Not just a good show

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Category: Dailies

Veteran British motorcycle journalist Kevin Ash recently published an op-ed in which he criticized the mainstream manufacturers for wasting energy and money on motorcycle racing. His line of reasoning went that in these economically depressed times where even the mighty Japanese factories have seen crushing losses in sales in most western markets, the continued emphasis on MotoGP racing and sport oriented consumer bikes is a commercial dead end, and did not reflect the on-the- ground reality of the common western consumer. The facts may be right, but the conclusion is completely wrong. 

Those precious resources, he argues, could be better spent promoting the motorcycle as a reasonable, even responsible alternative form of transport. Mr. Ash went on to single out several salient facts illustrating the many advantages that motorizing millions of single occupants on versatile two-wheelers has in our increasingly congested urban civilization. On that point Mr. Ash mirrors my view and the undeniable data from around the world that has proven beyond any shadow of a doubt that the powered two wheeler, be it a scooter, moped or superbike, has an increasingly large and important role to play in the future of the modern world.

However, Mr. Ashʼs observations mislead him to believe that the continued focus on racing and high performance by the big four Japanese brands is blind sighted, or “stupid” to quote him directly. This assertion demonstrates again (frustratingly) the incredibly myopic view that the western motorcycle industry and media continue to have about what is actually going on in the world around us. I hope to demonstrate some facts that ought about the current state of the industry which provide a global context to those who continue to think that the universe of motorcycling revolves around Europe and America. The irrevocable conclusion will be that promoting racing is by far the most reasonable thing any motorcycle manufacturer ought to be doing.

Those who do not know historyʼs mistakes are doomed to repeat them.

How arrogant and complacent we are, in the rich west. For as long as most HFL readers can remember, the world bent to our demands and companies from every foreign land fought tooth and nail to win our business. Since the end of the second world war, the US motorcycle market was consistently the most profitable, which meant that even though it was Britain that manufactured the greatest volume of bikes in the world between 1950-60, it was the US where they aggressively marketed them, often to the dismay of the domestic British public who were treated as second class customers. In his seminal book “Whatever Happened to the British Motorcycle Industry?” former Norton Engineer and later NVT Triumph executive Bert Hopwood explains how throughout most of the sixties and seventies, the increasingly pressured British motorcycle brands did everything possible to increase exports to the US, often depriving other markets of new machines and even spares. This was consistent with every other brand in the world, from Honda to Horex because simply put, the US market was willing to pay more and buy more of everything than anywhere else. Even small players like Laverda and MV Agusta developed their motorcycle lines, even changed their brand images to try and impress American bikers. The Japanese, of course, did this better and devoured the market by listening very well to the needs and wants of the public, sometimes pioneering entire genres of motorcycle in the race for sales.

Throughout all of this, racing was a key component of marketing. In fact, it could be argued that it has been the keystone of motorcycle marketing since the motorcycleʼs invention. Not long after the first motorcycles were introduced to the American public, racing was being used for promotion. The very iconic names that we hold dear today, from fabled legends like Flying Merkel and Crocker to the then giants of Indian and Harley-Davidson all prided themselves by racing with boasts of trophies won, and guarantees of performance. In Britain brands like Brough made it the principal pillars of their marketing that each motorcycle was tested at 100mph, sometimes without hands on the ʻbars. Norton owes its entire existence to the brandʼs ability to win TT cups and grand prix. Of course, those were all premium brands that attracted a wealthier clientelle, but the fact is that every brand, from the great to the forgotten participated in motorcycle racing, sometimes with machines from other manufacturers rebadged for the purpose, in an effort to persuade the public that their motorcycles were reliable and desirable.

Yamahaʼs first motorcycle was the YA-1, a poor copy of the German DKW RT 125. The companyʼs first public promotion of a motor product was to race it up Mount Fuji to prove the newcomerʼs robust construction and to win prestige. Similarly, when Harley- Davidson wanted to increase sales among young baby boomers in the late sixties, they acquired Italian brand Aermacchi, which constructed mostly commuter bikes from 175-350cc. Of course, no one today remembers the pedestrian Aermacchi Chimera or Ala Verde, only the gorgeous grand prix 250s and 350s adorned in orange and black. The Japanese brands total domination of the US and European markets for the past forty years are due to two factors: cost/quality proposition and the desirability that comes from literally hundreds of world and regional racing championships. Ask any baby boomer who was into motorcycles in the seventies, and they will tell you: without the likes of Phil Read on a Honda, Kenny Roberts on a Yamaha, or Barry Sheen on a Suzuki tearing up the tracks in the black and white pages of The Motorcycle and Cycle World, there would have been very little credibility to a DT200 or GT250 as street bikes. They were, after all, motorcycles with serious chassis deficiencies from foreign brands that had no heritage.

