The “Other American Motorcycle Company” is doing well

Polaris has released their 4th quarter numbers, and It looks like it’s champagne time at their headquarters. Unlike Harley-Davidson, which reported yet another loss in the 4th quarter, Polaris has moved firmly into the black.

Net income for the fourth quarter 2010 was a record $54.5 million, an increase of 24 percent over the same period in 2009. Record sales of $618.4 million for the fourth quarter 2010 increased 31 percent over 2009 fourth quarter sales of $471.8 million.

For the full year ended December 31, 2010, Polaris reported record net income of $147.1 million, or a record $4.28 per diluted share, compared to $101.0 million, or $3.05 per diluted share for the year ended December 31, 2009. This represents a 40 percent increase on a per diluted share basis and a 46 percent increase in net income.

Polaris, of course, makes much more than motorcycles, but Victory certainly did its part in 2010, moving 81,624 motorcycles compared to 52,811 in 2009. That’s a 55% increase in sales, and was the largest sales increase of any of Polaris’ product lines.

Congratulations to Victory, and Polaris, who are showing real strength when most other manufacturers are still scrambling to cut losses.

BMW: They don’t exist yet, but you can buy them

2011 BMW K1600GT
2011 BMW K1600GT

Since BMW announced the new straight-6 K1600GT and K1600GTL models, they’ve become one of the most hotly-anticipated motorcycles of 2011.  So much so, that BMW has announced that they will take pre-sale orders for them, starting today.  All you have to do is go to the BMW web site and fill out this pre-sale form. Just so we’re clear, you’re entering the pre-sales program for a motorcycle that isn’t actually in production yet. They also have another form to fill out if you just want to receive updates about the bikes from BMW.

It takes quite a lot of confidence to start taking pre-sale orders for a bike you haven’t actually built yet, but it seems that BMW’s confidence is warranted. BMW Motorrad USA announced their 2010 sales results today.  Somehow, in a year of economic recession, plunging motorcycle sales, and despite making about the highest-priced motorcycles one can buy, BMW did…good.

BMW Motorrad reported a 12.3% increase in motorcycle sales in 2010.

The German manufacturer shipped 98,047 units in 2010 compared to 87,306 motorcycles in 2009. BMW reported growth in almost every market including a 4% increase in the U.S. despite a double-digit downturn for the industry.

Leading the sales charge for BMW was the S1000RR, their new–and conventional–literbike, which sold 10209 units to become BMW’s highest-selling model.

JD Power Motorcycle Competitive Information Study

JD Power released their Competitive Information Study on motorcycles today.  Among the highlights is this:

The population of motorcycle buyers is aging, with the average rider age increasing from 40 to 49 years since 2001—an indication that many owners may soon exit the market. Additionally, the percentage of first-time buyers has declined for a second consecutive year, making it more critical now than ever for manufacturers to focus on attracting new customers.

So, motorcyclists are getting older every year, and new entrants to the sport are down for the last two years.  These are bad trends for the industry as a whole, of course.

The key for manufacturers and dealers is to deliver on the best customer service practices they can.  For the manufacturers, this means a laser-like focus on build quality, and delivering a solidly reliable product.  For the dealers, pro-active communication with customers, and quality service are key.  Missing out on any one of these seems to have a sharply negative effect on customer satisfaction, and on the chances of return business. Manufacturers and their dealers really do have to work hand in hand–now more than ever–to ensure a seamless and satisfying customer experience.

Those that don’t may find that surviving the current economic doldrums increasingly difficult.

The full JD Power press release is below the fold.

Continue reading “JD Power Motorcycle Competitive Information Study”

Royal Enfield Gets CARB Approval

The quintessentially British-named Royal Enfield, the maker of 500cc old-school thumpers, has announced that they’ve gottan CARB approval for their bikes, which means that they are now available in California.  In general, the CA emissins cost about $300 more than the 49-state model.

I’m not entirely sure what the appeal of Royal Enfields are, but they certainly have a vocal community of afficionados. The bikes look like they did back in 1955, so the styling isn’t very modern–certainly part of the appeal–but all of the components and engine are, in fact, thoroughly modern, with the 500cc bullet sporting EFI.

