Motorcycle sales are down, motorcyclists are getting older, and people have all kinds of non-motorcycle related pursuits fighting for their hard-earned, after-tax dollars. Industry distributors, suppliers and after-market players are all struggling according to numerous media reports and a review of various OEM financial reports. Future sales forecasts by the big manufacturers are weak. Many are working towards lower inventories to ensure they are not producing more bikes than their “current” marketplace can support. So, what’s up?
Here’s my 2-cents on this issue…
The 45+ Demographic – As is the case with many expensive recreational product offerings such as ATVs, RVs, side-by-sides, boats and motorcycles, personal income levels and interest rates play a huge role in customer demand. In other words, you got to be able to afford your recreational pursuits.
The American Motorcyclist Association indicates the average age of today’s motorcycle rider is 48. Nearly 40% of motorcycles in the U.S. have owners in the 50+ age range. Average household income of a motorcycle owner is above $85,000. This is $30,000 higher than the average household income of $55,000 in the U.S. Basic observation: A disappearing pool of customers (with the money to buy their ever increasingly expensive products) is clearly evident to OEMs and has been so for the past decade. Despite the evidence, OEMs have been slow to control their selling costs and even more slow to invest in developing other target demographics such as women riders and minorities.
Product Sticker Shock – It’s no wonder first-time buyers and young people aren’t buying a lot of new motorcycles. Many are loaded with college debt and/or automobile debt and/or raising young families. In California and other expensive states, a good number of the under 35 crowd can barely afford to leave the comfort of their family’s homes.
OEMs have failed to address the economic reality plaguing this demographic. Best I can tell, young people actually like the idea of participating in adventures and going on roadtrips but view bikes as too expensive a vehicle for it.
Not building new motorcycles that young people can afford has been a clear strategic miss by the OEMs in my opinion. For example, the Harley-Davidson Street 500 MSRP is $6,899 plus an estimated 25% for various state and dealerhip charges. Now, your talking almost $9,000 out the dealership door.
Indian’s new Scout Sixty is a really cool ride but at MSRP $8,999 plus an estimated 25% of OEM “disclaimer” fees and you are now looking at $11,249 out the door.
Yamaha Cruisers don’t fare much better with the Bolt Cruiser MSRP at $7,999 + 25% = $10,000.
Just 1 in 5 new motorcycle purchases (only 20%) are coming from first-time bike buyers according to marketing expert, Brandon Gaille. Basic observation: Smart competitors have taken notice. Sources tell me that India’s Royal Enfield is getting ready to launch new U.S. bikes in the 500cc and 750cc range for under $7,900 out the door by 2019. Japan’s world famous Honda Super Cub, with engines at 50cc and 110cc, is being launched now in Japan for an out the door price estimated to be $2,500. A U.S. and Canada introduction is expected for 2019.
Used Motorcycles – The real price to ride value today…comes from used motorcycles. Bikes are so well built that one can consider any pre-owned motorcycle with less than 10,000 miles and less than 10 years old basically like new in my opinion. Riders are saving thousands of dollars by buying good used bikes from Motorcycle Trader, EBay and other sources.
And, for all those fortunate few that can afford/want to pay $40,000 to $50,000 for a new, top of the line Tourer, there’s as many potential such buyers chosing to hang back waiting for a pre-owned, low-mileage Tourer selling for $22,000 to $29,000. Basic observation: Dealers need to display more used bikes up front as viable ride options…don’t hide them in the back of the showroom as outcasts. I’m hearing used bikes are selling so you might as well prioritize them for sale on the showroom floor.
Industry Leadership – Looking around the motorcycle industry, OEM leadership is predominantly male. One is hard-pressed to find many female executives among the C-suite decision-making ranks. So it’s no surprise that female riders have not received top level support from OEMs and their distributors. Key point – The industry cannot hope to capture the hearts and minds of new riders without more diversity in its leadership ranks.
Depending on which statistics you look at, women riders make up between 9% and 14% of the motorcycling population. Gen X women, those born between 1961 and 1981 are currently between 30 and 55 years of age. They appear to be well educated, more confident, more independent and many have good paying jobs. Yes, they got debt and other obligations but so does everyone in this demographic age group.
As a business person, it seems odd to me that women and minorities are so under-represented across the sport of motorcycling given how long motorcycles have been around.
Also, women continue to be promoted not as serious riders and/or passengers but mainly as sexy ornaments to motorcycles and the motorcycle lifestyle. This is a clear marketing target customer miss by OEMs in my opinion given today’s business climate of diversity, inclusion and harrassment. Basic observation: Diversity and inclusion of women and minorities matters. Big time support and respect is a must going forward if OEMs have any hope in developing this major, important group of future riders.
