Late last week a rumor began to circulate that Honda Motor Co. (NYSE: HMC) was pursuing a buyout of Harley-Davidson (NYSE: HOG). On the strength of the speculation, HOG stock jumped almost $3, closing the week at $62.55.
Honda has issued a strongly worded denial of such interest, and I believe it. Harley and Honda would be a bad fit for several reasons.
Culture: Harley's success is not mechanical, but cultural. The cachet surrounding the brand depends on its individuality, and the brand would not survive the subordination of it within a larger entity. Most Harley riders treasure the knowledge that the company is still American owned, at least in part, and among those in control are members of the original Davidson family such as Willie G.
Nationalism: Harley's brand is also dependent on its American identity; to lose this would diminish the value of the company considerably. The pejorative term 'Jap crap' is still commonly heard amongHarley riders.
Business styles: Honda's expertise lies in engineering, manufacturing and value marketing. For it to attempt to move into a brand whose primary value depends on intangibles would put it on a playing field for which it is not equipped.
No upside: Honda is well positioned with a complete product line, and additions from the Harley line would duplicate existing hardware and dealer networks. It could not realize any significant benefits of manufacturing or distribution.
Some have suggested this to be an attempt to pump the stock as we approach the end of the second quarter. I tend to agree and think you can safely discount this rumor.
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Reader Comments (Page 1 of 1)
6-27-2007 @ 10:11AM
debzam said...
I'm pretty dense, and this is kinda new to me, but if it's such a bad idea, why would the HD stock go up?
6-27-2007 @ 11:13AM
Sheldon L said...
A better Idea to stir the pot.
Honda + Harley = less than the sum of the parts. If Harley offers's itself for sale it should be to Federal Express....and then they should buy their own bikes and use them for new short hop messenger service, world wide.