Sept. 6, 2010 – Indian’s steady ride forward

Before even the first production Indian Motorcycle came off the assembly line, leaders of the revived American brand were preaching one message: This time will be different.

There would be no rise and fall that characterized the short but dramatic reign of the Gilroy, Calif., Indian operation. Back more than a decade ago, that operation started in a 170,000 square foot facility and then was expanded to almost double the initial footprint after the first model year.

In contrast, three model years into the new Indian Motorcycle era the company continues to operate out of a modest-sized, 40,000-square-foot facility located off a North Carolina interstate highway.

Similar discrepancies exist in the dealer networks. The Gilroy operation had 170 dealers after its initial model year whereas the new Indian is continuing with its slow growth mentality, nearing 30 dealers in its third model year.

“We are staying the course,” Indian General Manager Chris Bernauer told Powersports Business. “We have a core business that we’re going after and we’re committed to being successful in that market.”

The market, of course, hasn’t been kind to start-up companies, which have not only had to deal with the effects of weakened consumer confidence but also a severely tightened lending environment.

Still, Indian Motorcycles has made progress, recently reporting vastly improved retail sales that are both a result of having a larger dealer network and more unit sales per dealer.

“Our business strategy has really been unchanged since we started,” Bernauer said. “We’re going to be a small-volume manufacturer making premium products in the premium end of the marketplace. If that doesn’t take us to 5,000 units in the first year, that’s OK. We’re happy with being a little bit smaller manufacturer and growing organically.”

That growth has amounted to an 80 percent year-over-year improvement from 2009.

Perhaps affecting that growth is the company’s vision in where the Indian brand should be retailed. The manufacturer has stuck to a pattern it believes is most beneficial to a premium brand: in a single-brand store or with another premium brand.

“We have turned down opportunities to open in these big cities with multi-brand stores that have the Japanese product in it,” Bernauer said. “We just don’t think it’s the right place for us to be and we continue to be patient and say, ‘Let’s not do it and something else will happen’ rather than just jump at the chance to sign up with a dealer in a city that we’re excited about.”

The decision to stay away from metric dealerships, Bernauer said, really revolves around that shop’s core customer. “They tend to be customers that aspire to own an Indian motorcycle and can’t right now. It’s just too big of a nut for them to crack,” he said, referring to the cost of an Indian model, which ranges from the mid-$20,000 to mid-$30,000. “We just don’t think it’s our core customer.”

Instead, Bernauer said the company believes higher-end European brands are more appropriate matches for Indian.

Overall, the company has 22 dealers in the United States, two in Canada and five internationally. The latter group is particularly surprising since Indian has not done any dealer marketing outside of North America.

“We react to and get international dealer interest several times a day,” he said. “These are people coming to us because they know who Indian Motorcycle is. They’ve seen some things about us and they’re coming to us.”

As a result, Indian has signed dealers in France, Switzerland, Japan, Korea and Russia. In each case, the dealers themselves are working with their country’s officials to get the bikes emission-certified.

Within North America, Bernauer notes Indian is continuing a pace of adding about one dealer per month, with those coming predominantly in the largest U.S. markets. The pace of the building network has been delayed somewhat by the difficulty some would-be dealers have had in obtaining wholesale financing.

“It still is the biggest obstacle, particularly for people who are not currently in the powersports industry,” he said, although also noting the stricter lending standards also have had a positive side effect. “In a way, it’s made our dealer network stronger.”

Indian has asked potential dealers to commit at least 1,000-2,000 square feet of showroom space to the brand, have an ability to service a

V-twin motorcycle, signage and furniture and most importantly, have an “Indian ambassador.”

“You have to have somebody in your facility who just loves this brand and who is going eat, sleep and breathe Indian Motorcycles,” Bernauer said, describing the “Indian ambassador.” “If we have that dealer who has the passion and loves the brand, then we’re flexible. We love working with those people because they want to do great stuff with us, it’s not us pushing them. We do everything we can to make it easy for them to be our business partner.”

As the dealer network grows, Indian Motorcycles continues to be active in some of the larger consumer events.

“We just got done with 10 days out in Sturgis and had an incredibly huge success there,” he said. “Everybody that comes through loves the motorcycle. They tell us great stories about their dads and their grandfathers and how they want to own one someday.” PSB