The bikes are currently made in India, at Royal Enfield’s production facility in Chennai. The Indian company first began assembling the Bullet in 1956, and manufacturing it under license in 1962. The company purchased the rights to the Royal Enfield name in 1995, the original company having been dissolved in 1971.

How to Save Harley-Davidson – Step 2

A&R presents part 2 of  How to Save Harley-Davidson.  Folowing on their marketing advice, they start by pointing out the problem with Harley’s product line.

35 motorcycles, 7 model lines, 4 chassis, 3 motor families, & 1 market segment, that’s Harley-Davidson’s product line by the numbers. Where many large production motorcycle companies might have 30 or so motorcycles that span the entire gamut of motorcycling’s different sub-markets, Harley-Davidson has put all of its eggs in the heavy cruiser market. This singular pursuit of one market segment has not only been the cause for Harley’s success, but also a significant contributing factor to the company’s recent downfall, which has led to a recently rumored leveraged buyout. [One of the reasons for Harley’s stock price increase over the last few weeks is rumors of an impending private-equity buyout.– Ed.]

As the old idiom goes, one should not put all their eggs in one basket, which is exactly the faux pas being committed here by Harley-Davidson in its product offering. Businesses, especially public ones, should always have an eye on sustained long-term growth, and a key element to that goal is a well-diversified position in their appropriate industry. Taking this lens and applying it to Harley-Davidson, one can immediately see a portfolio that has been extensively mismanaged by focusing on only one segment of the total motorcycle industry: the heavy cruiser market.

What this has effectively created is a motorcycle company that looks like Alfred Hitchcock’s take on Baskin Robins: 31 flavors, but they’re all Rocky Road.

If you count the new Trike, Harley really has 5 motorcycle models, although one of the Models, the Sportster, has two engine sizes, albeit they use the same engine with different cylinder bores.  Essentially, those five bikes come in 35 factory option packages.

As A&R points out, what Harley doesn’t have is any sort of light, performance oriented machine, like a cafe racer or scrambler.  I would go a step further and say they also don’t have any sort of lighter, entry-level cruiser.

Even if HD has no interest in getting into modern sport-oriented bikes–and there’s nothing wrong that attitude–they don’t even offer a lighter, smaller-engined entry-level cruiser.  Their”entry-level” offering is a 600-lb, 1200cc Sportster.  And whatever else it may be, the Sporty is by no means an entry-level motorcycle.

They already have the basic tools and expertise to build smaller, more performance oriented cruisers, and entry-level bikes.  But they’ve invested so much of the company in catering to the baby boomers, they arean’t offering bikes that appeal, by and large, to new entrants into motorcycling, or to riders that want even a small amount of get-up-and-go in their rides.

That’s been a fantastic strategy for the past 30 years, and it’s served the company well.  There’s only one problem with their strategy of selling to the Baby-Boomers.  The Baby-Boomers are starting to die.  So, it’s not a market with a lot of growth potential moving forward.

Triumph’s Strength

Motorcycle Daily takes note of Triumph’s sales strength in the US, while other manufacturers’ sales are slumping.  They explain it as follows:

The advantage Triumph has is its heritage of triples and parallel twins. Virtually no other company has this heritage, and Triumph can therefore develop motorcycles that have very little competition in the market. “Competition” here means similar heritage and design.

When Triumph realized the folly of competing with the Japanese in the inline-four cylinder supersport market, and abandoned that format for the 675cc triple, it instantly found success. The triple gave it a different exhaust note, broader power curve, narrower engine and chassis, and, most importantly, a tie to its heritage of building performance triples.

While everyone else is building v-twin cruisers, Triumph cruisers are parrallel twins with a strong heritage that includes Marlon Brando, among other notable reference points.

Triumph Sprint ST
Triumph Sprint ST

I’m not sure that the “parallel twin” argument carries much weight.  The Big Four all have a number of parallel twins.  But the Bonneville, Scrambler and Thruxton definitely  have a certain recognizeable heritage, especially to people in their 40’s, like me.  We remember those bikes from when we were kids.  They were really–outside of the then-monster Harleys–the gold standard of style and power in an era where the 500cc motorcycle was the big boys bike.

