Cycle News - Archive Issues - 1970's

Cycle News 1971 08 31

Cycle News is a weekly magazine that covers all aspects of motorcycling including Supercross, Motocross and MotoGP as well as new motorcycles

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VOLUME VIII NUMBER 33 WEST August 31, 1971 PRICE THIRTY CENTS America's largest and most complete weekly motorcycle newspaper -- ECONOMY FREEZE BELTS MIC INDUSTRY-By Ron Schneiders LOS ANGELES, CAL., Aug. 19, 1971 - President Nixon has unleashed the dogs of war against an ailing American economy in a massive effort to improve it before he suffers that fate worse than death: defeat at the polls. The "dogs" go by many names, including Price Freeze, Wage Freeze, Import Tax and so on. They are going to affect motorcyclists. Just how much, right now, is anybody's guess. As James Potter of the Motorcycle Industry Council sa'Ys, "Confusion reigns!" and Ire isn't kidding. We called almost every distributor of motorcycles in the Los Angeles area and by the end, all we were absolutely sure of was that nobody was absolutely sure of anything. But is is at least possible to draw some general conclusions. First of all there is going to be a surtax imposed on all motorcycles brought into this country for the next 90 days. According to Tariff Rule 69.50, the maximum duty that can be applied to motorcyles is 10% and that's what it's going to be from now through the next 90 days. There is presently a tariff of 6%, so the increase will be 4%. On a $1,000 motorcycle, figure to pay an extra $40. That's if you can buy one. The dock strikes have got about half the new motorcycles in the world floating around various harbors. Parts will cost even more. Tariff Rule 69.55 states that maximum duty that can be imposed on parts is 25%, but presently it's "only" 7% so that will go up to 17%. Actually, many parts such as those that have rubber and leather and other special materials in them will go up even more because they have a higher-than·7% tax right now. The surtax Ifas two related purposes. First, it is being used as a "club" to force other countries into a realignment of their currencies. The U.S. has a fIXed price for gold (in dollars·per-ounce) and most other countries have pegged their currency to the dollar at some fIXed rate. The trouble is, from the American viewpoint, the fixed rates are not realistic. japan's rate of exchange of yen for dollars has not changed since immediately after World War II. At that time her economy was a shambles. Since then her economy has skyrocketed, while ours has not. Thus the fixed rate is no longer realistic. The same situation exists with respect to the European nations, but not to the same degree, which partially explains why European motorcycles cost more than equivalent Japanese bikes. The second purpose of the surtax is to help American manufacturers compete more effectively with foreign manufacturers. Have you noticed that there aren't any American motorcycle manufacturers? Good. You get an "A" on this week's civics test. Dickie Nixon flunks. (If you want to be technical, Harley Davidson makes one model here, the Super Glide, which no one seems anxious to compete with anyway.) Apart from the surtax there is the problem of . fluctuating currencies and their effect on distributors who are supposed to respect a voluntary price freeze that carries a penalty-for-violation of up to $5,000. The changing value of the mark which has been "floating" has caused the price of German made goods to jump some 13% since June. If the yen is changed in line with the desires of the government, the price of motorcycles from manufacturer to distributor can b-e expected to take a huge jump. But the increase can't be passed to the consumer as the surtax can, so in theory the distributor will have to absorb it. If the price freeze and surtax end in 90 days as planned, there woil't be any problem for the ·distributors but nobody - and I mean nobody - sees even a. remote chance that either measure will be repealed in 90 days. The excise tax on cars, now being repealed (maybe) was enacted as a WW II emergency measure. Here are the reactions of some ditributors: American Honda, Les White: Essentially no comment. He said their directors have a tape of Nixon's message and that they were playing it over and over. Whether they didn't understand it, didn't believe it or both was in doubt. Honda has a warehouse in Houston, Tex., so the dock strike to them is "just a pain in the neck." They have enough parts to last two months. White completely refused to even hint at what the developments might do to prices. Butlaco, Tom Patton: "It's a godam mess!" Bultaco will absorb price increases for the moment. Many of their lines have been short all year and the dock strjke isn't helping. Cooper Motors (Maico), Frank Cooper: Cooper has made a rather thorough study of the monetary situation because it has already affected him rather seriously. Maicos come from Germany which has recently allowed its currency to float, with the consequence that Maicos are now costing Cooper approximately 13% more than they did in June of this year. On top of that he is baving to airfreight his bikes because of the dock strike. He thinks tbat under the letter of the law be can raise his prices somewhat because they have been higher within the last 30 days, but be hopes be won't have too. His thought for the future: ''Thjs tax will either remain or increase." Yippee! Husqvarna: Unable to contact. Hercules (DKW, Pucb), Ted Lapadakis: Of all tbe distrib\ltor's contacted, Ted Lapadakis seemed the most optimistic. And with good reason. All his next year's bikes are in, so he won't have to apply any surtax. At least until Jan. I, his prices will remain the same, including parts. If parts costs (to him) rise, he will absorb the increase. Says Ted, ''This will help re-align the Japanese prices with the European prices and enable us to get a fairer share of the market". Kawasaki: Unable to contact. Montesa: Kim Kimball, Montesa's maestro was not available for contact but his comptroller said they intended to hoiq the line on prices for the time being and see what