Bred obsolescence: why 2011 won’t be a bumper year for bikes

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The Great Recession has hit the motorcycle industry hard, evaporating disposable income and cheap credit. In many Western markets, where motorcycles are seen as luxuries and toys, sales virtually disappeared, unsold stock piled up and dealers deeply discounted sales in efforts to stem the disaster. Predictably, new model launches were significantly reduced, postponed or canceled. Now with the world economy reforming, and different consumers demanding new models, OEMs struggle to re-caste themselves and the old motorcycle business model. Let’s examine the effects that two years of new model stagnation has had on the industry.

Stunted Growth – Knee-High by July

As with agriculture, in industrial development you reap what you sow. The average new motorcycle program for a major OEM takes 36 months for a clean sheet design.  This means that for the 2011 model year, any new models we will see this autumn will have to have been started in late 2007, 2009 at the earliest for derivative models.  Given what we know about the state of investment during that period and the lack of teasers, leaks or hints coming from major OEM press releases as of late summer, it is safe to assume that this will be a poor year for new motorcycles.

Of course, this pattern has not been the case for the smaller legacy brands, most notably BMW and Ducati. Both have surprised and delighted the premium buying public in recent years with significant new model launches such as the class-leading BMW S1000RR superbike and Ducati’s reinvention of the all-road Multistrada. Both showcase world-first technological innovations like traction control and active suspension, as well as a feature not normally connected with European Legacy brands : attractive pricing.  The response from both press and public to these and other European novelties has been overwhelmingly positive, highlighting the vacuum left when the Japanese stopped punching out new products at their usual fast pace. It has also served to shift public expectations and momentum towards these medium-sized companies for the first time since the 1970s. Globally, as reported in Q1, Japanese brands still dominate sales, but if the consumer base in the US and western Europe is focused by a so-called “hard core” of enthusiasts, then the Japanese brands have lost their position of perceived authority. Only new and genuinely exciting motorcycles will tip the market’s favor back towards them, but those new products are not likely to be seen anytime soon.

Navel Gazing

Two significant new products launched by leading manufacturers in the past 12 months have presented a window into the last of the good times R&D. In 2009, Honda finally presented the long awaited and long hyped seventh-generation VFR, promising to deliver a technological tour-de-force in the Honda tradition. Now up-rated to 1200cc, and with a novel dual clutch electronically-controlled transmission, it was meant to crush the opposition with its ease of use, comfort and radical new styling direction. Similarly, Yamaha unveiled the Super Tenere, a new take on their classic Tenere sub-brand that invented the modern all-road adventure motorcycle genre in the early 1980s.  Like the Honda, Yamaha filled the spec sheet with impressive numbers, performance and hype that purported to boast of its impressive capabilities and ground-up new design.

Both of these products are the result of many years of R&D and planning, but it is immediately clear that they also represent an obsolete industrial model. An over-dependency on focus groups, past market performance and a myopic view of specification that exaggerates the importance of features has bloated these and many other Japanese flagship models into overweight, overpriced and over-designed white elephants. Both these examples and other recent models have met with wide criticism, notably concerning disappointing performance, the traditional Japanese strong point.

Of course, currency fluctuations and the suddenly high Dollar-to-Yen exchange rate inflated prices for Japanese-manufactured motorcycles, but this is a only part of the problem. The majors in the proceeding good years failed to capture a brand status that could absorb premium pricing in the upper market sectors. With unique motorcycles and competitive prices from European legacies, sales in that lucrative area have bled away.

Regardless, the legacies were not immune to the same follow-the-leader product planning. The never-ending trailers for Triumph’s new adventure bike, the Tiger 800, and the similar online saga involving the Ducati Diavel, show that products designed for the same old, Baby-Boomer-dominated era are all we can expect from them in the coming season. Whether the new, emaciated market can absorb these high-end luxury motorcycles is doubtful.

False Harvest

As we head into the fall international trade show season, first with CIMA Motor (China International Motorcycle Trade Exhibition) in October, then Intermot and finally EICMA, the entire industry is bracing itself for another year of collective disappointment. Already editors of magazines in the US, Canada, Italy and the UK, have made it clear that expectations are low. The new austerity seen in everything from political policy making to individual spending, has all but eliminated new product launches. Trickle-in press releases, grass-roots social media campaigns and blogged video “leaks” are the new direct route to the public. They are effective, but don’t yield the same “wow” or immediately measurable response OEMs have depended on for years.

