Should We Prepare Husqvarna's Obituaries?
Unfortunately, some of these changes lead to disheartening results, and the hard time Husqvarna is having now may only be the beginning of even more bad news.
Husky started off in Sweden, at the end of the 19th century, building bicycles and in 1903 they jumped to building motorcycles, introducing their very first original engine in 1920, a twin cylinder. Husqvarna fared pretty well after the middle of the last century, as they won 14 motocross and no less than 24 enduro world championships during the ‘60s and the ‘70s.
1977 marked the first big financial change, as the brand was acquired by the Swedish group Electrolux. Ten years later Electrolux sold Husky to Cagiva and the bikes went south, to Italy. For two decades, Husqvarna continued operation under Cagiva's umbrella, until being sold to BMW in the autumn of 2007.
The German group started pumping money into Husky and added road bikes to the family: the Nuda 900, Strada 650 and Terra 650, and it seemed like the sun could shine once more over the Swedish brand. Truth be told, despite Husqvarna's 50 years of racing history and achievements, the brand was never a commercial success, and it has never seen the massive sales other manufacturers report yearly.
However, BMW really wanted to bring a new glow to the old Husky badge and for a moment some really believed that once the new road bikes started rolling out the factory doors, the sky was the limit. Husqvarna had a badge laden with tradition and racing heritage, BMW had the money and the sales network which, together with the proven success of the Germans, should have transformed the old Swedish manufacturer into a modern “enfant terrible”. Which did not happen...
Asphalt and Rubber broke down some of the optimistic figures showed by Husqvarna for 2012 and saw the 15% rise in units sold over 2011 and things looked still grim on the off-road side: it was rather clear that without BMW pushing hard and investing a lot in the on-road segment, there was rather little anyone could do to stop the decline.
We might say that when BMW gained control over Husqvarna, they tried to make the same move they had with Mini: a nice product targeting a completely different customer, thus being an amazing way to complement the product range under the group's generous umbrella.
Mini made it, Husky didn't. Mini became a lifestyle choice, while Husqvarna's off-road machines seemed to appeal to less and less customers, and that's how BMW came up with the idea of bringing new toys to the game.
While the fact that Huskies had nothing to do with the perceived image of the BMW bike owners, there was something still missing, so the Germans brought in the traditional reliability of their power units, had it mixed with Husqvarna's resilience in the face of unwelcoming riding conditions, and packed it into a new, modern, road-worthy shape and it proved to be a good recipe.
Unfortunately, it was too late and the other segment was still accumulating losses, and this is most likely why BMW let Husqvarna go. Some mentioned losses around the €200 million mark ($260 mil), and this is big even for BMW.
After selling Husky to Pierer Industries AG, BMW went to India, and announced a partnership with local builder TVS Motor, and made official their intentions to build smaller-displacement bikes. A more detailed analysis on this matter can be found here.
Pierer Industries AG is owned by Stefan Pierer, KTM CEO and so it came that all of a sudden we had no less than the three major off-road bike manufacturers under the same umbrella, as KTM also controls Husaberg. What now, many have asked, but the answer was not to the liking of many.
“Cannibalizing” was one of the words, “antitrust” was also mentioned. Now, with pretty much all the guys looking for a high-end off-road machine ending up with getting a KTM, a Husaberg or a Husqvarna, “cannibalizing” seems less evil, since from a financial point of view, it matters rather little where the money comes from.
It all flows in pretty much the same pot and at the end of the year, when stockholders are happy, everybody is happy, too. The big problem is represented by the losses we mentioned earlier and the overall costs of running Husky: and with KTM already doing great things with Bajaj in India, it's unlikely that Pierer Industries will be willing to pay more for bikes selling less.
With the Husqvarna plant in Varese, Italy already shut down and more than 200 workers laid off, Pierer announced Huskies would still be manufactured, but in Austria, and the flow of parts will be normal.
Rumors have it, the street bikes will be killed, as Stefan Pierer made some declarations on the way he believes Husqvarna must keep on making off-road bikes. We could believe that Pierer has certain models in mind, and plans to build them in a KTM plant in Austria, and maybe India, thus becoming the king of off-road machines and trying to sell no matter which brand (of the three) and enjoy the “ka-ching!”
Others fear KTM and Pierer Industries AG just bought Husqvarna to kill the brand and thus remove the competition from KTM and Husaberg. Being an European business and knowing that the Old Continent does not take too kindly on antitrust trespassers, we might get to see some EU officials delving deeper in the matter quite soon, if more credible rumors on shutting down Husky for good appear.
One does not simply spend big bucks on a brand and then kills it, at least we hope that EU officials have the same opinion on this, for the sake of so many other walks of business.
I even dare think of crossbreeding, at least between KTM and Husky and would not be terribly surprised to see some splicing of both brands' DNA, in order to help Husqvarna get better. This however, does not make things better for the Italian workers, since it's only natural the operations in Varese were way too expensive.
So the move to Mattighofen or to the East will definitely save lots of money, in any scenario. Though we kind of doubt that Pierer will just leave Italy and go on making the same bikes, same way and be glad with whatever sales he makes with Husqvarna.
It was clear for BMW that it was easier to make money by building smaller-displacement bikes in India than pumping huge money in Husqvarna, then work hard, wait and pray for miracles. And we really don't understand why KTM or Pierer would not see this. Until things settle down a bit and a clearer direction for Husky is on the line, we'd all prepare to wave the road bikes good-bye, as it looks like it just wasn't meant to be.
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