used to be even further out on that spectrum. For almost a decade now, Cadillac has had the edgiest styling in the GM stable, and is really the only one of their brands with a distinctive look. I haven't been a fan of GM since the 1950's, but I tip my hat to what the Cadillac division has done.

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Cadillac is an excellent example of a marque that had an older demographic and reinvented itself. They build cars for younger hipper people now and completely changed their image.

I thought the hot rod CTS was going to be my next car, until I checked out the 335i hardtop convertible... 300 hp, 300 ft/lbs, open air.... what's not to like?

 

Good point. It can be done. Could you imagine yourself even just checking out a new Cadillac 6-8 years ago? I certainly couldn't, and now they are making very competitive stuff.

 

It's extremely difficult to turn a brand's image around, but great product, smart marketing, and time can turn the trick. The difficulty may be the time element if finances are that bad.

 

 

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If HD wants to survive they better pander to the Latino market. The country is fast becoming Spanish speaking and Latinos are the "lump in the snake" in demographic terms. The Latino market is family-based and not likely to find the loner biker image that has distingushed the HD marketing as appealing, as a total market, as the boomers did.

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I think that despite having something to appeal to the youth, many are forgetting that the Buell line up have been poorly made mtorcycles with less than current styling and designs. The youth need and had have come to expect more than a name alone. We expect reliability, affordability and modernality. The Buell lineup fufilled none of those categories. I think it was great that Harley had a sportier brand lineup to sell side by side and lure in younger buyers, but you cant ignore the product you offer.

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After reading these posts it occurred to me that HD sold a lot of bikes with the same promise that home loans were being made at that time.... better get yours now... it will be a great investment.

 

Investment?

 

Many home loan officers told everyone that buying a home was a great investment because, if they bought now, got a "no doc" loan where you could lie about your income and get a 100% loan that everything would be ok because "of course your home will go up 10% per year and you can refinance out your equity at the end of two years and have tax free money in the bank."

 

I had a HD salesman tell me that buying a Harley was a great investment because HD prices would only go up and anyway, with demand as high as it is and with 100% financing you could expect to ride the bike for two years and get at least the same price by merely hinting to your friends and neighbors that your bike was for sale.

 

Hmmmm..... lots of foreclosed houses for sale now..... lots of Harleys for sale in the paper.....

 

 

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If HD wants to survive they better pander to the Latino market. The country is fast becoming Spanish speaking and Latinos are the "lump in the snake" in demographic terms. The Latino market is family-based and not likely to find the loner biker image that has distingushed the HD marketing as appealing, as a total market, as the boomers did.

 

Interesting idea... here in SoCal the latino (esp Mexican) impact on both car and motorcycle culture is manifest. While I think the "lonely biker" is still appealing to most latino Americans, what realyl seems to drive them to harley is the perceived modding "hot-rod" appeal of the brand. I doubt HD will have too much problem selling product in SoCal for years to come (albeit at a lower rate than the boom years).

 

As to the article, it seems to me that the author has a bit of an axe to grind. Virtualyl all of the points he makes can be said for any similarly positioned company in any luxury market. These brands, especially iconic ones like Harley, are not likely to go anywhere soon. Successfully weathering the storm will do more to burnish HD's image as a rock of American motorcycling than any quick-fix marketting or quicky product refresh, IMHO.

 

JT

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The executive summary (by me) is what we've heard before: H-D's customer base is primarily older white men, and they've done nothing to attract younger generations, who are now coming into their expensive-motorcycle-buying years, to the brand.

 

I mostly agree with one exception. My son is in that new generation buying group and bought a new generation 'cruiser' from H-D. The V-Rod Muscle his bike of choice for now, IS NOT YOUR FATHER's HARLEY! It absolutely stomps any stock or mildly modified old air cooled design H-D quietly and with minimal vibration! The only problem is the bike favors taller riders with it's' foot peg location. Not my kind of ride but, a power cruiser non the less from H-D.

