Is The Motorcycle Industry Is Dying?
As ageing addicts hang their leathers, Harley-Davidson, Honda and the rest of the motorcycle industry pin their hopes on smaller, affordable bicycles for a new generation.
“The riding season was coming up and I thought ‘You know what? Maybe, It’s not that crazy. “‘
For Fed Pacheco, it was a long trip from motocurious to motorcyclist.
There was a ride years ago in Texas on his uncle’s Suzuki Boulevard, not long after Pacheco had emigrated from Venezuela. A few years later, he decided to take a riding course and got his bike permit, though he still didn’t pull the trigger.
But when Honda unveiled its new Rebel 500 in November, the 27-year-old finally went all in. “I just started obsessing about it, to tell the truth,” he said. “The riding season was coming up and I thought ‘You know what? Maybe, It’s not that crazy. “‘
Pacheco followed one of the first Rebels from the market to a dealership in New Jersey, walked in and paid $6,800 on the place. The bike was still in its shipping box.
With a starting price of $6,000, Honda’s Rebel 500 is aimed at younger, first-time riders. Honda’s Rebel is the latest entry in a parade of new bikes meant for first-time riders; almost every company in the motorcycle industry has scrambled to make one. They’re smaller, lighter, and more affordable than most everything else at a dealership and probably would not seem out of place from the 1960s–back when motorcycling was about the ride, not necessarily the bike.
They’re Additionally designed for millennials and meant to lure them into the easy-rider lifestyle. If all goes as planned, these little rigs will help companies like Harley-Davidson coast for another 50 years.
“They’re new bikes, but they’re new thinking,” said Mark Hoyer, editor-in-chief of Cycle World magazine. “They’re selling this understanding of lifestyle … it’s a cultural movement; a rebranding of the whole motorcycle industry.”
It’s also the manufacturing equivalent of a mid-life catastrophe. Motorcycle sales in the U.S. appeared in 2006 in 716,268 and instantly started to skid. When the recession hit, the market went down hard. Bike sales dropped by 41 percent in 2009 and another 14 percent the following year, according to the Motorcycle Industry Council.
That’s not surprising considering the marketplace at the time: A bicycle is a picture of discretionary spending, and they can be complex to finance even in a healthy credit industry. Even now, with the stock market on a historic bull run and observing the U.S. car industry posted its best year on record, traffic in bike shops has remained slow. In 2016, U.S. customers rolled off with 371,403 brand new bikes, roughly half as many as a decade ago.
And then there’s the generational time-bomb. In 2003, only about one-quarter of U.S. bicycle riders were 50 or older. By 2014, it was close half. The market has been cruising on a marketplace which may only have the capacity to get an additional bike. Unexpectedly, bike-makers desperately need new riders and millennials, apparently, are the best hope. Not only are there more of them than GenXers, but they also have a longer expected lifetime value, which is corporate way of saying they’re a further away from needing a hip replacement.
Harley-Davidson’s Street 500 quickly turned its riding academies into a revenue opportunity. About 2010, bikemakers made a substantial strategic change: Sturgis was out; Coachella was in. They hadsomething cool to show on the wealthy, quasi-hipster music scene, something far in the fat-fendered, chrome-soaked hogs buzzing around South Dakota. “Everybody is trying to do precisely the same thing,” said Lee Edmunds, Manager of Honda’s motorcycle advertisements. “They are all realizing they ought to have more people come in at an entry-level stage.”
Harley-Davidson led the charge, maybe because it dominates the U.S. market for large motorcycles and has the most to lose. Between 2006 and 2010, the quantity of big-engined Harleys registered in the U.S. plummeted by almost half. The company has hosted riding academies for first-timers since 2000, but it quickly ordered its engineers to design an authentic starter bike. Unveiled in 2013, the Street 500 looks like a conventional Harley in the way an Ivy League quarterback looks like an NFL lineman. The motor, just shy of 500cc, will not turn any heads in Daytona Beach or wake up anybody in suburbia. The seat sits relatively low to the ground and the full package can be had for just under $7,000. The Street 500 quickly became the standard kit in Harley’s riding schools, which churn out 65,000 new riders each year.
“There was a requirement to become more applicable to urban environments,” said Anoop Prakash, the corporation’s director of U.S. marketing. “Ahead of the Street, we certainly believed and knew many riders would start in another brand.” At roughly the same time, Kawasaki launched its very own Ninja 300, a subdued version of its famous sport bike. It’s the identical angry wasp styling, albeit with a much smaller powerplant and pricetag–$5,000; anti-lock brakes could be had for $300 more.
A post shared by Scrambler Ducati (@scramblerducati) on Mar 2, 2017 at 5:56am PST In 2014, Ducati combined the first-timer fray with its Scrambler, resurrecting a sub-brand it last made in 1974. The contemporary version is essentially an 803cc engine wrapped in six different trims, from a no-frills “Classic” to a stripped down café racer. The technology lends itself to tinkering and Ducati encourages buyers to customize their Scramblers with add on components. “We call it a naked bike,” said Jason Chinnock, chief executive of Ducati North America. “It was trying to bring something to market that had a nod to the nostalgia, but also the simpler way motorcycling was approached in the 1970s.”
About a year later, BMW pulled the cover off its G 310 R, a neat, 350-pound version of its famous touring bikes. Anti-lock brakes are standard, and with a sticker price of $4,750, it is less expensive than adding “smoke white” merino leather to one of BMW’s 7-series sedans. The base version of BMW’s G 310 R costs $4,750 and comprises anti-lock brakes for a quieter ride.
Finally, Honda rolled out the Rebel that Pacheco dropped so difficult for. Pacheco is cofounder of a Manhattan advertising store named Hungry Studio–it’s his job to understand what a brand represents and what a product does. In the long term, the Honda felt right to him compared to Harley-Davidson he learned to ride. “It didn’t feel nostalgic to me at all; it felt elegant,” he explained. “And I could definitely tell they were ads to people like me” Make no mistake, the economics on these bicycles isn’t wonderful. Profit margins are much fatter on something such as a Honda Gold Wing F6B, an 844-pound locomotive that starts at $20,500. But that swollen kit doesn’t hold much street cred where Pacheco parks in Manhattan, in part because the people buying those big cruisers are quickly transitioning in the roadhouse to the golf program.
The problem, however, with this sudden industry pivot to younger customers is that it may be coming too late. For years, it was too easy to just keep building bigger, stronger bicycles. “They got more complicated, more expensive and more intimidating,” said Edmunds at Honda. “For quite a long time, each the manufacturers could do that, because that baby boomer market was so huge.” Chinnock, at Ducati, calls it “the horsepower game”
The new breed of small bikes, meanwhile, has quickly become the most promising area of the corporation. Between 2011 and 2016, sales of motorcycles with engines smaller than 600cc increased by 11.8 percent, while bigger, stronger bikes managed just a 7.4 percent gain.
In its first full year its Scrambler was on the present market, Ducati sold 15,000 of them–28 percent of its general organization. “These riders were not looking at Scrambler as an entrance into the world of Ducati; they looked at it as a totally new thing,” Chinnock said. “It’s kind of one of those business mistakes you’re OK with.” Harley-Davidson, meanwhile, has a new advertising tagline: Nine bikes for under $12,000. Prakash, the marketing pioneer, breaks it down to $6 per day. Forget the latte; buy a bike.