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Making Money with Motorcycles
 By Dave Preston
The sky is falling and Chicken Little wants to sell. Dealerships
all over the country are dead in the water, on life support, for
sale or (if lucky) hanging in there. Major manufacturers are
pulling back production and delaying or cancelling new model
introductions. This is not fun for dealers, manufacturers or
enthusiasts. Woe is us!
There used to be a standard gag in the motorcycle business along the
lines of “You can make a small fortune in the motorcycle business…
provided you start with a large one.” For many individuals, this is
no longer a sick joke but rather a tragic statement of fact.
Therefore, now is the perfect time to jump in! Here are a couple of
ideas on how to make a bundle in the motorcycle biz – brought to you
by a guy with three decades of experience – as an English teacher.
On the other hand, I did not lose any money to Bernie Madoff, so
perhaps I am ahead of many in the financial smarts game.
Keep in mind that in a media-sales driven world, things are rarely
as bad as they seem. True, at times they are worse, but usually
things continue on a more or less steady path. Motorcycles are still
tremendously exciting products and new designs and features are
constantly coming to market. As the economy staggers toward health
and employment and stock market numbers begin to crawl upward, our
sport is not going to die and will probably prove to be a growth
market for those who are still in it.
Here are two scenarios, labeled Plan A and Plan II for ease of
study. Admittedly “out there” concepts for making money – a lot of
it – in the motorcycle business, these two plans might work. In
positing them I am totally unencumbered by facts, experience and
resources – so they could be considered pure fantasy. Or not…
Plan A: MV Agusta is now for sale by Harley. Harley-Davidson
purchased MV a couple of years ago for, if I recall, $110 million.
Many opined that the reason for the purchase was not to become a
purveyor of hand-built Italian exotica, but to gain access to MV Agusta’s European showrooms in order to expand the available retail
outlets for Harley.
Fast forward through the financial meltdowns few anticipated and
Harley does not need more dealers – in Europe or anywhere else. In
fact, they assuredly have too many and they know it. Thus, MV is
for sale.
Part 1 of Plan A is to purchase MV Agusta. In a down market, this
will probably go for about $80 million. Part 2 is to purchase a
large Harley dealership somewhere near Hollywood and make it the
largest MV Agusta dealer in the world. You want to be near Hollywood
for easy access for product placement in movies.
So far you are hemorrhaging money at an extremely rapid rate. You
have a beautiful dealership offering very high end sport bikes to a
wealthy clientele and you may be able to get examples of your brand
into the next Tom Cruise movie, or whatever. None of that is going
to make you much money, however, so now is the time to examine the
weaknesses of your MV Agusta products. Beautiful, rare, offering
high performance and romance while dripping in exciting heritage,
they are lacking only in comfort and reliability.
So… you approach a world-wide auto manufacturer famed for quality
control that has problems that are of use to you. Enter Part 3 of
Plan A - Toyota. On the brink of the crown glory – “largest auto
manufacturer in the world,” Toyota has seen their world shatter into
carbon fiber shards in recent years. They have “invested” hundreds
of millions in a Formula 1 racing effort with minimal return. Their
sales are down and their products, by their own admission, are
boring. They recently took the unprecedented step, especially for a
Japanese firm, of apologizing to their customers for uninspiring
products and committed to bringing excitement back to their line.
Your pitch is to agree to allow Toyota to market MV Agusta – “MV
Agusta TRD motorcycles” in their showrooms, in return for technical
help in ramping up MV reliability and comfort. They invest $100
million in your new firm, which is utter chump change compared to
either their F1 efforts or the cost of developing an exciting new
sports car design from scratch. With motorcycles in their
dealerships they bring instant excitement to their showrooms for a
(relative) pittance.
Fortuitously, the need to provide at least one MV Agusta TRD for
every Toyota dealer in the world will ensure full employment of your
production facility in Italy for years to come.
But wait, there’s more. Toyota leads the world in hybrid technology.
With their and your motorcycle venture, they have prepared the way
for electric hybrid technology to be used in “MV Agusta TRD”
motorcycles and scooters.
You now have a profitable company worth $500 million at least, and
everyone wins – especially you! All that is needed is about $150
million in venture capital to get started, and the need to move
quickly before Toyota figures this out and calculates that you are
not needed!
Plan II: Invest in Honda. If Plan A is a little out of reach, let’s
look at a lesser scenario. Consider Honda motorcycles.
The company that brought technological marvels to market, seemingly
every other day back in the 1960s has been eerily quiet for most of
this decade. The Gold Wing is a fine motorcycle and has remained
static for a time span of near geologic proportions. The same can be
said for the VTX cruiser series, the VFR and the ST 1300 sport
touring models. This year has brought us the Fury and the DNO-1
–interesting to be sure but hardly of the scope and breadth of days
of yore. Only the sport bikes have upheld their technological
heritage.
What if all of this is intentional? Imagine that a smart boffin deep
in the bowels of Honda R&D took at look at the world situation about
five years ago and concluded that the market (both motorcycle and
stock) was overheated and could not be sustained. What if our boffin
foresaw the collapse of both markets and the thinning of the
dealership herd now taking place? In that case, the plan might be to
sit and wait until the market has shrunk to today’s low and then
strike hard with bold new designs that will revolutionize the
industry and lead to market dominance. After all, Honda did this
once before – about 50 years ago.
Recently Honda has made significant cuts in their American
operations – truly Draconian cuts – by offering long-term staff
significant chunks of change to retire. This is either in
preparation for getting out of the motorcycle business entirely,
which seems unlikely, or simply a calculated part of the creation of
a younger, leaner and faster-reacting work force for the market
they plan to create.
All of this may be why we finally see information emerging on the
new VFR 1200, which looks to be a fantastic product. Rumors are
swirling about an ST 1300 replacement in 2011. After that, how about
a Goldwing with a carbon fiber structure replacing the frame that
offers a loss of 150 pounds of weight? And of course, Honda is also
well positioned to use electric and hybrid technologies in future
vehicles.
If all of this or even most of this is true (admittedly a series of
very large “ifs”), a savvy bet would be to purchase a modern
motorcycle dealership of any sort - preferably one next to a car
dealer. There are many for sale in almost any part of the country
you wish. Purchase both the dealerships for fifteen million or so
and then go all in as a complete retailer of all things Honda.
Motorcycles, scooters, cars, trucks, power products, personal water
craft, ATVs and UTVs – all in one “Honda Heaven” dealership. Then
you wait for the incredible products you presume Honda is about to
release and you become the dominant dealer for both cars and
motorcycles in your area of choice.
Worst case - it doesn’t work as well as you hoped, so in a few years
you sell out – perhaps to a new Toyota MV Agusta dealership!?
Ride safe, ride well, and ride often!
Dave Preston is the author of Motorcycle 101, a sensible book
for the new and returning rider. |
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