Where MD really hits the nail on the head is Triumph’s dominance of the triple powerplant.  Other than Benelli, which is hardly a premier marque in the US–Triumph stands alone with a line of three-cylinder motorcycles.  Based on sales figures, a number of riders seem to be learning that the Triples have a unique performance advantage compared to the twins or I-4s.  Triumphs offer the low-end grunt of a twin, without sacrificing the high-end horsepower you get from an I-4.

They also have a distinctive look.  Triumph really has hit it out of the park in terms of styling, whether it’s the retro-cool of the Scrambler, or the smooth modernity of the Sprint ST–with a single-sided swingarm, no less. (Not all of Triumph’s bikes are a hit with everyone in the looks department, of course.  The agricultural engine of the Rocket III really divides opinions sharply.)

Triumph also competes aggressively on price.  For instance, the 2010 Sprint ST sells for $12.7k, while the big four are pushing their STs at $15K and up.  They really are an outstanding value for the money.

John Bloor really has done a fantastic job of bringing this venerable brand back to life.

Now, If he could just get the Sprint fitted with a shaft drive…

Times Are Tough All Over

The US isn’t the only place where motorcycle sales have been dismal this year.  ACEM, the Motorcycle Industry Association in Europe, is reporting that, as of September, year-over-year motorcycle sales in Europe are down by 27%.  Here’s the ugly, ugly chart:

ACEM Sales 2002-2009 (September)
ACEM Sales 2002-2009 (September)

That’s definitely not the sales results graph you want to see.

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Motorcycle Sales: Dismal

The most recent sales figures for motorcycles don’t look good at all.  The industry is taking a shellacking unlike anything I’ve seen since ’81-82.  As of the third quarter of this year…

…motorcycle sales totaled just 434,370 so far this year, down from 771,950 in the first 9 months of 2008 for a drop of 337,580, which makes overall sales down 44%.

I wish i could say things were going to get better soon, but I don’t believe that to be the case.  For instance, take our current 9.8% unemployment rate.  If we counted employment stats like they did prior to 1973, that reading would actually be 17%.  Those are depression numbers.

And, speaking of the depression, everyone thought things were going to get better and better in 1931.  There was lots of happy talk about the economy, just like there is now. I’d like to think that’s as far as the parallel goes, but I wouldn’t bet money on it.

motorcycle sales totaled just 434,370 so far this year, down from 771,950 in the first 9 months of 2008 for a drop of 337,580, which makes overall sales down 44%.

Ducati Execs Do the Right Thing

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It’s no secret that the recent worldwide economic downturn has seriously affected motorcycle sales, sending them plunging by a third.  Now here in the United States, it’s become a common thing to see executives at big firms take huge bonuses, even when the company isn’t doing so hot.  The most egregious example of this was when failed insurer AIG took billions of dollars in Federal money for a bailout of the company, then promptly paid off millions and millions in executive bonuses with it.

Apparently, things are different in Italy, where senior executives at Ducati, faced with slumping sales, did the right thing.

Senior executives at Ducati have taken a 10 per cent cut in their pay and will not receive any bonuses because of the decline, while [Ducati CEO] Mr [Gabriele] Del Torchio said he had taken a 20 per cent pay cut.

Let’s leave aside any legalistic or other arguments about whether the executives should be compensated or not.  At the end of the day, when you’re cutting production, and laying off staff, it seems only right that the pain should be shared by everyone else in the company, all the way to the top.

Kudos to Ducati for setting an example of shared sacrifice.

Fit to Ride?

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Harley-Davidson has come up with a good idea, and it’s one that really should be implemented as widely as possible.  The MoCo will be implementing the Harley-Davidson Fit Shops at dealers all over the country.

Dealership Fit Shop specialists work with current and prospective Harley-Davidson motorcycle owners to help customize the suspension, seat, handlebars and/or foot controls to meet their riding preferences. New riders may not realize all the customizations that can be made to a bike to make it a one-of-a-kind ride based on build and preference, while long-time riders may not know about the latest customization options. Any Harley-Davidson model can be customized to fit most riders.

