Sept. 7, 2009 – Overcoming economic barriers

By Neil Pascale
Just entering its second model year, the relaunched Indian Motorcycle company is growing at its expected controlled-growth pace.
General Manager Chris Bernauer provided Powersports Business an update on the V-twin manufacturer, giving insights on the company’s growing dealer network and its early success with accessory and apparel sales.
The second attempt at relaunching the iconic American brand, which dates back to the beginning of the 20th century, is occurring at a 40,000-square-foot facility in North Carolina. The Kings Mountain, N.C., site acts as the manufacturing plant and headquarters to the company that is owned by Stellican Ltd., a London-based private equity company that purchased Indian’s trademark rights in 2004.
The relaunched brand offered its first model-year motorcycles, including the Chief, last year along with a complete selection of parts and accessories and apparel. Earlier this summer, the company held its first dealer meeting and unveiled two additional models, the Dark Horse and the Bomber.
While the company has mostly stayed away from national media marketing campaigns, it has been active in promoting the brand both at dealership openings and at consumer events. Bernauer, formerly Harley-Davidson’s Sportster platform director, was especially encouraged by the “nonstop conversation” the Indian group recently had at Sturgis.
“It was exciting,” he said. “It’s a little spark to say we’ve got everything we need to be successful. We have the brand. We have the product. We have the passionate people.”
Indian also has the same immense hurdle that the rest of the industry is dealing with — the challenging economy.
“As we’re launching this company, the economy has kind of given us a body slam,” Bernauer said. “We’re just hanging in there, building what we can sell and opening dealers when we can open them. We haven’t gotten too big for our britches.
“Being that we kept ourselves very lean, it really gives us the ability to hang on and accept that we’re going to be small. We’ve always planned on being pretty small but we’re going to continue to be small for a little longer than we had hoped.”

Financing barriers
The recession’s biggest impact on the company has been on its efforts to grow its dealer base. Indian currently has 15 U.S. and two international (France and Switzerland) dealers but has been thwarted at times to increase that number due to the difficulty in interested dealers getting qualified for wholesale financing.
“Even wealthy investors are having a hard time financing at wholesale anything, including Indian motorcycles,” Bernauer said. “So that’s been a barrier for us.”
Indian has begun concentrating more on existing dealers who already have their floor plans in place. That’s a bit of a shift for the company, which designed stand-alone dealerships to be built in the United States’ largest markets.
“We would still love to have that stand-alone dealership. We’re talking with those guys,” Bernauer said, before also noting, “We’re putting a lot of weight into the existing players in the industry because they get it, they know what it takes.”
Indian believes the best fit would probably be with a European dealership, where “the premium brands could support each other,” Bernauer said, noting the Indian consumer is likely to be a different consumer than the BMW or Ducati client.
“A metric dealership is probably not the best place to be,” he said. “That’s not to say we won’t go there if it’s the right dealer, the right building and the right situation. But we’re more apt to go after one of the existing Euro players.”
What are some of the minimum requirements Indian is looking for from potential dealers? Probably 1,000-2,000 square feet of showroom space, an ability to service a V-twin motorcycle, signage and furniture and “most importantly, an ‘Indian ambassador,’” Bernauer said. That’s a salesperson who can be the store’s Indian enthusiast. Indian has developed a sales training video and provides dealer development staff to support that “ambassador” role.
Certainly knowledge of the brand’s accessory and apparel offerings will be part of that education. Indian had up to 200 parts numbers for its 2009 Chief and that has obviously paid off as dealers are averaging more than $1,000 in accessories for each new bike sale.
“The number of dollars people are spending on accessorizing their Indian motorcycles is just amazing,” Bernauer said.
The same can be said for apparel purchases, which average more than $500 per new bike sold, Indian reports.

Early buyers
Less surprising is the demographic that has made up the early Indian buyers: mostly wealthy men with a keen knowledge of the Indian history. Some of those early buyers also include Harley-Davidson riders, including some with 2009 models.
“We’ve had several people trade in brand new Harley-Davidsons,” Bernauer said of Indian consumers, remembering in detail one rider who traded-in a Road King with less than 800 miles. Conquest sales are certainly expected to continue for the relaunched brand, which is aiming to at least double its dealer network in the next year and continue to expand its fledgling Indian Riders Group.
“I just think we have all the ingredients to rock this thing,” Bernauer said.

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