It used to be that when you wanted to buy a new motorcycle, you did so at a dealer near your home that offered multiple brands in the same store. Those dealers are disappearing, the result of manufacturers demanding retail exclusivity, and intense competition from internet commerce. It’s a trend that has made it very challenging for consumers to actually see or try out new motorcycles and accessories before buying. Has it hurt the business, or is it business as usual in the 21st century?
In the motorcycle sales boom of the 1970s, every town had a motorcycle shop. These mom and pop affairs were the place where you ordered new bikes, parts for old ones, and got repairs done. These dealers were the only place to find motorcycle accessories, helmets and apparel, and if you were lucky, sound advice. In a world before globalization and the internet, the local shop was the source, often the only source, of motorcycle information and products.
For manufacturers, the independent dealer was a convenient and efficient distribution channel for their products, as well as a conduit for corporate propaganda and customer feedback. For dealers, the privately run, multi-brand shop offered the stability and glamour of associating with giant multinationals while operating their own business with a degree of independence. For consumers, the dealer was an easy access point to global products and services, through a local lens.
It was a business model that suited the times, but today that model is broken. The last few years have seen small dealers closing, large motorcycle retail conglomerates fail, and even the demise of some factory sponsored dealer initiatives. Is the dealer model of motorcycle distribution dead? If it is, then what will replace it?
The Ruins of a Walled City
The cracks in the dealer distribution model were visible a long time ago, with fundamental conflicts evident to most industry observers. The compact between manufacturer, dealer and consumer that has existed for over a century, in which the dealer acts as a middle man, was only acceptable because there was no other way to connect products to buyers. But even as consumers accepted the dealer middle man and his middle man profit, it was viewed as a necissary evil. After all the salesman is, perhaps, one of the most reviled professionals in society.
A private, local motorcycle dealer is a small business owner whose basic survival depends on consistent sales. If a brand being sold goes weak, then they need an alternative, stronger brand to lean on, all the while propping up the annual bottom line with repair services, spare parts and accessory sales. That is why so many dealerships carried multiple, competing lines of products from different brands. It was a way of mitigating risk.
However, therein laid the first of many contradictions. If a salesperson is pushing a particular make and model in the store over a rival make and model of roughly equal specification, is it because they are convinced it is the better choice for the customer or because the store wants to be rid of it? The multi-dealer is representing both brands, so which brand is getting better representation?
Of course, as a private business the store will act in the best interests of itself, but if it’s the only bike shop in town as is so often the case in smaller communities, that means that one brand will come to dominate the region, a prospect that has short term benefits for the winning brand but long term net negative effects on the local motorcycle population. Often only a handful of dealers cover an entire province or state, forcing consumers to either chose from the few brands at arms length or travel great distances in order to get something else.
In consumer marketing, less choice equals a less robust marketplace, and that inevitably leads to reduced overall market size and shrinking sales. Today’c consumer can see everything, every motorcycle and accessory in existence, right on the phone in their pocket. When they discover that they cannot get what they want in their area, they may turn to what is available, but they may just as easily decide it is not worth it.
For a manufacturer, this is totally unacceptable. They cannot leave potential sales on the table for lack of distribution, so sign up as many dealers as possible to cover as much territory as possible. But they can never be sure of the quality of that representation, and always run the risk of having their hard won brand message diluted by the whims of a distant, independent small dealer who places their need ahead of the manufacturer. At the same time cannot expect a small business to take on their product line only, given the great risk that represents to the dealer.
One Touch Purchase
With today’s smartphone shopping culture, where one can make outrageously complex arrangements such as ordering an international travel itinerary with a few swipes of a finger, it seems anachronous that motorcycle shopping is still largely limited to physically trekking to a bike shop on the edge of town. For a product as exciting and tactile as a motorcycle, it is a huge disservice.
Some manufactures have tried direct sale on the internet, but it is an uphill struggle. People fall in love with bikes when they see them up close, see how they look in motion with another rider, and admire their intricate balance of raw mechanical function with sensual, biomimetic forms. This is why internet shopping for a new motorcycle also fails to deliver. Unless you have seen and sat on the bike in question, squinting at a 1000 pixel representation of one on a 11” tablet isn’t going to cut it.
