Motorcycle Shops See a Slow but Steady Rise in Sales
Revving Up for Success
Ray Smith left his career as a homebuilder 14 years ago to live his dream.
“Motorcycles are my passion,” he told BusinessWest, as he recalled how he opened Cycle Stop, an independent motorcycle shop in South Hadley.
In 2104, he put on a 13,000-square-foot addition because he needed more room to display the pre-owned, low-mileage motorcycles, accessories, clothing, and parts that he sells and also needed to expand his thriving service department.
Smith has seen small and large motorcycle shops and franchises close their doors over the past decade, but his business has done well, and he predicts this year will be a good one not only locally, but for the industry as a whole.
Other dealers agree and say growth has been on a slow but steady trajectory for the past few years, and they expect the trend to continue.
“We sell fun and are on the road to success,” said Glenn Morin, sales and finance manager at Valley Motorsports in Northampton, adding that the company’s inventory includes cruisers, touring bikes, sport bikes, and adventure bikes, which have become very popular because they have both on- and off-road capabilities.
Sales at Valley Motorsports have risen 9% to 10% each year since the recession ended, and the goal for 2016 is to do at least slightly better than that. The company expects to reach it, because it has seven makes under their roof, the economy is rebounding, and manufacturers are introducing new, exciting models.
Owner Jerry Randall, who opened the business in 1973, said Valley Motorsports provides financing and does its best to make a purchase seamless, which helps boost its numbers. But although it carries models that include cruisers, touring bikes, sport bikes, and adventure bikes, he doesn’t think sales will ever return to the levels seen before the recession: in one year spanning 2004 and 2005, nearly 1.1 million motorcycles were reported sold in the U.S., compared to last year, when the Motorcycle Industry Council reported that 500,678 street bikes, dual-sport, and off-road motorcycles were sold.
“Things have been inching up over the past few years, but it has been a long, uphill struggle, and I don’t think sales will ever be as good as they were; motorcycles are still a luxury,” said Randall, noting that, in today’s economy, people think very carefully about assuming debt and how they spend their money, and motorcycle owners are keeping their bikes longer, which is a trend mirrored in auto sales, where the average trade-in is 10 years old.
But interest in racing and other forms of off-road cycling is picking up (more about that later), which adds to the fun, desirability, and, therefore, the motivation to buy a bike.
Indeed, spring is the season to take to the road. “People have been pent up all winter and are anxious to get out on their bikes,” Smith said, noting that most of his sales occur between March and June.
Aaron Patrick, who owns Harley-Davidson of Southampton, projects a 20% increase in sales over last year, when the company sold more than 400 motorcycles.
“We expect to sell 476 new or used models this year; sales are always dependent on weather, but if we have the June that we are expecting, we will be about halfway to our goal,” he said, adding that, although they stay open all year, the bulk of their sales take place during an eight-month period.
The company’s worst year was 2012, when it sold 375 bikes, and during its best year, that number reached 600. “We hold our own,” he told BusinessWest, noting that Harley-Davidson is careful to keep the number of new bikes manufactured in line with supply and demand, and also has a number of marketing campaigns.
He promotes sales in a different manner that focuses on local riders, and sponsors the Pioneer Valley Harley Owners Group, which has more than 100 members who take part in charity rides and other events to help the community.
Catering to Customers
Harley-Davidson offers a mixture of traditional motorcycles and trikes, which are bikes with three wheels. Prices for new units start at $7,000 and reach above $40,000.
Patrick said the Southampton dealership spends a lot of time fitting its customers to the right bike, and the number of available models make it possible for people of any shape, size, or ability to enjoy riding.
“Comfort and fit are a big thing, so we have people sit on a lot of bikes, and if they have a motorcycle license, we allow them to take models on test drives,” he said.
The dealership boasts $15 million in annual revenue and holds special events that cater to the growing number of female riders. They include Ladies Nights and a Ladies of Harley group within the Pioneer Valley group that has about 15 members.
Sales Manager Rob Thompson says Harley has five families of motorcycles to choose from. Baby Boomers tend to like touring models, which can come equipped with saddle bags, storage space beneath the seat, a backrest for the passenger, and a windshield, and which appeal to people who ride up to 20,000 miles a year.