developed. . Penton West, Fred Gilmore: Penton is looking for Its new models to start arriving in September, or October. Due to the dock strike, all their bikes will be shipped cross-country. He is looking at higher costs all across the board and says, "Somehow the consumer is going to gobble this up." He made the point that some of the big Japanese firms could hold the line quite a while with their substantial resources but many of the smaller distributors were working with no cushion. Suzuki, Dick Orth: Suzuki is going to absorb any additional costs on the '71 models. Suzuki bas no comment or speculation on '72 models. "We need clarification before we make any statement," said Orth. Their '72 models are arriving now and will be subject to the surtax. Yamaha International, Terry Ternan: As typical of the bigger, Yamaha had nothing to say on the subject of price except that they were likely to have some headaches due to the fact that some of their new machines are already here and not subject to tariff while many of them are in the bay, and are subject to the tariff. On the face of it, it would seem that '72 machines will carry two prices. This is of course undesirable and will probably be resolved some way, but Ternan wasn't sure how. ''The dock strike is hurting us terribly," he said. "We're having our dealer's meeting in a couple of weeks and we're going to introduce and sell our new models." "How long will they last," I asked. ''They'll all be sold to the dealers that night." he saiQ. "How long will they last the dealers?" I asked. "About a week." He didn't sound happy at all. Pabatco (H odaka) , Chuck Swanson: Chuck Swanson wasn't sure of the situation but he had been doing some arithmetic. He (and most of the other small distributors) work on about 9% margin. If either the tariff or the other factors force him to absorb 9% or more, he's out of business. Ossa, John Taylor: John Taylor thinks the surtax will lead to "a tightening of the market, but it's a healthy trend." B.S.A.(friumph: BSA(friumph, the giants of the 60's, have fallen on poor times. Beset by labor problems at borne, crippling dock strikes in England, and continuous losses, sbe is a prime candidate for a takeover bid. New money and firm direction for the company must be found or it, like Rolls-Royce, will fmd itself in receivership, as the Britisb say. It's no secret that a large price hike was in store; it will probably have to be postponed, althOUgh no one is quite certain how the price freeze applies to freign manufactured goods. Cycle News General Manager Tom Culp asked BSA how things were going; they didn't have much to say. The surtax, obviously will be passed on to the consumer. (See related report on page 5.) One big question remains: Is it better to buy now or wait out the 90 days and see what happens? If you are planning to buy a bike in the next eight months or so, it w.ould be best to get one that arrived before the surtax was imposed. You'll save an absolutely clear 30 to 100 dollars. If you can't do that and are determined to have a bike, you might as well buy it and pay the tax. The tax probably won't be removed until the realignment that's sought takes place. When that happens, prices will take a sharp jump upward, but there's no guarantee that the surtax will come off right away, so you could wind up paying both the tax and the higher price due to realignment. If you don't want to buy a motorcycle, you might sit down and browse through some history books. During 194041, a U.S. President named Franklin D. Roosevelt imposed what were then called "economic sanctions" against Japan, wbich was at that time a small country on the edge of industrialization. Roosevelt, like Nixon, was wielding the conomic. might of this country unilaterally and indescriminately. Japan's stock prices then as now, plummeted. When Japan was beaten to its economic knees, when all her pleas for relief went unanswered, Japan reacted, in helpless rage, and beat hell out of a small American island in the middle of the Pacific ocean. Ever get the feeling that you've seen this part before? The situation is not an exact parallel of course, but it's close enough to be scary. The Further Adventures of Bryan and Barry Hello motocross enthusiasts - this is your Afghan reporter for the Kenney-Higgins AMXT campaign in Europe. Recently, our boys have done some hard charging through a long line of top names. At an international race in Mezieres, France, Kenny carried the flag to a sixth with Higgins just behind in eighth. A week later we saw Ake Jonsson smash DeCoster's attempts at a win in the Luxembourg Grand Prix while Kenney powered the Husky to a twelfth o v e r a l l . · Riders such as Dave Nicoll, Stan Lundin, Andy Lee and Pierre Karsmakers are par for the course in the Frencb international events, and Mezieres had its share of competitors. Our HVA man took a nice flier the first moto, but picked himself up quickly without losing much time. No bike CftLENEWS 2499 eSi ioJtusAve. problems and good form - Higgins and Kenney looked strong behind ti)e front runners, Lee and Karsmakers. Kenney finished sixth, and Higgins, eighth. Just nine seconds kept DeCoster away from a win in the Luxembourg Grand Prix. Tbe BeIge took a good lead the first moto, but in the second moto Jonsson couldn't be touched, and Maico won the day. While th~ decisive race was being run; Kenney and Higgins were having their share of difficulties, but managed to show the group of American supporters some good racing. The first moto Higgins derailed a chain, winding up with a DNF; Kenney finished fifteenth on a flat front tire. The second moto, they both had a better go.. Higgins rode to sixteenth and Kenney got a thirteenth. Overall for the day for Kenney was twelfth and' encouraging under the conditions to be only two points away from a point. The track was only a little over two miles long which cut down the number of laps to about 15 in the allotted forty Ne-.rspaper minutes. After a team race in Italy, we'll be witnesses to the end of the World Championship series in Holland. Til then Snowflake

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