Zero Motorcycles, one of the very first electric bike brands, invented a system that attempted to address this problem. The company initially sold all of it’s products through the company website, while flaunting them to the public via a network of “reps”. These were individuals who didn’t really own a shop, but rather had two or three Zero bikes in stock, perhaps in a store front but typically in their homes, which they showed to prospective customers at privately arranged meetings or at motorcycle events. The reps were spared the huge costs of financing a large inventory and renting sales space, while earning a commission direct from Zero for each customer that followed through with a sale.
The plan didn’t work, largely because it was hard to figure out if a Zero bought directly in the company website was influenced by a rep or was just a straight click-through customer. Zero dropped the rep idea and signed on traditional dealers not long after.
CSC, a US importer of rebranded Zongshen motorcycles that received a lot of positive attention last year, only sells direct from its’ website. The company openly claims that this has been a major force behind their sales growth, expansion into new territories and helped keep prices low. Service and repairs are handled by drop shipping parts to any local motorcycle dealer consumers choose for warentee items, which CSC says has worked well so far.
Are consumers accepting this distribution system, and trusting it to keep them happy after purchase? CSC says so, besides which the CEO regularly states on forums and on CSC website “If you find the idea of buying a motorcycle on the internet uncomfortable, then CSC is not for you.”
It’s All In The Family
There are of course, other ways to connect new motorcycles to buyers. BMW, Suzuki and Honda have all sold motorcycles through their car dealerships all around the world. In the case of BMW, the presence of $75,000 luxury sports cars parked next to the staid full dress touring rigs added prestige, while a flashy Honda CBR Repsol replica could remind a dad buying the family Odyssey that life was still exciting. In all cases sharing dealership space reduced costs and in theory provided consumers with a level of after-sales care much higher than typically found in mutli-dealer motorcycle shops.
The truth, however, is less clear. Honda’s experimental Powerhouse dealer concept, in which super-sized retailers peddled everything from cars to lawn equipment met with a tepid response from motorcycle consumers. They felt, truthfully or not, that the motorcycles were being sold by car people, a claim Honda denies. But several powerhouse dealers in Canada closed, while some steadfast motorcycle dealers, many of which had been with Honda successfully for decades, lost not only their franchise but also many loyal customers.
The profit margins on mainstream motorcycle sales are not huge, especially when compared with margins on luxury cars. It is not difficult to imagine that the manager of a car and motorcycle dealership will place their business emphasis on four wheels sales, assigning resources to the tasks that will maximize new car inventory turnover.
Additionally, the culture of motorcyclists is fundamentally different to car culture. Nearly every biker drives or rides in a car, because cars, even expensive ones, are commodities. But motorcycles are fringe products in North America, and bikers are viewed with a combination of amusement and suspicion. The parts counter staff at BMW auto retailer are used to dealing with the broad spectrum of the car buying public, but are they ready to deal with a beardy cafe-racer type who not only wants to order head gaskets for his 1974 R65, but wants to talk about it in relation to the limited edition R90 too?
You Will Be Assimilated
The multi-dealer may be on the wane, but the franchise dealership is still strong. No one does this better than Harley-Davidson. In nearly all regions of North America, Harley’s can only be purchased from large, centrally planned big box dealers that look more like acorporate embassy than a motorcycle shop.
Everything is curated right down to the smallest detail, from the colour and lighting inside to the number and type of motorcycles and accessories on display. Observed from the street or from anywhere inside the store, the Harley-Davidson dealership experience is slick and immersive.
The concept with this type of dealership is to hammer the customer (or potential customer) over the head with the brand values in the hopes that it sticks and leaves an indelible mark. To be the most effective, the brand message has to be completely consistent, something that cannot be left to the individual dealer owner. The result is the McDonalds of motorcycling: no matter where in the world you go, where you see the Golden Arches (or in our case, the Bar and Shield) you are guarenteed to find the same familiar feelings and enter a sanctuary for the brand faithful.
Canada’s own Bombarider Recreational Products (BRP) is pretty good at this too. If you go hankering for a Can-Am Spyder, then you will likely find yourself inside a BRP exclusive zone, surrounded by not other motorcycles but Can-Am ATVs, Evinrude outboard engines, and Skidoo snowmobiles. The colours, literature and apparel surrounding you will be saturated with imagery of impossibly good looking, active 20-somethings using multiple BRP products in the same weekend. It is alluring.
