Back in early June I posted this note on the talks between H-D and MV Agusta. According to this AMA press release the two groups have signed a definitive agreement worth approximately $109 million US. The agreement gives H-D 100% of MV Agusta.

This is not Harley’s first foray into Italian motorcycles. Most of us remember when Harley sold small-bore and 2-stroke bikes made by Italian firm Aermacchi in the ’60s and ’70s. It will be interesting to see how Harley fares this time around. According to this Chicago Tribune story H-D’s sales in the US are falling, but have been growing at double-digit rates in Europe for the past three years, to the point that they now have nearly 10% market share. Sportbikes make up 80% of European sales, so it seems that H-D is looking to capitalize on that.

In the US this may not work. My son once applied for a job at a Harley dealer. We had put together a nice resume package, with a letter referencing his interest in motorcycles and powersports. The Harley dealer told him, in no uncertain terms, “We don’t do powersports!”

But in industry, the big grow bigger through acquisition. There aren’t a lot of new markets for big motorcycles, so the key is to acquire market share by buying customers. According to the article:

MV Agusta is considerably smaller than Harley-Davidson, which has nearly half the U.S. market. The company has about 500 dealers worldwide, the majority of them in Europe, and in 2007 it shipped 5,819 bikes. Harley-Davidson shipped 330,619 bikes last year and has a network of about 1,300 dealers.In the U.S., MV Agusta has about 45 dealers that sold 330 bikes last year.

Harley-Davidson noted MV Agusta significantly slowed production this year due to financial difficulties.

I wouldn’t expect to see MV Agusta bikes show up in your local H-D dealer anytime soon.

According to this report, Harley-Davidson is in an advanced stage of talks to buy part or all of Italian motorcycle company MV Agusta. Why would HD buy an Italian sportbike company when they already have Buell?

Because big companies have to grow sales – year-over-year, quarter-over-quarter – always growing. When sales slow (as they have in the motorcycle market for the past year or so) there are only two things you can do:

  • Invest in developing new products or new markets for your existing products (both of which take time)
  • Buy customers (and sales) via acquisition

When it comes to buying motorcycle companies, Italy is about the only place you can go. H-D flirted with buying Ducati last year but was rebuffed. We’ll see if this turns out differently.