Marketing as a Discipline – does not appear to be a strong, well-funded business competence amongst OEMs. Basic observation: Where are the powerful, executive level, revenue-driving, motorcycle-riding CMOs leading the charge on “experience marketing” initiatives?
Marketing as an Investment – There appears to be enthusiasm for various motorcycle racing segments, a few celebrity endorsements, some money to assist local dealership promotions but little investment by OEMs in the creation of new rider engagements and experiences. The industry’s use of the broad media overall seems to be inadequate for more demand creation. When was the last time you saw a cool television commercial showing a happy motorcycling family outing, for example.
Basic observation: OEMs need to pivot and invest in more “experience marketing” strategies and plans that are totally customer specific…not dealership specific or feel good engineering specific. OEMs and dealerships need to move beyond Saturday morning coffee and donuts and/or bikini-clad babes washing bikes to attract new riders. It’s about the experience around “the ride” for everyone!
New Rider Prospects – They’re everywhere! Yes! The U.S. Department of Transportation estimates that there are near 8 million Americans who have a motorcycle license but don’t own a bike. Where are the sophisticated marketing campaigns and initiatives aimed at converting these 8 million motorcycle-licensed holders that don’t own a bike?
In California, the country’s largest motorcycle market, there are more licensed motorcyclists without a motorcycle than there are licensed riders who currently own one. According to a 2014 Motorcycle Industry Counsel Survey, 1.7 million Californians held licenses to operate motorcycles but only 847,937 motorcycles were registered in the state. I suspect a similar correlation exists today in 2018.
Think about this for a moment…millions of licensed-qualified prospects want to ride and the industry is struggling to sell them bikes? Basic observation: The industry’s traditional marketing and sales model is obviously outdated and nowhere near as effective as it should be…My spin on it…OEMs are making great bikes that people want to ride but they are just too expensive given the weak marketing communication efforts around their overall value. In other words, they have allowed the price-to-ride-value equation to get out of whack.
International Sales – are in motion by OEMs in the U.S.. – Global sales will play a major role in the financial success of American motorcycle manufacturers if they are able to adapt and build for the international rider. Basic Observation: Dramatically increase your efforts here to optimize your profits and shareholder value.
The Bottom Line
There are an estimated 9.0 million motorcycles registered in the U.S. today, according to the Statistical Portal. The Motorcycle Industry Council estimates that the percentage of U.S. households with at least one bike has settled around 6.8% since 2008. Harley-Davidson wants to add 2.0 million new riders over the next decade…what do the other OEMs want to do?
While the industry and and its participants may rise and fall together, I’m placing the responsibility for the industry’s success today and in the future 100% on the OEMs and their current distribution model. Like many traditional business models, they must change and significantly improved the customer experience to ensure a profitable future in the U.S. and abroad.
OEMs have a responsibility for elevating the visibility of riding. They have the responsibility for working hand-in-hand with their dealers to create family-friendly riding opportunities. They have a responsibility to train their dealers to be more customer friendly. They have the responsibility to promote safe riding conditions on streets, roads and highways everywhere. They have a responsibility to lower manufacturing costs so that they can bring bikes to market that people can justify buying.
Dealers have the responsibility for bringing the fun back into buying new motorcycles. Yes, OEMs and dealerships…The future of motorcycling is in your hands.
Me, I will continue to promote the great sport of motorcycling with my thousands of social media followers in the hopes that someone somewhere will be inspired to get on a bike and ride.
Coming soon…In Part 2 of this topic, I will provide my 2-cent advice on how motorcycle manufacturers, dealerships and others…can get back on track towards recruiting more riders and selling more bikes. Stay tuned…
Ride Safe Out There,
About Motorcycle Marc – I’m a motoblogger, some say a motorcycle evangelist, an industry influencer, ambassador and sponsor. I prefer to ride motorcycles but when I can’t ride I blog about it. Since 2009, I’ve developed a strong, dedicated following of thousands of gearheads, motorheads, biker-wannabes and 2-wheeled adventurers who love motorcycles and everything motorcycle-related. Welcome to my world – Marc J. Beaulieu (MJB)
About Give-A-Shift – The Future of Motorcycling – Roundtable Discussion This initiative is being championed by motorcycle industry pro, Robert Pandya. I got to give credit where credit is due…his document inspired me to write this blog post. Mr. Pandya recently brought together a number of key motorcycle advocates and industry participants to discuss the realities impacting today’s motorcycle industry. The resulting roundtable report offers some good thoughts and ideas. Click here to read it or click on the Give-A-Shift Banner located in the right side banners of this blog.
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