The negative side of these brand temples is that they cost about as much as their religious counterparts to build and run. To get a Harley-Davidson franchise requires significant, seven figure investment and that is not including bank guarentees of upwards of a million dollars for financing inventory. All those shinny new motorcycles on display are depreciating assets purchased first by the dealership, which they then have to sell on to customers. Every month they sit on the showroom floor the dealer is paying interest to the manufacturer, while watching their already tight dealer profit margin shrink.
Of course, the same is true for any dealership, including the mom and pop multi-dealer, but the smaller independents are not contractually required to absorb giant amounts of inventory every year, including models they know they simply cannot sell in their area. A Harley-Davidson dealer once said, off the record, that having Buell and V-Rod models in his shop made the difference between being profitable and unprofitable in lean periods.
Order Here, Collect At The Window
A future scenario for motorcycle distribution that someone is likely to try is the Apple model, where you can go to a wholly-owned and operated brand store, perhaps in a shopping center or mall, to see and demo a bike before going home to order it online. The motorcycle would arrive at your home or business with a representative that would spend a half hour demonstrating features and making final the transaction. If it sounds fantastical, or inapplicable to something as complex as a road vehicle, just look at Tesla. The young Californian car maker does precisely this, selling all of its nearly 60,000 luxury cars a year online. Tesla stores are really just demo centers, where one can see, touch and even test drive cars, but there is no lot and no inventory on site. Instead, Tesla makes the car to measure and sends it to the customer on a dedicated delivery service.
It may seem an unlikely scenario for, say, a $4000 scooter, but if recent business history has shown us anything it is that one should never underestimate the ability for the market to find efficiency. If Amazon can profitably deliver my motorcycle gloves to my dead-end, dirt road in rural Nova Scotia, from China, for free, in two days, then surely Honda and BMW can figure out how to send a van with a customer service rep here too.
The days when you could walk into your neighbourhood bike shop and chat with the owner about last Sunday’s race are not over, but they are less likely to happen going forward. The giant companies that manufacture 95% of all new motorcycles spend close to a third of their budgets on R&D and marketing, so that the brand message is clear and directly accessible to their target audience. Given that fact, what are the odds that they will continue to trust the final delivery of that multi billion dollar message to the hands of an independent motorcycle enthusiast in your community?
Whatever comes down the pipe, buying and maintaining a motorcycle is easier than ever before. We should not look at the future of motorcycle product distribution with aprehension but with muted hope. The online forum is the new bike shop, where one gets up to the minute advice. Ebay and Amazon are where you can find those previously impossible to get replacement parts. And finally, the manufacturer itself is where you will likely end up buying your next new motorcycle, if not now, then in the very near future.
It may seem cold, and many may rail against the loss of the local dealership. But it would be a historic first time that anyone has wept for the lack of a middle man. _________________________________________________________________________________________________________________ About the author Michael Uhlarik is an international award-winning motorcycle designer with over 16 years of experience creating bikes for Yamaha, Aprilia, Piaggio, Derbi and many others. He is a veteran motorcycle industry analyst and part-time industrial design lecturer. He is based in Nova Scotia.
Woe be the day when I can’t find a local dealer where can kick tires and sit on bikes! But I hate Honda Powerhouses…
I would have to agree with this analysis and possible direction for the future. Having showroom retail locations similar to the Tesla models will be the future. i worked in the Premium auto industry for over 10 years in sales and eliminating the sales person and sales process at a dealership will not only enhance a “no pressure” selling atmosphere but also eliminate the “haggling” over price where the sales person and dealer are only interested in their profit on the sale and not focused on providing the client with a authentic buying experience of the brand. The manufacturers have amazing marketing programs. If they eliminate the dealership structure involving sales people and managers, they will add profit to their bottom line. Most people know what they want when they are about to purchase a product, no matter what it is. This concept of online purchasing with a delivery at your home or office with a delivery specialist is the wave of the future. Say good bye to the dealer. It is a dinosaur.
I really appreciated the insights in your article, even if the prognosis seems a little depressing. My own experience with our Honda Powersports dealership is mixed. The sales staff were excellent – experienced motorcyclists; the product was excellent; the warranty coverage was superb – the two ‘Honda’ accessories that had minor defects were completely replaced by the dealer, with no squabbling.
