May 3, 2010: A touring sales trend

A sales trend that appeared in late 2008, accelerated in the summer and fall of 2009 is continuing this spring. That trend? The growing separation between the number of preowned bikes sold to every one new motorcycle.
The growing separation figures to be especially prevalent in the touring segment, where riders have shown a comfort level with the preowned market or have gravitated there due to a diminished discretionary budget.
“It’s definitely a new market out there,” said Jimmy Allison, who owns separate Harley-Davidson and metric dealerships in New Mexico. “The guys who are going to score big are going to be heavy on the used business and know how to sell them.”
Harley-Davidson CEO Keith Wandell, in fact, lauded the company’s competitive bike exchange program in the company’s recent earnings report, noting the effort to reach competitive bike brand owners through trade-ins has paid off for Harley. Wandell notes many of the consumers taking advantage of the program are trading in their bikes for Harley touring models.
Harley-Davidson also has just recently begun encouraging its dealers to purchase its repossessed motorcycles through auctions with a new program. Dealers who purchases these bikes at auction and then finance them through Harley-Davidson Financial Services receive a retail bonus, says Justyn Amstutz, executive vice president of sales and marketing for National Powersport Auctions.
It’s believed to be the first program of its kind.
The V-twin market is not only the touring segment that is seeing increased preowned activity, however. “Every time I have a used Goldwing, it goes right out,” Allison said. “If I could buy them right, I’d buy all the used Goldwings I could get.”
New U.S. data shows the increasing number of preowned bikes being sold, at least in comparison to the new unit market. In February, 4.5 used on-road bikes were sold to every one new unit retailed, according to data provided by R.L. Polk & Co., which compiles and analyzes state registration data from across the United States. That used-to-new ratio is only climbing. Just four months ago, that ratio was at 3.2 used to one new.
“It’s as popular as you can get,” Dealer Principal Clark Vitulli said of the preowned touring market. Vitulli owns Harley-Davidson of St. Augustine in Florida.
“The prices are high at the auctions for them (the touring models), but it’s still worth it for us to get them because a nice, clean preowned touring model is still a great vehicle on our preowned lot,” he said.
Even in a changing market, the touring bike buyer has indicated their willingness to look at the new bike. The 2009 J.D. Power and Associates’ Motorcycle Competitive Information Study found touring riders are accustomed to using trade-ins as part of their new bike purchase. In fact, six out of 10 surveyed touring bike buyers said they did that last year, a much larger percentage than either cruiser or sport bike riders.
Allison, however, notes the used bike is still most popular among Harley touring riders.
“We’re selling used touring bikes to people who would usually buy new ones,” he said. “We’re still selling some new ones, but here’s what’s happening: We feel there’s a new attitude in customers. Customers no longer want to show off their new, expensive touring bike to their neighbors, who might have just taken a cut in pay or lost their job. Nobody wants to show that stuff off anymore. What they want to do is say, ‘Yeah, I bought a touring bike. I traded in my Low Rider because it was a really good deal.’ So people are being more conservative with their money.”
Vitulli notes his store looks traditionally for 2000 model-year or newer preowned models that will qualify for extended warranty options, a key selling point for many of these consumers.
“There’s more and more people willing to buy a nice, well-maintained used touring model,” he said.
—Neil Pascale

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