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Thread: What is with the Motorcycle Business?

  1. #1

    What is with the Motorcycle Business?

    This might not be the right place to bring up this topic, but I really couldn't find any
    other place that fits.

    My question for everyone is:

    Is it just me or is the Motorcycle Business in the US totally crazy?

    The reason I ask this question is that I've been riding off and on fro about forty years. I ride my bike whenever it is warm enough (above freezing) and dry enough
    (I'm a wimp I don't like the rain). I go to work on my bike, I going traveling on it , I do as much as I can to use it instead of my car. This may be a bit weird in the US, is it?

    I don't have the room or the finances to support more that one motorcycle at a time, so I when I buy a new one, I like prefer to trade in the old one. It costs a bit but the convenience is important.

    The problem that I am facing is that none of the dealers in Minnesota seem to be at all interested in taking a trade. If they do, they low ball so much that I may as well give the them to Goodwill and take the tax write-off. I take care of my bikes, they usually look pretty much like new, even though they have a few miles on them. If I could find a dealer that would offer the Kelly trade in value, I think I would die of shock.

    Now in the current climate, things have gotten even weirder. We have dealers with new motorcycles that are two or three years old, sitting on the showroom floor, and they still won't offer a decent trade in value. It's is beyond my understanding and it seem like no way to run a business.

    So, for now, I keep my current machine, no transaction takes place, no jobs are created and the economy stagnates. I'm not really upset because I still have my money in the bank and I still have a bike to ride. I can keep it 'til the wheels fall off, but I suspect that by then some of these crazy dealers will be history. Oh well, to sweat off my butt.

  2. #2
    na1g
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    Yep, that pretty much sums it up. If you wonder how some of the dealers stay in business, the answer is a lot don't. Those that do are often selling snow machines and jet skis, sometimes even lawn mowers and snow blowers. Single-brand m-c dealers are rare. My nearest BMW shop also sells Ducatis, Huskys and Indians, none of which have much market percentage but they must help the bottom line. Single-brand BMW (and probably Harley) shops have to be good to survive. Max BMW has just opened a third store (CT) so they are doing something right. A big multi-Japanese brand shop in my area has some very leftover bikes around. Word is there are a bunch of "new" 2010 Honda ST1300s in warehouses (there were no 2011s) but the dealers don't push them and don't discount them. Seems like they must be full-up with trade-ins or simply don't want money tied up in merchandise in this economy. The good news, if any, is that the current motorcycle market will weed-out the bad dealers and send their customers to the good guys.

    pete

  3. #3
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    Dealers need revenues, not more used motorcycle inventory on their floors, especially going into a long winter in Minnesota. Approach that same dealer next March and I bet the story will be different. All this is in multifold given the general economy and the "leisure" aspect of motorcycling. No one "really" has to have a motorcycle, it is not a necessary stable of everyday life for the vast majorit, as it is with a car.
    MOA #46783

  4. #4

    Wouldn't you want to get rid of expensive inventory?

    It just seems strange to me that the dealers would rather have a $12K new machine sitting on the floor instead of a $2K trade-in. I suspect if interest rates where higher there would be a bit more action.

    In addition, this isn't just the time of year thing. I have found this to be true even in the spring and summer. The old, 'You could probably do better selling it yourself' comment is all too familiar.

    Well, yea, you can do better selling it yourself. I can also do better buying it from a 'Flea Market' listing. It's the convenience thing; I don't think that dealers understand that they are in the service business. The best way to get and keep customers is to help them solve problems. Let's face it, wouldn't we all rather be out riding, than going through all the hoops, just to spend some more cash?

  5. #5
    Registered User 88bmwjeff's Avatar
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    Quote Originally Posted by RobG View Post
    It just seems strange to me that the dealers would rather have a $12K new machine sitting on the floor instead of a $2K trade-in. I suspect if interest rates where higher there would be a bit more action.
    If they paid all cash for the bike, then that would make sense. However, I'm willing to bet those bikes were purchased via financing. In the end, it's what brings the bigger bang for the bottom line. I think the trade in depends on the bike, it's condition, and price. If a dealer doesn't think they can sell the bike, they probably won't accept it as a trade in. This happens in the automobile side as well. Remember a few years back when gas was about $4 per gallon and people were selling their SUV's in droves. You couldn't sell an SUV and no dealer was willing to take one in on trade at any price.
    Jeff in W.C.
    1988 R100 RT (the other woman)
    "I got my motorcycle jacket but I'm walking all the time." Joe Strummer

  6. #6
    Registered User lmo1131's Avatar
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    Remember a few years back when gas was about $4 per gallon
    ... that would be today; $4.09/gallon of regular.

    I don't sell cars, I haven't bought a new one since the first one in 1977. My first "new" motorcycle, an R75/5, was purchased in 1974, and I haven't bought any other motorcycle since then. I still ride it daily.

    But it makes sense to me that motorcycle dealers aren't offering a lot on trade ins; they have to make a buck on handling it too. It isn't a hobby. The same applies to automobiles. And refrigerators for that matter...

    Supply and demand. If your dealer isn't taking trades, there is a reason (demand). And chances are there is an over abundance of used bikes (supply) available on craigslist, BikeTrader, etc.
    "It is what you discover, after you know it all, that counts." _ John Wooden
    Lew Morris
    1973 R75/5 - original owner
    1963 Dnepr

  7. #7
    2011 R1200RT ka5ysy's Avatar
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    Our local Harley dealership, interestingly, has been buying used metric bikes in order to have some low-end inventory to sell to entry-level riders. That is smart marketing when you can buy out the inventory of dealerships going under, and make money to boot. This dealer also does trades based on blue book values and still does well. The funny thing is that the low end used stuff sells well, and the high dollar Ultras move quickly. The mid price bikes are where the stagnation seems to be.