It was the service that drove me back to our town’s local mechanic. After having one of the plastic covers broken during service, and finally, the fuel petcock left off on my final visit, which I only discovered after the bike stalled out at a stop sign (I should’ve checked, I know!), I’ve taken my bikes to Clarington Cycle here in town. I now ride an Aprilia scooter – I downloaded the manual & parts catalogue from AF1 online, from whom I order my parts. The AF1 forum provides technical advice from other riders. If I’m unable to do the work myself, the local shop will install the parts. I don’t know if this hybrid approach is becoming more the norm as well, but it’s worked for me so far.
Keep the great articles coming!
Gordon L Belyea
Your Vespa-AF1 experience is essentially what I did with an Aprilia Tuono a few years ago. I bought the bike by phone from a dealer in Ohio ($4k off list for a brand new, 1 yr old model), had it shipped to me in rural southern Illinois, and bought parts from AF1.
There was an Aprilia shop (Moto Italia in Edwardsville) about an hour away who handled a warranty repair one time, but they dropped the Aprilia franchise shortly afterward to concentrate on Moto Guzzi(!). They still had the Aprilia manuals and an experienced tech a couple years later when a valve adjustment was due, and did a nice job for me.
I think CSC may be onto something as far as using independent shops for warranty work, especially for scooters and simple/cheaper bikes. Not sure it’s entirely feasible for high end and complex bikes.
Similarly, for recall work on my Scarabeo, I’ve made the 1 hr trek to Toronto’s excellent Corsa Meccanica. George still handles Aprilia, as well as other Italian marques. I may need to do this for the bike’s valves, which require specialized tools for their adjustment.
Yeah, George is the dealer everybody wished they had. I’ve been around the sport for 35, competed and worked in it as well, and he’s been the best I’ve seen for understanding his customers.
He’s so much fun to watch, too. Like he’s permanently wired on a triple espresso…
Good discussion as always at CMG. I recently purchased a new jacket and helmet in Calgary. I looked online both in Canada and the US. At the end of the day I was able to look at and try on the equipment at the dealer and the price for both was cheaper than any online option. So I got service and the best price at the dealer. I do take all my service now to a smaller independent shop in Turner Valley. Best service I have had in 35 years of riding. Best service and good prices are still available and I sure love going to the dealer in the depths of winter to satisfy my fix. Hope they last.
I won`t shed a tear, i would if they had made a good job but i have yet to find a good dealer.
The exclusive distributor makes parts/accesories price prohibitive. A helmet that I can buy cheaper from the US than the dealer can from the exclusive distributor?
Sales professionals rather than mootorcycle professionals selling bikes. There are dealers out there who dont have ales people with a motorcycle licence.
Corporate branding. Does your store really have to have a stylized Indian Fender incoperated into the architecture of the store? This drives up costs for the dealer and the customer.
There is one problem we in Ontario have. As was explained to me is that we can not buy a vehicle completely online as you could else where. Where I can buy anything from parts, riding gear to accessories over the internet I’m not able to find a scooter/Motorcycle buy it and have it delivered to my house via the internet it needs to be person to person new, used other wise.
I myself would not trust a bike I bought online no matter what the manufacturer says. As you said the need to see it in the flesh really matters in the bike world.While the person in the pictures looks good and well balanced on the bike it maybe to big or small in person to fit you and your riding style.
As Michael explained Tony, you can buy one of these :
If you search the CMG archives you will find more information about them
Dealers are being squeezed out, but we have seen a recent resurgence in independent repair and accessory shops.
Once you buy it, you still need to have it maintained and repaired by someone who is knowledgeable. You still need to ‘try it on’ and see how it fits.
For both these services there is a cost involved keeping the lights on and the rent paid, and consumers have for the most part come to understand that.
Part of the problem too has been that the old stuff just won’t die. When i started in the business, you didn’t see bikes that were 30 or 40 years old still running in any numbers. Someone has to fix them, and the dealers aren’t really prepared to do that.
Online retailing ? As a good friend once said, “its hard to compete on price with someone sitting in front of a computer, in his parents’ basement, in his underwear”, so you have to do it on convenience, knowledge and the customer experience.
Is Starbucks any better that the coffee you can brew at home ? I for one don’t think so, but there a lots who do, so let’s find a way to cater to them.
Then there’s always the concern about “what happens when things go terribly, terribly wrong” ?
Those that follow CMG already know my feelings about consumer direct sales of complete machines, owners performing their own maintenance (and doing it wrong), and how to satisfy such issues as Transport Canada recalls ?
