Jan. 21, 2008 – A stable (and vital) demographic

By Neil Pascale
An industry comparison shows the percentage of first-time new bike buyers has slightly dwindled while the percentage of buyers replacing their existing motorcycle has slightly increased compared to five years ago.
The relatively little change in that demographic piece about the new bike buyer in 2007 comes weeks before the announcement of what is expected to be the second straight year of declining powersports unit sales for the United States. It also follows what some in the industry suspect to be the first year of declining new U.S. motorcycle registrations in several years.
The data on the new bike buyer comes from the latest J.D. Power and Associates’ Motorcycle Competitive Information Study, which was released early to Powersports Business before parts of the study became public in early January.
The survey, which includes insights from more than 8,500 consumers, found 22.4 percent of new bike buyers purchased their first motorcycle in 2007. That is a couple of percentage points down from five years ago.
The percentage of first-time buyers in the powersports industry is close to another industry that markets “want” rather than “need” products — the marine industry. For that industry, 27 percent of its buyers purchased a boat for the first time in 2007.
Is the motorcycle industry’s relatively
stable first-time buyer percentage a healthy number?
Mark Blackwell, vice president of Victory Motorcycles, believes so.
“When we looked at the data, during the last eight years, the percentage of new buyers hasn’t changed materially in our viewpoint, and it has bounced around between 20-25 percent,” Blackwell said. “It has not been on any kind of steady downward trend.
“To have 20–25 percent of the buyers each year both during a time of market expansion and even in a slight downturn as we are currently experiencing feels very healthy to us. The industry is not too dependent on this number, but rather, having a steady number of new people buying their first new motorcycle, again feels pretty good to us.”
Michael Lock, CEO of Ducati North America, believes the industry might have to re-evaluate this percentage in the future.
“We’re still, in my opinion, behind the times here,” Lock said. “It’s much easier for our industry to communicate with and promote to people who are already active (in motorcycling). It’s much cheaper and much easier to do. So that tends to be, as an industry, what we do.
“I do think the industry will have to re-evaluate who the target audiences are of the customer of the future. Is that young people? Is it mature people who have never ridden motorcycles?”
But the bigger issue, Lock says, is what the industry does with those first-time riders.
“I think the customer retention is the important thing,” he said. “Ultimately it’s easy to bring people in to do something: You make it cheap; you make it exciting; you make it easy. It’s a question of whether they got value for the money? Do they like this experience?”
Apparently many do. The consumer survey found nearly 58 percent of the new bike buyers in 2007 were replacing a previously purchased motorcycle. That number is up approximately 3 percentage points from five years ago.
The percentage of motorcycle buyers purchasing a replacement is similar to the marine industry (61 percent in 2007.)
However, Blackwell has concerns about making any opinions based on comparisons of the marine and motorcycle industries.
“What we know about that industry is there is a lot of churn with new people coming and leaving the category,” he said. “Unfortunately, that industry is really suffering at the moment, so I think it would be dangerous to conclude that their (first-time buyers) number is somehow better than ours.”
Dealers were split on whether they are seeing more or less first-time buyers.
Morris Baker, the president of five Texas dealerships, says he has not seen a decline.
“We are trending up in sales, not down,” Baker said. “Now different brands are moving. Some brands are moving up, some are moving down. But we’re not seeing any declines in first-time buyers in our particular market.”
That’s not the case for Beaverton Honda-Yamaha, says Jerry Lenz, the general manager of the Tigard, Ore., dealership. Lenz believes the decline of first-time buyers is related to the difficulties in getting many potential candidates financed.
“There is no real first-time buyers program,” Lenz said, “and I think financing for these younger guys is a bigger situation on how we’re going to get them into the unit. With the tightening of interest rates and what (F&I providers) were looking for as far as who they were going to finance, that’s what is taking most of my guys away.”

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