Most motorcycles can be fit precisely to a rider, but most riders don’t do so.  Most modern motorcycles have fully adjustable suspensions, and the idea is to dial in the suspension to match the rider’s weight, riding style, etc.  Dialing in the suspension to fit the rider makes the motorcycle handle and ride better.  But, all too many riders accept the factory stock settings, and ride off into the sunset, occasionally issuing complaints about how their bike wallows in the corners or whatever.

By taking stock of all the customization options, and having a trained specialist help each purchaser to dial in the bike’s settings to fit the individual rider, you end up with a more satisfied customer, who’s happier with his motorcycle’s comfort, ride, and handling.

And who knows, you may end up with a rider who is a little better educated about his bike.

Kudo’s to Harley for taking a step forward that dealers of other motorcycles would be wise to copy. Not only does it help make for a more satisfied customer, it also has positive implications for motorcycle safety.  Big Four dealers should take a look at doing something similar.  It would be a big help to their customers.

Motorcycle Sales Cratering in 2009

As I mentioned before, the economy isn’t good.  And since motorcycles are a luxury good for most people, they are being hit especially hard.  The MoCo had a 91% drop in profits last quarter, Suzuki’s sales numbers have collapsed…it’s bad all over.  And I can prove it now.

The Motorcycle Industry Council is reporting their collected sales data for the first six months of 2009, and I can’t find any good news in it.

Scooters took the brunt of the fall in sales, decreasing over 67% year to date compared to the same period last year and an incredible 77.5% in June 2009 over the same month in 2008…

Dual-purpose motorcycles fell nearly 47% in year to date sales compared to 2008 while the month of June saw 58%, or 4,431 fewer motorcycle sold than the year before…

But not all of the drop can be attributed to motorcycles falling out of favor with the would-be riding public. Many buyers complain about trouble finding financing for their new motorcycle purchases.

Regardless, looking at the year to date number, a staggering 177,650 fewer motorcycles were sold in the first six month of 2009 compared to the year before.

So, the good news is that a lot of motorcycles are just sitting on showroom floors, waiting for someone to buy them.  The bad news is that it’s getting hard to get motorcycle financing.

And I don’t think it’s gonna get any prettier any time soon.

Motorcycle Sales

In case you haven’t been keeping up with current events, things are slow in the economy.  We went to the local mall Friday night to see about getting a part for our dishwasher, and the place was a ghost town.  After finishing up at the mall, we also went to a popular local eatery.  We were one of three parties in the place.  All the rest of the tables were empty.

This afternoon, I went to Escondido Cycle Center, and North County Yamaha.  I was the only customer in NCY–another customer was leaving as I arrived–and one of two customers as ECC.  Dead, dead, dead.

Interestingly, the sales guy at NCC couldn’t have been less interested in trying to sell me a bike.  Since I have an insurance settlement coming from my accident last December, I am looking at possibilities for a second bike.  Something small and hooligan-like, but without the cramped riding position of the Gixxer or CBR.  I went to NCY because they have Triumphs there, and wanted to look into a Speed Triple 1050.  I told the sales guy what I was after, and he said, “I don’t know mcuh about it.  It has a good torque range.  Broad. why not go sit on it and see if you like it.”  He then turned on his heel and left me to my own devices.  Apparently, trying to sell a motorcycle didn’t fit into his schedule this afternoon.

And, keep in mind that this is their chief sales guy, and as far as I could tell, the only sales rep there.  I’ve seen him there before, and his whole vibe was that I was being a pain in the ass for trying to engage him.

Wierd.

The sales guy at ECC, on the other hand, was knowledgeable, and showed me not only the sportbikes, but an array of standard bikes that have same sportbike engines, but more comfy ergos.  Totally different sales experience.

Sometimes the guys at NCY are helpful, and sometimes they act like they’d rather you just didnt show up at their door at all.  When sales are as bad as they are currently, you’d think they would deep-six the latter attitude.