A companion to this article was printed in today's
DMN page 13A - "Dreams of a Harley? You can
get one for a song". But, it was apparently reword-
ed from this following Milwaukee Journal Sentinel
article of 3/25/2009
I needed no registration for the link access.
http://www.jsonline.com/business/43699382.html
Many Harley returns
Auction services, tent sales market repossessed bikes
By Rick Barrett of the Journal Sentinel
Posted: Apr. 25, 2009
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Related Coverage
a.. Auction services, tent sales market repossessed bikes
b.. Harley executives face questions on job cuts, outsourcing
Run off the road in a bad economy, scores of Harley-Davidson motorcycles are
being sold through auctions and occasional tent sales.
Many of the bikes are from Harley-Davidson Financial Services, the
motorcycle company's consumer lending arm. It uses multiple auction services
to resell motorcycles after the owners fall behind on payments and are
forced to turn over the keys.
Several million dollars worth of repossessed Harleys are coming from
Navigator Remarketing Group. It's having a tent sale Thursday in
Indianapolis to sell about 120 motorcycles at near-wholesale prices.
Only a few years ago, someone selling a late-model Road King, Fat Boy or
Softail could get nearly the same price they paid for it.
Some people traded bikes every year, knowing they wouldn't lose money on the
deal.
Tent sales and auctions weren't on these sellers' radar screen.
"The biggest thing driving the premium prices for used bikes was the waiting
period for new ones. In was up to about 14 months," said Jeff Haig, an
Electra Glide rider and member of the Kettle Moraine Harley Owners Group
chapter.
Now, Navigator has a $130 million motorcycle loan portfolio, mostly for
Harleys, from a Colorado lender that fell on hard times.
It has a showroom filled with repossessed Harleys, including 2008-model
bikes with fewer than 100 miles on them.
"The marketplace is replete with broken deals" and repossessed vehicles,
said Bobby Lazenby, president of Navigator Holdings Inc., the parent of
Navigator Remarketing.
Global audience
As part of its loan collection efforts, Harley-Davidson Financial Services
has stepped up auctions of repossessed motorcycles.
It has a deal with Manheim Inc., which claims to have the world's largest
wholesale vehicle marketplace with 145 locations in 19 countries on five
continents. It also has a deal with Copart Inc., a Fairfield, Conn., firm
that specializes in vehicle auctions and also has a global audience.
If your Hog is repossessed in Milwaukee, its next trip could be on a boat to
Armenia - a former Soviet Republic and one of 86 countries where Copart
sells cars, trucks and motorcycles.
"Motorcycles do really well in Eastern Europe," said Marla Pugh, a Copart
spokeswoman.
The company recently opened its online-auction site to the public,
increasing the number of buyers.
"We get bids from all over the world. That's a big part of our sales angle,"
said Rob Vannuccini, a Copart senior vice president.
Navigator hopes to sell repossessed Harleys for about 15% above the
wholesale price, thus reducing losses in the loan portfolio.
"This is music to any investor's ears," Lazenby said.
Navigator recently sold 44 Harleys through a wholesale auction. It has
leased a former Chrysler car dealership in Indianapolis to sell repossessed
bikes from the loan portfolio.
"It's kind of counterintuitive, but even in this economy there seems to be
no shortage of people with $8,000 to $12,000 to spend on a nice Harley,"
Lazenby said.
Harley-Davidson Financial Services, one of the largest lenders for Harley
motorcycle purchases, doesn't disclose figures for repossessed bikes. But
its loan losses have widened as the recession has deepened.
"Essentially, we will run an auction every few months," said Thomas
Bergmann, HDFS president and Harley's chief financial officer.
Lenders don't publicly reveal how much money they recover on repossessed
motorcycles, although they say used Harleys fetch a higher price than some
other bikes.
"Whenever you repossess a motorcycle, you don't fully recover the loan.
Typically it is a loss of anywhere from 30% to 35% on the loan value,"
former HDFS president Saiyid Naqvi said in a July 2008 conference call with
analysts.
Only licensed vehicle dealers can participate in many auctions. But anyone
can buy a Harley from Navigator, and Copart now allows the general public to
bid on motorcycles through the company's registered agents.
"That's a big plus for Harley-Davidson because it brings in a whole new
group of buyers," Vannuccini said.
"It's a reality of Harley's business. They want to maximize the return on
bikes they've had to repossess," he added.
Dealer reaction
Some Harley dealers aren't thrilled about lenders setting up tent sales and
public auctions in their territory. The practice cuts into a dealership's
sales and creates a competitor that doesn't have to offer customer service
and other dealer amenities.
"It doesn't sound too appealing to me," said Ryan Mitchell, sales manager at
Indy West Harley-Davidson in Indianapolis.
But some dealers benefit from buying repossessed motorcycles through
auctions and reselling them to the general public.
There are online auctions exclusively for dealerships, said Rob Hastings,
owner of Milwaukee Harley-Davidson.
"Sometimes those work out for us, and sometimes they don't. Typically, those
bikes go to the hottest markets," Hastings said.
For the consumer, buying a repossessed motorcycle through an auction or
lender sale comes with risks.
Test rides usually aren't allowed prior to bidding, and sales are generally
final.
"It's a wholesale environment. We don't offer warranties," Vannuccini said.
Navigator says it has hired mechanics to check over each Harley before it's
sold at the tent sale.
Before bidding on a bike, prospective buyers can start the engine to see how
it runs.
But they won't know much about the bike's history, how it was maintained, or
whether it was sabotaged by the previous owner before being returned to the
lender.
"No one is going to beat a repossessed motorcycle on price. Still, I want to
go back to the dealership" if there's a problem, said Laurence Richardson,
editor of Clutch and Chrome, an online motorcyclist magazine.
Tuning up repos For more images of repossessed Harleys being readied for
resale, go to
www.jsonline.com /photos
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