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I had a HD salesman tell me that buying a Harley was a great investment because HD prices would only go up and anyway, with demand as high as it is and with 100% financing you could expect to ride the bike for two years and get at least the same price by merely hinting to your friends and neighbors that your bike was for sale.

Bingo! At one point, HD was offering 120% financing; buy a $20,000 bike, and get $24,000 financing, so you can afford the accessories that are so conveniently available at your HD dealership.

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....At one point, HD was offering 120% financing; buy a $20,000 bike, and get $24,000 financing, so you can afford the accessories that are so conveniently available at your HD dealership.

 

A lot of which were sold to people without the necessary income to repay the loans. Precisely how the housing bubble burst.

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The executive summary (by me) is what we've heard before: H-D's customer base is primarily older white men, and they've done nothing to attract younger generations, who are now coming into their expensive-motorcycle-buying years, to the brand.

 

I mostly agree with one exception. My son is in that new generation buying group and bought a new generation 'cruiser' from H-D. The V-Rod Muscle his bike of choice for now, IS NOT YOUR FATHER's HARLEY! It absolutely stomps any stock or mildly modified old air cooled design H-D quietly and with minimal vibration! The only problem is the bike favors taller riders with it's' foot peg location. Not my kind of ride but, a power cruiser non the less from H-D.

 

 

The V-Rod is the only Harley I would even consider. For a year thay made the Street Rod with mid controls which was enticing, except for the fact that the rear brake lever was not adjustable and, for me, caused pressing on the lever unless your foot was pulled unnaturally to the rear. It also sat much higher than most anything Harley ever produced, so it actually leaned over way more than most HD drivers are capable of doing and did not scrape anything. Most un-Harley!.

 

The other problem with the V-Rod for the usual Harley demographic is that "It ain't a REAL Harley. I aint gonna buy a liquid cooled bike"

 

I really cannot wait to see the reaction when HD finally puts the V-Rod engine in a cruiser frame.

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A Buick salesman told me the average age of a Buick driver is 63.

 

I wonder what the average age of an RT buyer is? :)

 

 

sIXTY fOUR....

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louisvillebob

RT buyer or owner?

 

Can't blame an RT owner for being older. The things last forever. Ya can't wear them out. If it would wear out, I could maybe have an excuse to buy something newer.

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Well, I was 32 when I got my first one, 34 when I got my second one and 39 when I got my third one... so I'd say the average is about 35 1/2 years old :grin:

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A Buick salesman told me the average age of a Buick driver is 63.

 

I wonder what the average age of an RT buyer is? :)

 

I purchased my first brand new R1100RT back in 99 and I was 20 years old. Some people looked at me funny buying what some call an old mans bike at such a young age. I refer to it as recognizing good engineering. I did trade it in 6 months later for a K1200RS for a little more sport. Ironically as it is, I just bought a 2002 K1200RS yesterday. I do trade frequently but I believe I am at 10 or 11 BMW's now...Even in my early thirties and I still ride a beemer. One of these days I will ride an old fart bike, you may have heard of them....its called a Harley. :D

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A Buick salesman told me the average age of a Buick driver is 63.

 

I wonder what the average age of an RT buyer is? :)

 

bought my first RT, an R80RT, in 2000, at 26 years old, bough my Oilhead at 27 years old, a year later. I think now, 10 years later, Im still 20 to 30 years below the average RT riders age, at 36.

 

A 20 something on a BMW? On an Airhead? on an Airhead RT?

 

-Ken

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One of the things I find interesting in this discussion is the fact that in the not-too-distant past, Harley-Davidson was being universally feted as an example of inspired genius in design, engineering and marketing. How soon we forget.

 

However, I'll say this: the fanaticism over H-D always struck me as a little faddish and something that was inherently short-term in nature. In the U.S. motorcycles are not generally viewed as serious transportation. With the number of "toys" that H-D was pumping out, it seemed inevitable that they would eventually hit the point of saturation, particularly given their fairly narrow brand image.