    Some dealerships will not take trades, but will allow consignment selling in their shop. When you look at it, you can have a lot of capital tied up in used trade-in iron that might not move too well, and not have liquidity to be able to buy new inventory items when necessary. There is a lot to be said for that business model in this economy if you want to stay in business.

    I guess it depends on the business acumen of the particular dealer principal.
    Doug, 2011 R1200RT Polar Metallic
    MSF #127350, Instructor, Louisiana Dept of Public Safety
    Motorcycle Safety, Awareness & Operator Training Program
    NAUI Instructor #36288, Board Member, Divers Alert Network

  8. #8
    I'm willing to bet those bikes were purchased via financing.

    I'm certain that most of the new stuff is purchased with financing. At the current interest rates, they can sit on something for a long time before it becomes too costly to keep. Not a great way to make money with your capital, but if the capital belongs to someone else; why not?

    It just seems to me that if you look at the Kelly numbers on most motorcycles, there is a healthy margin for dealers to work with. What I see is that they pay to little and charge to much. The whole flow of transactions is slowed down.

    Personally I think it be in their interest to have more people out there on the road where they consume the bikes and well as the tires and jackets and regular service charges.

    It's true that the most economical way to own a motorcycle is to keep it forever and rack up as many miles as possible. I just don't see how that is in anyway beneficial to a dealer's bottom line. yet it seems that the way that they approach the business really encourage riders to just keep on riding the old stuff.

  9. #9
    Registered User 88bmwjeff's Avatar
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    Quote Originally Posted by RobG View Post
    It's true that the most economical way to own a motorcycle is to keep it forever and rack up as many miles as possible. I just don't see how that is in anyway beneficial to a dealer's bottom line. yet it seems that the way that they approach the business really encourage riders to just keep on riding the old stuff.
    As far as I know, automobile dealer makes more on the service end of things than the sale of the vehicle. I'll bet it's the same for motorcycle dealers.
    Jeff in W.C.
    1988 R100 RT (the other woman)
    "I got my motorcycle jacket but I'm walking all the time." Joe Strummer

  10. #10
    Blocking the slow lane
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    We sold three bikes in April this year, ranging from $1500 to $3500 in value. The R80RT went the first weekend, the K75 took a week on Craigslist, and the R1100RS a little longer. The market moves quickly if you are priced right.

    Just sell the bike yourself now, then take the winter to pick up a new bike for a great price.
    Jon Diaz
    BMW K75/K12GT
    BMWMOA Ambassador

  11. #11
    Rally Rat
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    I have visited motorcycle dealers all over the US and Canada and most are horrible. They do business in spite of themselves. They just don't deal in the same world as car dealers. If they had the same brand selling at different points all around the city like say Chevy or Ford then it would be different. In reality they can be bad and get by with it if you want that bike. That is why in this economy many have disappeared as they have no loyal base of customers and no word of mouth advertising. Perhaps this has been one silver lining in the down economy. In the end you may have to travel but buy elsewhere where you are appreciated. I bought from the BMW dealer that was the longest distance from me but had the best dealer philosophy. I had no idea of the price until I showed up there but i could tell from talking to them they knew how to do business. Turned out it is run by an old car guy, go figure.

  12. #12
    Old man in the mountains osbornk's Avatar
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    The dealer doesn't offer you much for a clean bike with miles on it because he can't sell it for much. There are many used bikes available with very few miles on them and that makes higher mileage bikes cheap. Higher miles don't hurt most bikes at all but when the buyer goes to buy a bike, he is going to buy the low mileage bike or pay far less for a bike with miles on it. High miles doesn't bother me with cars, trucks or motorcycles because I know I can buy them cheap and get good value. I also know I will have to sell them cheap if I don't do as I normally do and give them to one of my kids.
    'You can say what you want about the South, but I almost never hear of anyone wanting to retire to the North.

  13. #13
    Maybe I could add some insight if only I knew the year, model, and miles we were talking about. Absent that, I haven't a clue.
    Paul Glaves - "Big Bend", Texas U.S.A
    "The greatest challenge to any thinker is stating the problem in a way that will allow a solution." - Bertrand Russell
    http://web.bigbend.net/~glaves/

  14. #14
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    In the course of doing my job, I have the opportunity to see the financial statements of dealers. Most are in horrible shape. Most have significant cash flow problem. The bikes on their floor are financed. It is not that they don't want to sell you a new motorcycle. Most don't have enough cash to execute the transaction with a trade-in. Many are struggling to meet payroll each week. They have maxed out the credit cards with vendors. Most cannot get N30 terms.

    One option you might try if you suspect a cash flow problem. Offer to allow the dealer to sell your bike for you. Have them pay you once the bike is sold, and they can keep a percentage. If you buy the bike before your bike is sold, that will sweeten the deal even more. This plan allows them to make money without using cash they don't have.

  15. #15
    "Most have significant cash flow problem. The bikes on their floor are financed. It is not that they don't want to sell you a new motorcycle. Most don't have enough cash to execute the transaction with a trade-in. Many are struggling to meet payroll each week. They have maxed out the credit cards with vendors. Most cannot get N30 terms."

    It's hard to believe that this is true when it takes two weeks to get a service appointment, but it may be the case. Where I live, we are lucky to have four BMW dealers within 60 miles. The three that I have had experience with are all pretty good and I wouldn't have any problems working with any of them. I suspect that the problem in Minnesota is that the market is actually healthy and the dealers just don't have to deal. It's just seems weird to me that with a declining and aging user base that they wouldn't be trying to make it easier for customers.

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