MOTO eMAG: US Motorcycle Industry's Woes

US Motorcycle Industry's Woes - Parts 1 - 4 (6/9/21)

PART 1 (January 17, 2018):

Evaluation & Analysis
The US motorcycle market is very different from all other markets in the world. In India for example they sell 17M bikes a year. It's no wonder European brands are flocking there. We are a country of 320M and last year we purchased 17M new cars, SUVs and pickups. However, in the same year we bought only 470K motorcycles, including scooters and three-wheel vehicles (down from over a million units in '07). The US moto market has contracted or shrunk by about 60% in 10 years.

Bless The Boomers
The US moto market is shrinking and with new generations showing little interest in anything other than gadgets and video games it wouldn't take Nostradamus to see where our future is heading. In a previous article on MOTO eMAG, Bless the Boomers, I explained that the boomer generation is responsible for creating a massive outdoors-loving industry, such as riding, flying, boating, fishing and classic cars. With the boomers retiring and gradually passing on all these markets will weaken a great deal in the US.

What is the Woes Series?
The Woes series is about the future of our US moto industry that is under attack from all sides.

The Core Issues with US Motorcycle Market:

Very small market compare to the automobile industry (annual units: 470K vs 17mil).
It's a shrinking market.
Major cities are planning a war against combustion engines.
Although electric cars have a cool factor, electric motorcycles do not.
Younger US generations totally lack enthusiasm for motorcycles in general.
Motorcycle riders have a negative public perception.
As cars get quieter, insular and loaded with high-tech safety features and wrap-around airbags, motorcycles appear as extremely a dangerous choice.
The car buying trend in the US is now about ditching cars for SUVs. Meaning even more isolation from the road and the driving experience; that moves people further away from the motorcycling experience.
Americans getting older and more overweight by the year (according to CDC 40% are now obese) and there is the opioid crises, neither of those support a more agile population wanting to ditch their SUVs for a motorcycle.

Cars and Bikes Have Parted Ways
As a cinephile I am a fan of classic movies. I can name my top-ten films per decade all the way from the Silent Era. One of the nice things about watching classic films is seeing the evolution of cars and bikes in action. For example, you can see Henderson and Harley police bikes in use when they were new in the '20s and '30s.

Cars and motorcycles initially started together very simply as an engine with wheels and totally open to the elements. In the '30s and '40s people drove a lot of open top cars too. Jumping to the '70s, even then cars were quite unrefined, no one used a seatbelt, cars had no safety features, such as airbags or ABS and windows were almost always kept open and you worked on your car as you did on your bike. It was from the '90s when cars began to part ways completely from motorcycles by becoming more and more insular and cocoon like.

Now fast-forward to today, cars and bikes occupy totally different worlds. Cars have become incredibly protective, loaded with safety features, such as wraparound airbags, proximity and lane-departure warnings, self-parking, emergency braking, very good audio and entertainment systems and foolproof environmental controls.

This major shift between cars and bikes may not matter to baby boom generation but it certainly affects the younger US generations who were driven around in rolling fortresses with rear seat LCD screens for games and entertainment. This sense of long-term on-road isolation doesn't translate to fanaticism about motorcycles.

Future Automotive Buying Trends - Personal Transportation Revolution
Adding to above there are reports that automotive ownership will decline in coming years as more people opt for alternative means such as autonomous vehicles, car sharing (Zipcar, Maven), ride sharing (such as Uber, Lyft), short term leases and month-by-month leasing--which is the latest trend.

This new month-by-month leasing trend is already being offered by Ford, Cadillac and Porsche. Basically the participants only commit to one month at a time. No long-term commitment needed. So you can drive one car for a month, then try another for the next month and then another with all costs covered including insurance and maintenance, or drive the same car for many months within mileage limits. In most cases cars are delivered to and picked up from your location for free. So you can order a Ford in April, then pay more and book a Cadillac for May and increase your budget to order a Porsche for summer fun and go back to Ford if you feel like saving money the following month.

We're in the midst of a personal transportation revolution and the US moto market is missing out on it.