You are correct as usual Michael, the business model needs an update, and needs one NOW.
The motorcycle market will be driven by whether people want to ride a particular motorcycle; how they buy it only affects where they buy it, price being the leading factor. I’ve NEVER met someone who bought a particular bike because of dealer support, service, etc.
The demise of dealers is also somewhat geographical; Toronto has lost many, but that’s probably the price of real estate. My local Honda/BRP dealer in Embrun is alive and well, as is the Yamaha guy in Moose Creek, as are a number of dealers in Cornwall. Ottawa has dealers for all the major Japanese brands and Harley as well as Triumph, Ducati, Guzzi, Aprillia, KTM. I’m not sure the demise of the dealer is universal, or depends on anything in the motorcycle, as opposed to real estate, market.
Stealers are a rip off. no sympathy whatsoever.
Chris – The dealers aren’t the rip-offs, they are getting squeezed from both ends. The distributors and the consumers both have expectations and the dealer has to find a way to make ends meet.
There is more profit to be made selling financing and extended warranty than there is on the machine itself.
If you have a better idea, I for one would love to hear it.
IMO where local dealers are also losing business is in the pricing of their accessories & their service.
$190 per hr at one of the local shops for service is just ridiculous. Was looking for GIVI luggage for my recently purchased Honda last summer & obtained quotes of between $900 & $1200. I found the exact same luggage online for $600. Shipped from Italy I paid just under $650 cdn. If the local dealer(s) had been anywhere close on price (even in the $750 range) I would have ordered locally.
This past April I had to purchase a new helmet, went to 3 “local dealers” in the Calgary area & nobody had what I was looking for. One dealership, Blackfoot, offered to order in the helmet for me for $290. Pay the cost & they would call & let me know when it was in & I chose to NOT go with this option. Better idea was to go online when I got home & order it from a Canadian online retailer. Cost was $150 shipped to the local post office.
Either way the helmet had to be ordered as it wasn’t in stock. For slightly over half the cost I had it delivered & saved not only the extra $140 but the 1.5 hrs of travel time to a dealer that seems bent on alienating half of it’s potential customers.
Dealers have overhead I understand, but price gouging on products I don’t need immediately will not garner return business
I see a big gap here in what the author states about the future viability of dealerships: their health didn’t friend upon new bike sales, but on the aftermarket sales of accessories and service. That’s what keeps a dealer in the black.
Here in Canada, there’s a hidden evil within this, known as the importer. They have exclusive rights from the manufacturer for importation of their product. They control the price, and the availability.
With the internet, and a simple currency converter, there comes a transparency that shines a big light on them. When a front tire priced in the US at $101 usd, is bought through the importer by a dealer, shipped from the same warehouse, is listed in the book at $242 cad plus tax, any sane consumer goes wtf.
This is a common problem, as anyone can see for themselves. I try to support my local as much add possible, but when she’s telling me to buy it online because the price is so skewed, then you know it’s a serious problem as well.
Our recent brush with an exchange rate at par really highlighted this.
And the poor dealer is caught between a rock and a hard place. If they could stock on the prices available cross-border, then they could stay profitable.
But sadly, there’s no way that monopoly will be broken.
You are only too right about the importer situation. In effect, we have two middle men in this scenario rather than just the dealer. The result is, sadly, even more disconnection between the manufacturer and consumer.
With wholly-owned distribution operations like those of the big four Japanese brands, BMW, and recently Harley-Davidson, that level is absent, which helps them reduce cross-border disparity. But there is still a disconnect for sure when it comes to boutique and low volume brands, and as you mentioned, the entire accessory market.
The idea of this column was to illustrate that the current model no longer makes sense. Inevitably, most consumers under 35 will buy accessories online, and demand ever increasing direct contact with motorcycle manufacturers.
The dealers for sure will be squeezed out. The point is, is that really going to negatively affect the motorcycle market in the long term? I am open to other points of view…
I’m 45 and have been happily ordering parts/accessories online for well over 15 years. I know riders in their mid sixties who also order online. If I could buy manufacture direct, I would. We all eagerly pay an entry to go to the yearly bike show, and its packed for 4 days straight accessing the “product”. Yet, attending the local dealer to do the same thing is free. I think there is a large ratio of riders (including the older and savvy cash in hand types) ready to buy direct if given the chance.