Can ATK Cruisers Help Harley-Davidson?

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http://www.motorcycle-usa.com/321/8282/Motorcycle-Article/Can-ATK-Cruisers-Help-Harley-Davidson-.aspx Can ATK Cruisers Help Harley-Davidson? Bryan HarleyCruiser Editor |Articles |Articles RSS |Blog |Blog RSS Yes, Harley is my real name. And no, there’s no relationship. But I do enjoy riding Harley-Davidsons, which comes in handy as the Cruiser & Custom Editor of Motorcycle USA.

Thursday, October 28, 2010

ATK Motorcycles recently entered into an arrangement with S&T Motors and wants to offer its line of cruiser and street motorcycles, like the ATK 700 Cruiser, in Harley-Davidson dealerships to help them fill the entry-level niche and to bring people into their shops. It’s no secret that Harley-Davidson has been struggling. Sales are sagging, down 13.4% through three quarters this year alone while 2009 was even worse with a 21.4% decline. The Motor Company had to rely on a $300 million lifeline at a 15% interest rate from Warren Buffet last year to help stay afloat. Workers’ wages have been frozen, jobs have been cut, and threats of factory closings have taken a toll on its popularity, as has the closing of its subsidiary, Buell Motorcycles. Its demographic is getting older, with a buyer’s average age at 49 years old according to a report by The New York Times (Harley, You’re Not Getting any Younger). The need to attract a younger demographic is immediate. Could a lifeline for The Motor Company be an entry-level motorcycle made in Korea and sold under the badge of American manufacturer ATK?

ATK Motorcycles out of Centerville, Utah, a co-member of the United States Motorcycle Manufacturers Association along with Harley-Davidson, recently signed a multi-year contract with S&T Motors of Korea to bring 33,000 units to the American market with displacements ranging from 250cc to 680cc over the next four years. This is a big departure from the norm for ATK, which forged its reputation in the off-road realm. But according to ATK’s President and CEO Frank White, dirt bike sales are off over 80%, so it too is seeking new avenues to generate revenue. Now it is prepared to enter the street market with a lineup consisting of four small displacement carry-over Hyosung motorcycles in addition to a 700cc V-Twin cruiser it recently unveiled on the Bonneville Salt during the BUB Motorcycle Speed Trials. ATK’s new partner, S&T Motors, is the largest motorcycle manufacturer in Korea who has been producing Hyosung motorcycles since acquiring the brand in 2007. The catch is, ATK wants to sell its bikes in select Harley-Davidson dealerships.

“We want to be the second American brand in a Harley shop. We don’t want to compete with anything Harley does, we just want to go for new and younger customers. There’s a real need there,” White said in a recent interview.

ATK brought its lineup of cruiser and street motorcycles to the Salt for the 2010 BUB Motorcycle Speed Trials. Through friends like the former head of the Harley Dealer Association and ATK partner, Malcolm Zanca, and via relationships established with some of the heavyweight Harley-Davidson dealers, ATK is looking to distribute its motorcycles in about 20% of Harley-Davidson dealerships. ATK realizes this business model will not work for all Harley dealers but wants to focus its efforts on the “best of the best.” Currently H-D has approximately 795 U.S. dealerships.

“We don’t want to be in every one. It wouldn’t work for them and it wouldn’t work for us,” White stated.

ATK insists it is not looking to compete directly with Harley-Davidson but is trying to provide “a staircase of entry level motorcycles to cultivate future Harley riders” and to do what’s best for the dealer and consumer. As of August 2010, ATK has shipped its brand of street motorcycles to seven Harley dealerships as demo models across the USA with many more claimed to be ready to take products once it receives EPA and CARB approval. ATK says it has been transparent with The Motor Company in respect to their interactions with its dealers, but Harley-Davidson in no way endorses the plan.

“We know they can’t endorse us. One, their legal department would be all over it if we did anything different and the second thing is, if they endorsed us, they’d have other issues to deal with,” White said.