Tough Love
Out of deep love for our sport and for the industry, the Woes series was created to help revive the US moto market and suggest ways to reverse or at least slow down the negative sales trend. The focus of the Woes series is only the US market.

Our Woe's series was launched with a real bang, an epic 5-part Harley's Woes article. It received tens of thousands of hits, new subscribers and many forwards of our MOTO eMAG. The Woes series is basically a direct, no-nonsense, industry focused analysis and report on popular moto brands for the all-important US market. This is what we, the marketing types, share with executives of major brands. You see, you can sell a basic scooter anywhere in the world but a $15K+ 1000c+ bike can find home only in a few select countries and the US is one of the biggest markets. After Harley's Woes, we covered another favorite brand that used to be owned by H-D, MV's Woes, and then a brand that H-D actually was very hot on buying in Sept '17, Ducati's Woes. The 4th brand is Harley's longtime rival Indian's Woes. After that it was the entire US industry in US Motorcycle Industry's Woes. Then BMW's Not So Woes.

The US Moto Marketing is on Auto Pilot
I've noticed that motorcycle marketing in the US has shrunk into running banner ads with low APRs and monthly incentives. But those aren't marketing tactics at all they are sales strategies. Then there is the trend for one-off customs, but those customs don't translate into sales for the regular model range. Marketing should not be just about posting nice images of your product on your social media channels, or running banner ads. Latest promotion trend is to move away from banners ads to more content driven exposure anyway; which is exactly what we offer at MOTO eMAG.

Marketing is about winning hearts and minds. At BMW motorcycles, primarily between 2003 and 2008, due to high talent ratio and very hard work we won the hearts and minds of American riders and made once a pariah moto brand, especially among the younger riders, hot again. I'll cover the successful strategy at BMW's '00 years in detail with BMW's Woes in a future issue.

Successful Marketing = Winning Hearts & Minds
Apple is the all-time king of winning hearts and minds followed by Harley-Davidson. Any brand that turns its followers into religious zealots is worth admiring and also imitating.

The US Motorcycle Brands Masculinity Perception Index

It should come as no surprise to anyone who understands American riders that the brand that enjoys the highest level of masculinity perception is also the market leader by a very wide margin. It's H-D's world after all.

Among Euro bikes Triumph enjoys the highest rating in the US because Triumph is associated with two of the most popular and badass American male icons of all time, Steve McQueen and Marlon Brando. You can't buy nor bottle this grade of smart and masculine heritage. So Triumph has that in their line up.

The Motorcycle Brands Masculinity Index is brand indicator and not rider indicator. US riders are attracted to the brand with highest level of perception of masculinity.

This is a unique phenomenon that exists only in the US. For example Europe doesn't care for the masculinity index, it looks instead for high production value and great engineering or top performance instead.

World of PC and Helicopter Parenting
The more PC the US becomes, the further it parts from spirit of the American rider and the smaller our market gets. This point cannot be overemphasized as the US market has always been linked to the masculinity index. The more insular, protective and fearful people become (specially our children) the less they express their wild and free side. This effect gets worse as new generations are kept more and more indoors and are cocooned in an illusion of a safety bubble.

The Woes Series is Now a Movement
When I was at Long Beach IMS motorcycle show this past November, I received a lot of praise for the Woes series. People thought that it was important to speak about the serious crises that our beloved motorcycle industry is facing.

With the support of the Woes series a new movement is forming to inspire our industry to get more vigilant about turning new riders on to our great sport.

Los Angeles Times Article
Last Dec 14, Los Angeles Times released a story titled "No easy ride: Motorcycle industry is in deep trouble and needs help fast, panel agrees." The story basically mimics the Woes series point by point. However, there are comments in that story that aren't fully thought out and were never suggested by the Woes series. Let's review and educate.

Let's Debunk the LA Times Suggestions for US Moto Market Growth
Some of the suggestions being offered are two decades old and will never make a dent in growth of the US motorcycle industry. However, the panel gets an A for effort.