Clearly, examples like the VFR and Tenere show that the key drivers of new motorcycle model success are no longer add-on specification.  But neither is today’s motorcycle market concerned only with pricing. Each new purchase by a much smaller pool of consumers demands more consideration, so any successful model must embody not only rational advantages such as cost of ownership and usefulness, but seduce as well.  Simply offering a technologically solid product at an attractive price is not enough in the post-recession Western world, nor is the old standby of flaunting over-hyped “brand” values at inflated prices, as in the case of the legacy business models.  A newer, younger and less gullible market is ready to be harvested, by any manufacturer ready to cater designs to them.  Sadly, it looks like we won’t be seeing any in 2011.

Michael Uhlarik is an international award-winning motorcycle design professional.  He has worked for Yamaha, Piaggio, Aprilia, Derbi, and a number of Asian and smaller European OEMs delivering industrial design, product planning and brand development services for over a decade. He counts the Yamaha MT-03 and 2003 Yamaha M1 as his favorite work yet-realized. Michael launched Amarok Consultants this year to respond to the demand for dedicated motorcycle industry consulting in North America.

  • the_doctor

    Awesome that Micheal worked on the M1.

    Very interesting feature. It certainly gives the buyer/customer a lot to think about. Who dictates what to who, post-recession?

  • Shas

    “Globally, as reported in Q1, Japanese brands still dominate sales, but if the consumer base in the US and western Europe is focused by a so-called “hard core” of enthusiasts,”

    So true the Global 500+cc motorcycle market was only around 1.5 Million units per annum at its peak (2006-07)..This is where all the “hard core ethusiast” sales take place other than the dedicated 125+cc advanced off-road market which at its peak was may be around Half a million (294,000 in US in 2003-the peak year-where off-road riding has proportionally more popularity than any other “hard core enthusiast market”)…So all the hype,focus and motorcycle press is centred around this 2 million Units per year market.Comapred to that India (10 Million),China(20 Million),Indonesia (10 Million and Brazil account for nearly 70% of the around 50-55 Million Units per year Market…I think the enthusiast motorcycle press is rendering a huger disservice to motorcycling in general by pigeonholing themselves within a tiny 4 percent segment of the market and not focusing on this mammoth demographic for whom performance may mean a 16-25bhp machine as they generally peruse 8-12bhp machines which have an extreme focus on only 2-3 aspects–durability,reliability and ungodly fuel economy. Its not that fun cannot be had in 16-25 bhp machines..I quicklook at ADVRider would throw up tons of RR where these bikes are more than upto the task of touring up to Ladakh,Himalayas and across Tibet…More focus on Royal Enfields,Bajaj Pulsars and their ilk please!! Coming back to manufacturers..Its no scret big corporations are looking at Sino-India’s 8-11 percent GDP growth rate to fuel increase in profits and revenues as the Developed economies will be flat to low growth for the near term….But still India and China’s per capita GDP havenot yet reached middle income status like say that of South Africa…A quick look at South Africa’s motorcycle market reveals that around 5000 over 500cc motorcycles where sold in this middle income country of 43 Million..By the same population,GDP per capita,and popularity of 500+cc motorcycles in a middle income country there is a chance of manufacturers sowing,harvesting and reaping the rewards of a 300,000 units per annum 500+cc motorcycle market in India-China in the coming 7-10 years…The over 500cc motorcycle market has already shrunk to 900,000 in the developed economies and there are serious doubts regarding reaching that 1.5 Million peak in the next 5 years…So its time for every Manufacturer to create and brand awareness and make tie-ups in China-India

    • Random

      As Michael said,
      “[...] Any successful model must embody not only rational advantages such as cost of ownership and usefulness, but seduce as well. Simply offering a technologically solid product at an attractive price is not enough in the post-recession Western world [...]”

      Even small bikes in developing countries are being selected from a bigger pool of models who have each different priorities. “Seduction”, as per Uhlarik’s view, may be not only motorcycle design but the perceived image of a product owner, conveniences (as scooter storage compartments) or other aspects.

      It seems the motorcycle’s market consolidation of “the long tail” change to the consumer market. Manufacturers who have a clue of what the consumer expects in each of the miriad micro-segments are capable of increasing general (is there such a thing?) market share, while the many others that seem to be lost are probably doomed.

      • Random

        In an off-topic note to Uhlarik: The MT-03 Rocks!!!

      • michael uhlarik

        Hello Everyone

        Firstly, I will answer to the comment made by Shas above. Although your fundamental analysis is correct, the point of this article was to focus on how pre-recession, Boomer-centric thinking has become obsolete thinking, and affected the “new” high-end bikes we see in WESTERN markets (Europe, Canada, Austrailia, US). This is not hypothesis, it is fact derived directly from the manufacturers themselves, in the press release material accompanying the latest high end products, and industry knowns such as the median new bike consumer age (46).