 

I'm really sad to see Buell go. They demonstrated that a U.S. company could still innovate in ways never imagined by their Asian or European competitors. However, the point made above about their quality problems did not go unnoticed. It's a little surprising that Harley, which has made such enormous strides in quality, didn't attack that problem more vigorously.

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I think there is something that gets ignored. Motorcycle sales or sales of most products have 2 types. New buyers and repeat buyers. HD was relying too much of new sales. In order to maintain new sales you have to increase your customer base. Otherwise, you limited ot product life to determine the number of repeat sales.

 

HD could survive just on repeat buyers without making any effort to attract a younger audience. But it will be much lower sales.

 

I think HD has the same problem many makers of durable goods have. They've saturated the market. You have a product that has a somewhat fixed lifespan. So even if you can convince consumers to buy a new motorcycle every 3 years, you will in turn be flooding the used motorcycle market. At some point, cheap used vehciles will reduce new product sales... espcially in a down economy.

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RT buyer or owner?

 

Can't blame an RT owner for being older. The things last forever. Ya can't wear them out. If it would wear out, I could maybe have an excuse to buy something newer.

 

I've heard from several sources that at one time GM was carefuly ot desing many components to only last for 5-7 years or around 50-70k miles. This produced good parts sales...which have higher margins than new cars, and also forced consumers to purchse new vehciles sooner. The asians came along and changed that strategy by seliing produts that lasted longer with fewer issues.

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Bill:

I would love to see the engine size drop a bit--an 800RT or ST might the fit the pocketbook and size for younger/smaller riders a whole lot better.

 

And they really need to lower the seat height. I'm 6'5" barefoot with a 34"+ inseam and I use the lower seat position on my R1200RT.

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The one auto brand that really has re-invented itself and moved its demographic is Cadillac, which used to be even further out on that spectrum. For almost a decade now, Cadillac has had the edgiest styling in the GM stable, and is really the only one of their brands with a distinctive look. I haven't been a fan of GM since the 1950's, but I tip my hat to what the Cadillac division has done.

 

You nailed there. I gave up on GM decades ago (after owning a Buick LeSabre and a Vega wagon). If I HAD to own a GM product, it would be a Caddy, no doubt.

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I always thought that Harley was a inspired genius in marketing, but not in design and engineering.

Paul has hit it on the head. To which I will add that most of the people citing HD's genius knew little or nothing about motorcycles.

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Bill:

I would love to see the engine size drop a bit--an 800RT or ST might the fit the pocketbook and size for younger/smaller riders a whole lot better.

 

And they really need to lower the seat height. I'm 6'5" barefoot with a 34"+ inseam and I use the lower seat position on my R1200RT.

 

Just dropping engine size in the same bike doesn't work. Bike is still same weight/size, costs the same to build but has to sell for less money. BMW had some smaller cc bikes like R850R and R850RT, mostly because of European beginners license and insurance regulations. Honda now has the NT700 = Deauville in Europe light weight touring bike, Let's see how it does. BMW could use a F800RT.

Lower seat height: BMWs are usually tall because they want good ground and cornering clearance and good long travel suspension. That makes a tall bike. Low cruiser stile bikes have lousy suspension. BMW now has available lowered R1200RT, R1200R, R1200GS, F650GS bikes. Interesting is that there always was strong clamor that BMW are too tall (see above), but now that they have it they are very slow sellers.

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Miles of differance between that NT700 guttless POS, and the R850R or RT though Paul. I have had loads of fun on sub 1000cc bikes (as have you) and would love to see some of the 850's or even smaller displacement BMWs make it stateside, especialy if they are lighter bikes. A 850RT that was a bit smaller and lighter would be a good leader bike to get riders who are intimidated by the bigger bikes on BMWs just like the 650s have.