1. Attract More Women: At BMW US in the 00's we created special ad campaigns and dedicated brochures to inspire more women to join our sport. But the key issue with the US market is not lack of female participation, it's lack of PEOPLE participation. Women alone will not save our industry. If young men aren't attracted to bikes and rather play with their phones, it would be a safe bet that their female counterparts are on the other end of the phones engaging them as well.

2. Attract More Minorities: In 2003 at BMW US we focused on showcasing African Americans riding BMW bikes and it was a gamechanger. However, it's 2018 now and we no longer segregate our society by gender or race. This is not a bad idea however it's half baked. More on this with suggestions in Part 2.

3. The Effect of Autonomous Vehicles on Motorcycle Sales: We're decades away from actual impact of autonomous vehicles in whole of our daily lives. It will take just one tragic accident of a dead puppy or worse to push this technology back 5 years or more. According to this report only 19% of total vehicles in Western countries will be electric by 2040. This report paints even a less enthusiastic picture for autonomous vehicles.

The solution to reviving the US motorcycle industry is not to worry about autonomous vehicles nor is it about creating more electric motorcycles. Let's not dilute the message.

The above first and second points are a rehash of old arguments. The solution to our growth is to attract PEOPLE, period. Yes the challenge is to get Americans of all shapes and sizes and all age groups to be turned on by our sport again, to want to own bikes, be seen with bikes, go on Sunday rides and hang out with fellow riders.

PART 2 (February 8, 2018):

The Solution

The above covers Part 1 of the US moto industry woes, as the 5th segment in our very popular Woes series. In the first part I lay out all the challenges that have caused the moto market to contract by about 60% in 10 years. I also mention that the Woes has now become a movement based on a LA Times article (link in Part 1). If you haven't already, I encourage you to read Part 1 first before scrolling down for The Solution.

Point-By-Point Marketing Ideas & Solutions

Easy Riders and The Nicest People Come Together
After the release of wildly popular Easy Rider back in '69 there was a major resurgence of motorcycle riding in the US. Also Honda's famous Nicest People campaign is credited to have saved them from closing their US division back in the mid Sixties. Let's not forget the impact that the TV series Long Way 'Round (2004) had on establishing the BMW GS as THE enduro and increased the popularity of Adventure bikes. It's clear that successful mainstream movies and TV shows and very clever advertising can certainly help transform an industry.

Easy Rider is about the joy of the ride on any type of a bike, not just choppers, and the Nicest People campaign defines how practical, economical and people friendly light capacity two-wheels can get. Long Way 'Round shows how resilient, versatile and long distance friendly motorcycles can be. These are 3 distinct aspects of two-wheeling and with excellent execution all of them became a hit and helped revive our industry in the past.

One great new movie or an innovative TV series can totally revamp our industry once again.
We need to create more special events that happen outside of major rallies and clever marketing stunts.
We need to make motorcycles the topic of mainstream dialog again.
Bikes today are loaded with technology and are many times safer, and this has a crowd-pleasing element that should be explored.
Tie in motorcycles to other popular cultural or national events.
Put more bikes, and all styles of riding, on TV, videos and in movies.
Take the two-fold Easy Riders & Nicest People approach to attract both the rebels and the environmentally conscious.

Letter to The Mayor - Advantages of Motorcycles
In 2007 I wrote the draft of a letter that was sent to the mayor of NYC, from a large group, that listed all the advantages of motorcycles. The then mayor Bloomberg was vehemently against all motorcycles and was coming down on us real hard and we were trying to educate him a little about all the benefits.

The Civic, Economical and Environmental Advantages of Motorcycles

Motorcycles are globally hailed as a green form of transportation.
In many major global metro areas motorcycles are exempt from various fees or tolls, such as congestion fees.
They occupy much less roadway hence reduce congestion.
They offer twice the fuel economy of an average car--most motorcycles offer 50 mpg--hence they not only save fuel but they also reduce the harmful emissions by a great margin.
They require fewer raw materials to manufacture and most of their parts are recyclable.
They place a great deal less wear and tear on our roads than a typical car, SUV or pickup.
And they only need one-fourth the parking space of an average car.

