Erik Buell Racing Between Asia, Polaris and Death?

Another auction that was supposed to sell the remaining assets of Erik Buell Racing was organized, but things did not go according to plan. The sale was contested, and the court agreed that EBR remains in receivership until a sale is made.
The December 10 auction produced no commercial result, even though no clear details about what happened were provided. We do know, however, that the court set a new date for a future auction in mid-January.

Earlier this year, Hero MotoCorp retired from their business partnership with Erik Buell Racing, and this led to a domino effect that saw the American manufacturer forced to shut down operations, lay off employees, and call for special procedures.

Even though most of us expected Hero to take over EBR, this did not happen, as the Indian giant only picked the assets they were interested in during the initial sale. The assets in question were grouped under the vague "certain consulting project" notion, but we all knew what they were about.

Hero got all the development work EBR did for them, patents, plans, sketches, and whatnot, technically all the things Erik Buell Racing had prepared for them. And Hero will be happy to use them and develop new bikes based on that work. How much will they improve their production is hard to estimate, but this will be a step up for the Indian maker.

Hero got what they wanted, EBR got receivership

Right from the start of the partnership between EBR and Hero, the two companies announced that their collaboration sought multiple goals. Namely, Hero would provide financial support for EBR, thus making sure that more bikes would be produced, and the dealer network would continue to expand until EBR would be strong enough to "fly solo."

In return, Erik Buell Racing was to provide consultancy services for Hero, helping them develop new, modern motorcycles, engines and all, offering them an upper hand in the competition with other local makers.

Was it all planned?

EBR fans with a penchant for conspiracies suspect that this was a scheme carefully put together by Hero right from the start. I'm not necessarily buying into this theory, no matter how strange certain details may look when put together.

Even more, I guess that if Erik Buell suspected that he was set up by Hero, the police and court would have been the first places to go and file a lawsuit, instead of receivership. However, it's hard to believe that no such action was taken against Hero in case something looked fishy.

Taking into consideration my talks with Scott Harden of Zero Motorcycles and his stories as to how quickly a manufacturer can burn through what seems like a fortune, I'll still hold my horses in this "scheming theory."

What happens with EBR now?

Naturally, this is the big question. A new auction arrives on January 14, 2016, and there is no telling how it will end. Even though the seller is looking forward to getting a good price, this may simply not happen.

The more time passes with EBR in a non-lucrative predicament, the harder it will be for small buyers to have things back on track. Alongside the financial effort to buy EBR, restoring production and establishing a sales and service network is not at all an easy task.

Erik Buell Racing could not do it, not even with Hero's money and support, so I guess this is not exactly a walk in the park. Some are also vocal as to the poor marketing skills of Erik Buell himself, compared to his engineering prowess.

With the prospect of returning EBR to functionality as a company dimmer and gloomier for smaller businesses, seeing bigger names in the industry picking it up remains the best-case scenario.

Worst-case vs. best-case scenario

The worst-case scenario is easy to figure out. Nobody is interested in what's left of EBR, even though the assets include an entire business that's almost ready to roll... sort of.

Some buyers will eventually show up, interested in whatever bikes EBR has in stock, engines and parts, but they will only pay a small fraction of what the receiver hopes for. Maybe Magpul will arrive with several trucks to seize the bikes and build new custom ones, and this would be the end of EBR.

On the other hand, bigger manufacturers might be interested in snatching the rights to the EBR brand for change money. Being lawfully able to sell bikes that bear the EBR badge would be a great plus for an Asian manufacturer.

The Asia scenario

One of the possible scenarios sees an Asian manufacturer getting hold of EBR and the rights that come with the business. Indian makers, Chinese makers, you name it, they have deep pockets to make this work.

If Hero spent 2.8 million bucks to retain the development work done by EBR, spending a tad less to get hold of everything is not an issue for the big Asian makers.

The sad part is that they will most likely put an end to 1190cc sport bikes and replace them with 200-600cc ones or so. These makers simply don't have the knowledge to work with superbikes, and they will need time to get to this level, but in the small-displacement segment, they are gods.

Selling EBR-branded products in the emerging Asian markets will be a major boon for anyone that can seize the opportunity. If you ask me, Hero could be in for the kill, as they already have EBR DNA to begin with.

The Polaris scenario

Well, maybe naming Polaris now is a tad too deep into wishful thinking territory. For what's worth, given how cheap one could get EBR on January 14, pretty much any other European manufacturer with a good foothold in the business could write a check.

However, I see Polaris as the main potential buyer because EBR would thus remain on North American soil, which would represent a solid incentive for the customers in that market. The US buyers are a bit conservative at times, and being offered an American bike still built on their side of the pond would weigh a lot.

Polaris already has a good background with other brands, and adding EBR to the roster would not be a surprise. Even more, their new liquid-cooled engine could be a neat complement to the EBR image and, at the same time, coherent with the future of both EBR and Victory. That engine could power a Victory cruiser, and it would also do well powering an EBR roadster.

With less than a month until the next auction and the winter holidays and a new year arriving, I hope that someone is making plans for buying EBR. It would be just sad to begin 2016 saying farewell to this brand...
If you liked the article, please follow us:  Google News icon Google News Youtube Instagram

Would you like AUTOEVOLUTION to send you notifications?

You will only receive our top stories