And I would pony up the cash for an R850R just to have a lighter, better milage commuter bike that would be a riot in the twisty bits myself.

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The R850R was a nice bike but not lighter than the R1100R. It did have a smoother running engine. Problem is it did cost the same to make as the 1100, but sold for less money. Not good for business. To make it work, it has to be done like BMW did with the F800GS and the 800cc F650GS twin. I think car people call it "decontenting", take stuff away. Single disk brake instead of twin, regular cheap fork instead of better upside-down, cast wheel instead of wire spoke, other details.

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Interesting series; made for good reading. Whether it's true, or not, remains to be seen, but from my anecdotal observations, I think he's zeroed in on the real issue -- H-D has done little to attract a new generation of buyers, be they women, minorities or younger white males.

 

I would argue that even BMW has failed to do this! The entire segment is in trouble. If you look at the sales and ridership data for the past ten years, it has consistently gone down, not up. What you have seen is people like myself who have purchased multiple bikes, or as the gas prices rose in the US, reentry riders, but we've still not seen a huge flock of 20 something riders in the US. That's what is needed, and the industry as a whole must figure that out.

 

Wayne

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I think that despite having something to appeal to the youth, many are forgetting that the Buell line up have been poorly made mtorcycles with less than current styling and designs.

 

The tuber's had some issues, but any of the Buell's made since the XB engine have not not been "poorly made"... A list of warranty repairs of Buells and HDs would have to be made and those in the "know", at HD have repeatedly stated that the Buell's experienced less warranty repairs than the HDs. If you're going on speculation based on what people have posted online, then you might as well turn in your BMW because your final drive is about to fry, and your key sensor is going to leave you stranded, or... you get the point. Basically people post when they have issues, not when their bike is running great.

 

If you can back up your "poorly made" statement by something other than statements out of mid-air I'm all ears, but I doubt it. Oh and as far as less than current styling and designs. I'd rather have my Ulysess any day of the week over a GS. The bike is nearly bulletproof and a heck of a lot of fun to ride... and if that's not what it's all about, then we need to stop riding.

 

Wayne

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I think that despite having something to appeal to the youth, many are forgetting that the Buell line up have been poorly made mtorcycles with less than current styling and designs.

 

The tuber's had some issues, but any of the Buell's made since the XB engine have not not been "poorly made"... A list of warranty repairs of Buells and HDs would have to be made and those in the "know", at HD have repeatedly stated that the Buell's experienced less warranty repairs than the HDs. If you're going on speculation based on what people have posted online, then you might as well turn in your BMW because your final drive is about to fry, and your key sensor is going to leave you stranded, or... you get the point. Basically people post when they have issues, not when their bike is running great.

 

If you can back up your "poorly made" statement by something other than statements out of mid-air I'm all ears, but I doubt it. Oh and as far as less than current styling and designs. I'd rather have my Ulysess any day of the week over a GS. The bike is nearly bulletproof and a heck of a lot of fun to ride... and if that's not what it's all about, then we need to stop riding.

 

Wayne

 

I can back it up with the one I owned... It was eventually bought back by Buell. It spent the majority of the time I owned it in the shop. It was towed in within the first week after being bought new off the showroom floor. I spoke with other Buell owners in the service section with similar issues. Others that I know personally with Buells have had a long host of issues. I speak from personal experience, not jus twhat people post here or on other forums. Personally, its the one bike I refuse to ever buy again. I have met Eric Buell personally. He is a nice guy and very pasionate about his bikes but seems more interested in crazy, buck the trend designs instead of making things reliable.

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BMW now has available lowered R1200RT, R1200R, R1200GS, F650GS bikes. Interesting is that there always was strong clamor that BMW are too tall (see above), but now that they have it they are very slow sellers.

If I could find a used GS-low, I would probably snap it up. I love my RT, but frequently feel I'm on the edge of disaster when moving it around by foot.

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