Attract ALL The People Not Just Women or Minorities
Some thoughts about growing the US moto market by encouraging more women or going after certain minority groups have been around for about two decades. However, as I mention in Part 1 above, the key to our growth is not to chop up our public into little groups but to actually find ways to go after ALL the people ALL the time.

In the US moto marketing we have been stuck in exactly the same patterns for way too long. For cruisers we typically show the same tattooed biker, for touring bikes typically the same white couple, and for rest of the models almost the same white guy appears in all photos.

The US of 2018 is a very different country from 1998. Why hasn't our marketing tactics shifted with the times? Imagine if you removed the above clichés and started totally from scratch.

Why not run ads with a nice looking female on a sport bike, maybe a 30-something lesbian couple on a tourer, how about a guy void of any tattoos on an American-style cruiser (that would be a shocker) and a Latino on an Enduro. After all we're marketing motorcycles and not cereal. Our industry is on a decline and as the saying goes hard times demand drastic measures. We need to do a reset on our advertising clichés to win the new generation of Americans.

Serving The Military and All Uniformed Personnel Should be The Focus of All Brands
I hate to keep bringing up all the right things we did at BMW, but we turned a brand around quite successfully and learning from best practices should be priority one. We very proudly courted members of all branches of the armed forces and all uniformed officers, including the police, Correction, EMT and the Sheriff. We provided a specially designed, generous incentives and cash backs on the sale of all new BMW motorcycles at that time.

I strongly encourage major brands to consider creating ongoing incentives geared toward all the members of the military and uniformed officers. Also consider setting up special demo rides for uniformed personnel.

Our military personnel are the best pool of potential new riders and they should be catered to in high style and with generous incentives.

Harley is Motivated and The Industry as a Whole Must Join Them
The best place to get info about any industry is not that industry's trade papers but finance and business reports about that industry. That's because business reports tend to be void of any emotional bias. I base my Woes reporting on such principal. Here's a report from Fox Business covering Harley-Davidson's new initiatives to potentially bring 2 million new riders to our sport.

I encourage all motorcycle brands to come together and follow H-D's lead to offer major nationwide initiatives to help recruit new riders.

These Initiatives Could Include:

Dealerships to consider bike rentals (day/week/month) to help move bikes out of dealership floors.
Come up with alternative, creative and flexible month-by-month leasing programs (as explained in Part 1 which is already being offered by Ford, Cadillac and Porsche and will certainly expand to more brands).
Brands should consider bike sharing programs similar to popular Maven and Zipcar car sharing offerings.
Offer full credit of a rider's training course on purchase of a new motorcycle.
Offer a certified pre-owned program on used bikes to help move them out of dealerships and putting more people on bikes.
Take the worry of bike ownership totally out of the minds of new buyers by offering industry-wide complimentary scheduled maintenance for the duration of warranty.

PRICELESS IDEA: Complementary Routine Maintenance for Life of Warranty
BMW cars managed to unseat Lexus as the top luxury brand several years ago by eliminating the worry of luxury car ownership maintenance costs from the minds of buyers. Many brands now offer some type of complimentary maintenance under warranty, also for certified pre-owned models. However, no moto brand has yet to take advantage of this brilliant and crowd-pleasing marketing/sales scheme.

I predict that complimentary maintenance for life of warranty will be a gamechanger for our industry. It will not only create a very positive vibe for the industry but also take away inhibitions about purchase due to service costs. Complimentary routine service is basically handled via new vehicle warranty system that is already in place with all new vehicles anyway. Meaning the same way that a new bike gets serviced at a dealer for bad transmission under warranty, that warranty system is extended to include oil changes and so on. It's not complicated and it will pay for itself with increased sales. Also complimentary maintenance offers bring the customers back to dealerships which is what every dealer wants.

Complete Marketing Plans
We have complete concepts plus detailed marketing plans for the above ideas and for many more suggestions.

