The Economy Sucks?:
Aaaahhh – The Life
 Following
9/11 in 2001, I had an article penned discussing the virtues of
riding a motorcycle and how your bike is a form of escape from the
everyday world. The nation was somber, fall settled in and I never
ran it.
A general economic cycle runs a ten year loop with the highest
points usually mid-decade and its worst dips at the end of the
present and beginning of the next decade. Last fall I saw the
downturn coming. I penned up an article announcing what we might
expect to see in the industry. It wasn’t a happy picture. I shelved
it.
A look at how things have come to be as of late reminds me of
these two unpublished works, so I’ll lean on them a bit for
inspiration as we take a look at the economic status of the
motorsports industry as it stands right now.
During the summer the price of gas went over four dollars a
gallon and the economy is taking a dive for various reasons as you
know. The price of gas has been an inspiration for many of us to
ride our bikes a little more, taking what might be a leisure vehicle
for many and making it the daily driver. Are you gonna keep it up into
winter?
Scooter sales exploded. It’s a given. Look at every time the
price of gas has gone over the next dollar mark. First time it
happened was in the 1980s. Honda was there to reap the benefits
selling containers full of Spree, Elete and Helix Scooters. Then gas
went over two dollars a gallon in the 90s and again Honda was there
along with Yamaha which made a killing on Riva sales. By the time gas
hit three dollars a gallon in 2005, Vespa was in full swing with
their new line of scoots, a hoard of Chinese built scoots were
hitting our shores and Aprilia was cleaning up on the sales of 50cc
scoots. But we never saw showroom floors go empty – why? Because, the
rest of the economy was healthy for the most part.
Now with a sour economy and gas having once-already gone over
four dollars a gallon simultaneously the market is low on scoot
inventory. Dave Richardson of Moto International reports he's had a
300% increase in scooter sales this year which has left his showroom
empty of step-through two-wheelers.
And it’s not just new units, the used market is dry as well. What
is available is going for over book in a number of cases. It’s a
great time to be selling a new or used scooter! Other low cc bikes
are also in heavy demand, such as the Kawasaki Ninja 250, Honda
Nighthawk and Rebel 250s and Yamaha's Virago 250, but since so few
were produced over the last decade, these too are commanding top
dollar on the used market.
This is just one of the ways the motorsports industry gets
through the tough times making some money. Selling those new units
and servicing the used ones (which often need a deal of work to make
them good runners) add to the bottom line during tough times. While
one large volume dealer is cutting sales staff right now, they’re
ramping up techs in the backroom which is unheard of in the fall.
This is also a time when independent service shops are
overwhelmed. In general, summer is a busy time no matter what, so
stack more bikes on the road on top of that and get in line for a
service appointment. Since most OEM shops won’t work on bikes twelve
years or older, the phone lines light up at indie shops with
customers trying to book time. That used scooter someone just bought
turned out to be in not so great shape, but the wait will be several
weeks while parts get ordered and other bikes get moved through the
line.
Some people get turned away from indie shops. Someone who comes
in with a 70s model two stroke is likely to be advised to sell the
bike for parts since it’s not worth the money to make it run. If you
insist on getting it fixed, you may pay a hefty retainer up front to
get the work started. Older bikes can be a house of cards and smart indie techs will command the money on the front end for work unseen,
refunding the difference back later if the bike needs less work than
expected.
And then there’s the backlog for Motorcycle Safety classes. While
many states have been increasing the number of classes available the
supply still doesn’t meet the demand.
As long as the economy sags and fuel prices rise we’ll see these
areas of the industry flourish. But what areas won’t?
The Big Twin cruiser market for starters. Just as Harley was
getting around to backing off availability on bikes, providing
dealers a chance to sell over list again based on supply and demand,
the economy slips and it’s like – so what. In fact the cruiser
market was a good barometer of things to come since we started
seeing indie shops and customizers disappear about three years ago.
Honda had so many 2007 units on showroom floors last fall most
dealers didn’t need to buy new 2008 inventory. Thus you’ll
find a backlog of unsold cruisers in our
Hot Deal Bikes pages for
both 2007 and 2008. And don't even think about starting a regional
big twin magazine right now...
The days of selling lots of extravagant, one-off customs to
customers who did well in the stock market or mortgaged their home
are basically over for right now. If it’s just a leisure toy someone
wants, now is likely not the time they’ll be making a purchase.
Ditto for snowmobiles, dirt bikes and ATVs. Looking for a great
deal on one? - There are many to be had.
If an OEM has built their line to focus on larger cc bikes in
general, these will be lean times. H-D’s recent purchase of MV
Augusta isn’t the solution to what lies ahead for the motor company
and its franchisees.
Smart dealers who understand the economic cycle had been working
down inventory for 18 to 24 months before the dip struck last fall.
Others had not. Over the course of the next 12 months don’t be
surprised to see a few OEM shops around the Northwest disappear as a
result of not being able to cover the flooring costs on their
extended inventory.
But it goes beyond the dealers. National rally events are taking
a beating. Sturgis had a decidedly lower turnout this year and the
BMW MOA Rally saw 5,000 attendees as opposed to the 7,000 we saw in
Spokane in 2004. These events aren’t going away, but being held on a
smaller scale is probably in the cards over the next few years.
Smaller start-up events that have been around only for a few years
have seen smaller numbers or been cancelled all together.
And a tough economy in general means tough days ahead for many of
us. Figuring out how to make ends meet, keeping tabs on retirement
accounts and getting along without luxuries like world travel and a
third bike means many of us will want to escape.
It all boils down to one thing - There’s no better time to be
riding a motorcycle. Taking advantage of the fuel economy, using the
HOV lanes, escaping from reality by spending an afternoon in the
twisties and seeing the world from two wheels. Aaaahhh – the life!
Tom Mehren/Fall 08 |