        High-end is, by any global standard, motorcycles costing more than $5000 US, but for Western market purposes is tends to be defined as > $10,000. The average price of a new motorcycle in the BRIC nations (which include China, India and Brasil) is about $1300). This means virtually every bike sold in the US is a high-end bike. Even the middle ground fare such as Kawasaki’s 650 Ninja’s, Suzuki Gladius, Bandit 650, and SV, and the mid capacity Yamaha’s are considered large, prestige motorcycles in 90% of the world. However, all that being said, even with those huge numbers of small bikes actually sold in 2009 (48 Million), the big profits are in the high-end, where net margins easily exceed gross revenue in the small-displacement, low-end market.

        This is the fundamental reason why each and every manufacturer in the transportation business tries to go upmarket from commodity good, to luxury good. Luxury brands like Porsche, Mercedes-Benz, and yes, Harley-Davidson were some of the most profitable companies pre-recession largely because of this fact : it simply doesn’t cost proportionately more to manufacture a luxury vehicle than sticker price suggests. It is, believe it or not, cheaper to make a profitable business case for high-end tooling and components, than for lower tech ones.

        Example : welded steel trellis frame vs CF casting aluminum deltabox type frame

        Public perception : the deltabox is far more expensive.

        Truth : cutting and welding so many small tubes, then placing them in a jig with over 70 precision parts and then welding them, takes TIME. Time equals labour, and labour equals money. Then the whole thing needs to be realigned and machined square.

        By contrast, a modern CF casting like you find in a Yamaha R Series comes out of the tool almost ready to assemble. Yes, the tooling is very expensive, but there are almost 90% fewer human powered, post-fabrication operations. Design standard frame components that fit many bikes, and voila, an R6 frame is reasonably cheap to make, and superior in quality to an FZ6R’s steel job, and you can charge proportionately much more for it.

        Luxury brands build entry-level (by their standards) models to get you on the ladder, so that you will trade up as the years go by to ever more profitable high-end machines. This is why Ducati makes down-graded Monster 695′s (with relatively low margins) and then sells staggeringly over-priced SP and special edition versions of flagship models. DO you really beleive that a Bayliss Replica costs 80% more than a base 1198 to make? A single autoclave-moulded carbon fiber subframe may cost twice that of a standard metal one, but you can charge 4-10 times as much for it, and it is easier to assemble.

        Ok, so OEM’s make high-end bikes for good profit. Not a problem. What is a problem, and what I try to highlight here is that in this narrow but lucrative market, the goal posts have changed, and the bikes we are seeing now released as “new”, are, in fact, old. They will probably not do so well as their manufacturers expected.

        @Random. Thank you. The MT-03 is a source of both good and bad memories. Perhaps I will write about them sometime.

  • CG

    MC enthusiasts may be in the position of hoping the leisure class builds fast enough (along with the decent roads required) in India and China so that companies will invest the money to create new and exciting bikes. As one of the many disappointed in the new VFR and Triumph GT and aghast at the price of the Multistrada, knowing that none of the other Japanese firms are even thinking of entering that field is just depressing. The UJM is dead and I will never be old enough to own a cruiser. I can’t use a 180hp sportsbike, and a six cylinder BMW is a great car, but a motorcycle that is even worse trying to get out of the parking lot. Sigh.

    Where the market needs to be, the $6k to $10k fun/stylish bikes that new riders can be enticed into, and where the mfrs. seem to want to be is just not meshing.

    Incidentally, I have really enjoyed your recent posts on the Korean bikes and hope the powers-that-be in the mc business understand how those kinds of things need be hyped, not derided by the “cooler kids at school”.

    • pplassm

      The “Big 4″ are indeed making those bikes. Look at the FZ8, and the newer 750 offerings from Kawasaki and Suzuki. Also see the Hinda VTR250.

      Unfortunately, except for the FZ8, they won’t be sold here in the States.

      I was very dissapointed that the 660 Tenere wasn’t brought in along with the 1200 S10.

    • Mark D

      Ninja 650r – $6,800
      Yamaha FZ6r – $7,390

      Those bikes are out there; they just don’t sell very well :)

      • Wes Siler

        I don’t think those are the kinds of motorcycles that Michael says are needed. Budget roadsters are hardly seductive.

        • Mark D

          They do have the styling of supersports, which are, I believe, the biggest sellers for the Japanese companies, just without the power that’s unusable on the streets anyways. So you’d think the newbie attracted to a ZX-6r would also be attracted to the 650r. But, yes, “seductive” they are not.