But Harley-Davidson can’t prevent its dealers from selling more than one line of motorcycles.

Respected motojournalist Alan Cathcart talks shop with S&T's Jimmy Park and ATK CEO Frank White at Bonneville. Later on, Park would test out the Salt himself before gearing up for a 100-plus mph run on the ATK 700 Cruiser. “Harley dealers can sell any brand they want. I was told by one of Harley’s former VPs that’s involved with us that Harley can’t limit the dealerships to just Harleys, because that would be against some free trade laws, but I’m no lawyer,” White continued.

ATK’s CEO points out what Toyota did with the Scion brand as an analogy to what he’s trying to accomplish. Scion is a marque of Toyota that spawned from a project to attract younger buyers to Toyota in the U.S. market. The intended target of ATK is the “echo boomers,” or children of the baby boomers looking to get a start in motorcycling.

In regards to that market, White said it was announced at the recent Harley-Davidson dealer meeting in Las Vegas that The Motor Company is going to come out with an entry-level bike in three years and since then reported rumors place that price tag at $60 million dollars. Motorcycle USA wonders though, in three years, how many H-D dealers potentially will be belly-up?

The ATK motorcycles for sale in 2011 are rebadged Hyosungs, but in 2012, updates will be made and they will begin to be assembled in Utah. S&T will still be supplying components but American-made parts will be incorporated into the motorcycles. ATK intends to keep making the brand better, starting with basics like revised instrument clusters, exhausts, brakes, and wheels as every year ATK wants the motorcycles to become more of their own. After the street bikes start selling, ATK intends to branch off into other products like an electric bike. In the future, ATK would like to combine resources with an electric vehicle(EV) manufacturer to design, engineer and manufacture an EV motorcycle.

ATK Motorcycles recently headed to the Salt Flats of Bonneville in its home state of Utah to unveil its 700cc V-Twin Cruiser at the BUB Motorcycle Speed Trials. S&T’s Chief Operating ATK has been in the business of making off-road motorcycles since 1984. Frank White, above, is much more than a CEO. He is also an accomplished rider, winning races like the National AMA ISDE 6-Day Open Expert Class aboard a 500 ATK Enduro. Officer, Jimmy Park, got an opportunity to ride the liquid-cooled ATK 700 Cruiser on the Salt, surpassing 100 mph on both passes. Other models ATK will be marketing in 2011 include a Honda Rebel-like 250 V-Twin Cruiser with an air/oil cooled 75-degree V-Twin with DOHC and a constant mesh five-speed transmission. The 2011 250 V-Twin Street will be powered by the same V-Twin engine but is a more sport-oriented standard. ATK will also be selling a 2011 650 V-Twin Cruiser, which is styled similar to an old V-Rod and will source a liquid-cooled, 90-degree V-Twin with DOHC. The same powerplant will also be used in the 2011 650 V-Twin Sport equipped with sportbike fairings, a constant mesh six-speed transmission and a claimed wet weight of 474 pounds. ATK’s 2011 250s will cost $3,995 while the 650s are listed at $6,995.

Despite ATK’s stated intentions to attract new and younger riders into H-D dealerships, White made it clear that “Neither the Harley-Davidson Motor Company, or its affiliates, either endorse or support ATK in any way.”

Harley-Davidson’s Product Communications/ Project ATK's 2011 650 V-Twin Sport, foreground, sources a 90-degree V-Twin with DOHC mated to a constant mesh six-speed transmission. Manager, Jen Gruber, had this to say about the proposal.

“As for ATK, we do not comment on our competitors' motorcycles or their marketing plans. But I will say we continue to believe that the best Harley-Davidson customer experience is provided by focused, single-line Harley-Davidson dealers. You should also know that according to U.S. R.L. Polk registrations, Harley-Davidson took over as the top-selling brand in the U.S. in sales of new street motorcycles (all cc engines) to young adults 18-34 in 2008. And in 2009, we extended that lead over the next nearest competitor.”