Conclusion
The slide in sales can be reversed if all major brands refocus their efforts for the US market. Running banner ads and posting nice pics of your bikes on social media is simply not cutting it. Also press reviews don't affect overall sales. We need to ignite new interest in motorcycling, engaging all the American public and showcase bikes in mainstream media. Also extending a red carpet to our military and uniformed personnel would be a gamechanger. This is doable!

PART 3 (February 5, 2020):

2019 US Motorcycle Sales - On The Back Burner

The 2019 US industry numbers have come in for most brands and as expected they don't look too good, although the off-road market seems to have had a rebound. The key market for our publication, large displacement on-roads, is down by 7% (according to Ducati). I'll cover the details of the US sales slump on various premium brands in future "Woes" editorials, but here's the lowdown. The big takeaway from the sales reporting by some of the brands, including BMW and Ducati, clearly shows that they aren't too focused on the US any more. For example, for the first time (that I can remember) BMW ignored US numbers in their report and instead combined them with Canada (read why below). Ducati to their credit did mention their US sales (-2%) but added that the relevant US market is down by 7%, so in relation they're golden (that's called fuzzy logic). H-D is down by another 5.2% in the US. BMW reported about 15.1K units for NA, that number points to about 5.5% reduction from 2018. Any more reductions like that and they'll combine us with Mexico and SA next year. ;)

As mentioned above I'm not going to dive too deep into individual premium brands right now, however, here's what's really going on. Motorcycles are hot all over the world, except for the US. (There was some slump in India due to regulation changes, but it might pick up again in 2020). Europe is also enjoying a rebound and the Euro brands have specially benefited by that. BMW and Ducati are doing very well in Europe, even though as a whole Ducati did not manage to increase their volume. Considering the future of motorcycle sales is about smaller displacement bikes for mostly the Asian markets, it's sad to see that some of these brands are already writing the US off. For example, BMW is creating a 310 GS Cup in India, that points to where their focus is right now. BMW and Ducati would be able to dominate the sales more on our turf if they invest in proper US only branding and rider engagement. But with the rest of the world piping hot, the US is seemingly on the back burner, for now.

PART 4 (June 9, 2020):

Post Pandemic - Mad Buying Rush
When I wrote about the pandemic's impact on our industry early last year, I mentioned that it will create the biggest cabin fever of all time. In the last issue I said that both the 2020 and 2021 new bike sales numbers should be ignored because of the slingshot effect. Now I think that statement should read, people's buying habits will settle down and normalize a full year after the end of the pandemic. Since we're still in it, this could point to 2023.

Pay for Rolls Royce not Payroll
People are going nuts trying to recapture the lost time and with their pockets loaded with free money, from numerous sources, they are going to spend, spend and spend. Let me share an example of this buying madness. An owner of a small trucking co received a massive PPP loan that was meant to keep his staff on payroll. He instead went out and bought a Rolls Royce and other very expensive toys. He then drove the RR to his company to show it off to his laid off drivers, who then reported him to the Feds. It was such a stupid move that made the news. There are many thousands of other such cases that don't get noticed or found out.

Mad Buying Rush
This new cash freefall and the rush to recapture lost time will only last a short while. I am not surprised that our media is ambivalent to this point, but I don't blame them, since their writers are just two-wheel enthusiasts who don't think in such terms. However, some are writing these, IMO, silly blogs that our industry is back! No, it's not. We (the US motorcycle industry) have been in a steady decline since 2008 and a spike due to post pandemic mad rush is meaningless. Why are they comparing new stats to the time when factories and dealers were closed? We need to look at new data for 3 years (until 2023-4) to gauge whether there is an actual recovery in sales trend of new street bikes (not just cheap dirt bikes).

Post Pandemic = Post Prohibition Era
This bump in sales is simply a natural reaction to once in a hundred years global crises (like people partying super hard after the end of the Prohibition). All this sudden but short-lived buying of expensive toys (of all kinds) is only going to create a flood of like-new low-miles used fun machines hitting the markets soon (specially when the buyers realize that they can't afford to maintain them).