          Part of the problem is pulling our heads out of the “motorcycling world” and asking what somebody who knows NOTHING about motorcycling would find cool. That 60s Benelli for sale is seductive to me, but to random 18-25 yr old target market? Hard to say. Since the industry has yet to attract people who obviously don’t care for the usual classifications of bikes, I don’t think, for example, a by-the-numbers cafe bike is going to bring Johnny-recent-college-grad into a showroom.

          Incidentally, Brammo pushing their bikes more as a consumer electronic device than a “motorcycle” might actually be the answer here.

        • pplassm

          I dunno. I really like the looks of the naked FZ8.

  • HammSammich

    Honest question here…is the upcoming Tiger 800 really considered a “high-end” motorcycle? It’s gotta be less than the Tiger 1050, so its pretty safe to assume the price target is shy of $10k. I know that’s not cheap, but when I think of the high end, I usually think of bikes that start above $15k…But I guess it’s all relative.

    • Wes Siler

      The Tiger 800 is just another bike competing in an already very crowded and highly specific segment, it’ll push “features” as a way to differentiate itself in that segment, which is exactly the kind of dividing-the-existing-audience nonsense Michael is calling out here.

      And I wouldn’t expect to see it for much under $11,750.

    • michael uhlarik

      Please read my reply posted above.

      • HammSammich

        Thanks Wes and Michael for the detailed responses. I’m not really in the market for an adventure bike, but it’s still disheartening to hear how out of touch the pricing on the new Triumph model is expected to be. Hard to believe that a mini version of the Tiger 1050 (which goes for $11,999 sans ABS) with a stroked 675 triple (from the Daytona that sells for $10,499) is going to be so pricey. 5 years ago, Triumph was a decent performance value in the US market, and although never a budget bike maker, they competed favorably with much more expensive bikes…I guess they’re going the way of BMW (but with a lot more lame-ass cruisers).

  • Core

    Really good read.

  • Peter88

    Very good article! I have a question though. I was in China for 2 weeks on business back in May and there were hundreds of scooters but very few motorcycles. I was told that bikes are governed to 30 mph and relegated to the specific bicyle/scooter lanes. Thus very few bikes in China. If this is true (?) I don’t see China as much of a bike market no matter how much the middle class flourishes.

  • andehans

    Very interesting and a very good article. Isn’t this a bit similar to whats happened with the auto-market (at least in Europe) the last years. The middle-ground, usually occupied by the Japanese and mainstream brands, have been marginalized. There’s been a polarization towards more premium cars and cheaper, value-for-money cars. Why buy a full-spec Opel when you can get a bit smaller, but more premium Audi for the same price? I have yet to see the value-for-money segment take off with motorcycles. But I guess its just a matter of time?

    • michael uhlarik

      The value-for-money segment is precisely what is needed. The correct car analogy is Skoda (the Czech branch of VW, for any North Americans who may be asking). Yes, they produced garbage Communist bloc junk until the early 90′s, but since the re-launch by VW, the Fabia, Octavia and Superbe models have become the defacto archetype in value-for-money. (again, for N.Americans, those are VW Polo, Golf, and Passat based cars, with premium styling, practical features and a price point 10-20% UNDER their VW sister cars).

      Everyone in the car business is trying to do a Skoda, which is hugely profitable, and has grown as a brand to just under 1Million sales/year. That’s more than Chevrolet, in case anyone wants to know.

      Clearly, good looking, high performance, fair priced premium motorcycles are the only thing that will save H-D, Ducati, BMW and the Japanese top high-end market. Otherwise I too believe that the electric brands will gain a lot of ground here.


  • circuitsports

    Its simple – hand the job over to enthusiasts. You’ll end up with Ducatti looking bikes with Honda reliability and profitability through reduction of parts ect.

    • pdub

      That seems partially the call to arms. From what I get in the reading here the high profit luxury bike market is suffering from more than a simple lack of cash and credit. The two mentioned BMW and Ducati models were the example. There was money for those as they are bullseye accurate in achieving the goals of desirability and performance in their market segment. When the swarms of BRIC country practical commodity machines are fulfilled then the manufacturers are left to cater to the “object of desire crowd”. The Jap4 have been largely adrift in providing that lately and in the case of the new VFR provided a barge load of technological “look what we can do” to an audience that wasn’t asking for it nor the barge it floated in on. The audience in the higher end market generally know what turns them on and the manufacturers who are keener to clue in on that will find willing buyers even in this economy.