Boomers make up a large percentage of the client base, but manufacturers’ marketing efforts are geared toward raising awareness and demand for the brand among younger generations, and include buyer promotions and special financing deals, along with two new entry-level street bikes.
One has a liquid-cooled engine that makes riding in the summer cooler, and although Harley diehards don’t like the idea, Thompson said it appeals to many people, including first-time buyers of all ages.
“A Harley is no longer just a retirement gift,” said Patrick. “It can be a birthday or graduation gift, and younger people are getting more involved with them because of their comfort and ride quality.
“Harley-Davidson is a lifestyle, and more affordable than most people think,” he went on, adding quickly that new owners typically begin customizing their bike at the time of purchase or shortly after they get it home, which can add to the price.
Indeed, selling accessories plays a vital role in annual revenue for many dealers, especially since styles wax and wane in popularity. For example, over the past five years, many Harley owners have chosen matte finishes on their wheels and exhaust systems instead of chrome, which requires considerable maintenance, and some models are built with the finishes.
Smith carries a large number of parts and accessories, and said the rise in sales over the last two years, coupled with solid jobs reports recently and an uptick in the economy, led him to project a 10% increase this year.
The service department at Cycle Stop is on track to meet that number, but so far sales are at a 4% to 5% increase, so he has throttled back his expectations in that arena.
But he also does a brisk business selling accessories and says it’s not uncommon for people to spend $500 to $600 on a new seat and $1,800 on an upgraded exhaust system with a computer and air- flow cleaner.
“Some customers want custom paint, and others want fancy wheels, seats, and handlebars,” he said. “We do Massachusetts state inspections, and I had a guy today whose headlights passed, but were dim. When I pointed it out, he immediately purchased a $500 LED upgrade because he saw the benefits in terms of safety and added value. And another customer purchased an $18,000 bike earlier this spring and immediately spent another $8,000 to customize it.”
Valley Motorsports specializes in European and Asian manufacturers, including the Italian Ducati (its flagship brand, which Morin called their “bread and butter”), the Austrian KTM, and Japanese bikes manufactured by Honda, Kawasaki, and Yamaha.
Sales are higher this year than at the same time last year, and Morin says Ducati has introduced new models such as the Scrambler G2, which ranges in price from $8,000 to $32,000 for a fully equipped, race-ready model which can be ridden on the street and at the racetrack.
Indeed, race bikes that don’t have mirrors, lights, or blinkers are gaining in popularity and appeal to riders of all ages who want to race.
“They’re becoming very popular and have helped increase our sports-bike sales; people like to take their motorcycles on the racetrack because they can ride as fast as they want without having to worry about other vehicles or the speed limit,” Morin said, adding that some bikes can reach speeds of 186 mph. Valley Motorsports is sponsoring two race events this summer at New Hampshire Motor Speedway and Thompson Speedway in Connecticut.
Adventure bikes with touring capability on paved and unpaved roads are also gaining in popularity, and Randall says dirt bikes account for one-third of the overall business at Valley Motorsports. Although they appeal to a broad age range, most owners are in their 20s and 30s and enjoy taking part in competitive events held on a weekly basis.
“The evolution of technological advances over the past 10 years has given people the opportunity to use these motorcycles in a safe, controlled environment where they can enjoy their performance no matter what kind of bike they’re on,” Randall said.
A recently issued consumer report says the motorcycle industry is facing a number of challenges: motorcycles are rarely an individual’s primary vehicle, there is an aging core group of owners, and efforts to draw women into the market have been less effective than manufacturers hoped for.
But the influx of new racing bikes and the thrill of taking to the open road are certainly fueling optimism within the industry.
“It’s great to be able to feel the wind in your face,” said Smith. “You can clear your thoughts when you ride, and if you go to a place like the Quabbin Reservoir, you become aware of flowers, birds, hawks, and other things people don’t pay attention to when they are driving a car.”
Randall agreed. “Everyone here is a motorcycle enthusiast, and it’s fun for all of us,” he told BusinessWest, as he spoke about the fact that some bikes get good gas mileage and insurance is reasonable.
“You can cloak the reasons to buy a bike in the economy, but it’s really about having a good time and enjoying the wide, open road.”