In modern times, the towering heights of global importance reached by a once insignificant motocross brand like KTM, to the unparalleled renaissance of Ducati owe as much to racing success as they do to engineering or the production of motorcycles for public consumption. Could KTM have ever been taken seriously in the 1990ʼs if they had not come out brashly with the “ready to race” mantra impressed on everything orange? Or if they hadnʼt taken their lumps with years of losses in Paris-Dakar and national motocross championships? And would Ducati have ever become the must- have sports bike brand without the track domination of improbable personality Carl Fogarty in the World Superbike championships of the mid 90ʼs? Unlikely. Of course, the KTM Duke and Ducati Monster and 916 were beautiful and lust worthy motorcycles, but they were also outrageously overpriced and notoriously unreliable at a time when vastly superior products were available for far less money. No, those brands grew into profitable global brands by going toe to toe with the giants of industry on the track, and beating them. No amount of print ads promoting the virtues of the XC250 or 900SS as good value, or reasonable alternatives would have done anything remotely similar.

The Orient Express.

Unless you have been living in a cave for the past ten years, or get your industry information from US and British populist sources only, you will know that the balance of power in the world is shifting rapidly eastwards. To use an American euphemism, money talks. And the money isnʼt here anymore. It is in India, China, and for the motorcycle industry increasingly in places like Indonesia, Thailand and Vietnam. Yes, those distant nations in south-east Asia that have lived in our western consciousness as nothing more than holiday destinations or sites of proxy wars between superpowers are themselves becoming booming economic hubs. Indonesia, a country most Americans had never heard of until Barack Obama told us he lived there as a kid, is actually a motorcycle market superpower, buying 7.9 million new motorcycles in 2011. Let me put that into perspective. Indonesians bought more bikes last month than Americans bought in the best ever sales year. And the numbers are rising at a rate of 7% per year, meaning that at current rates the market will double in less than a decade. Who are the sales leaders? Honda, Yamaha and Suzuki, in that order, taking 85% of the market share. Suddenly those strange stickers on the belly pans of Casey Stonerʼs Honda RCV212 and Jorge Lorenzoʼs M1 that say “satu hati” and the phrase “semakin di depan” make more sense. In Indonesian, they mean “One Heart” and “In the Front”, the marketing slogans of Honda and Yamaha respectively.

The point that Mr. Ash fails to see, and that sadly most of the US and Anglo-centric motorcycle media ignore, is that we donʼt matter quite so much any more. It hurts to be on the downward slide of the motorcycle pyramid, but seeing reality for what it is is healthy and constructive so long as we are willing to do something about it. The world is buying increasing numbers of motorcycles of all sorts every year, just not around here, and that is why the major manufacturers are focusing their efforts in places like Indonesia and India. In those regions, the vast majority of motorcycle consumers contend with low wages and poor road conditions so making a purchasing decision about a motorcycle is a serious business. In a modern market flooded by low cost Chinese bikes with questionable reliability, they look to racing for the seal of quality and and prestige, Just as we did in our countries after the second world war.

The US market is at best worth 3% of global motorcycle sales, and while it is still also worth about 20% of global revenue (because lets face it, you get a lot more money for a 1000cc sport bike or 1700cc cruiser than for a Honda CB175F), the long term prognosis is just not looking that good. Our market is shrinking, and while some recovery will occur, it cannot match the proven existing sales and colossal potential of south east Asia, who together with Japan account for 90% of global motorcycle sales an production. Money talks, and the language it is using these days is not English. This is why every brand, including Harley-Davidson, KTM (through majority owner Bajaj), Ducati, Triumph, BMW and everyone else is clamoring to Asia, building factories, establishing joint ventures or seeking takeover partners. Todayʼs teenager in Jakarta is tomorrowʼs baby boomer in Jakarta, and we all know how lucrative that demographic is.

Image is still everything.

Racing is the best marketing tool in the motor vehicle manufacturerʼs basket. Spending vast sums of money to tell fairy stories conjured up by ad men is proven to be a really poor value marketing investment, compared to the real life drama of motor sport participation. According to Neilsen, a leading market research consultancy, consumer trust is twice as strong for brands that advertise through racing sponsorship than via print ads. Occasionally an amazing ad campaign strikes precisely the right tone and boosts sales for a few quarters, but in the end it all just so much shooting in the dark. For advertising to really hit home, it must be built on the basic premise that the product featured is simply better than all the others.

The surest way to do this is to actually make a better product, something that with a few exceptions, North Americans have forgotten how to do. The other is to prove it in a public test against the competition, which for motor vehicles means racing. The value proposition for the manufacturer is tremendous: the series are already organized and paid for with tremendous quantities of public exposure. All you need to do is produce a competitive product and winning message. Doing so results in brand building that establishes credibility through third party reporting (which is as much as three times more trusted than print ads) while creating brand mythology that can be leveraged by fans into word of mouth momentum. Ducati had no centralized advertising before 1996, the motorcycle press did that job for them, for free, every time they reviewed one of their street offerings and mentioned their superbike championship wins.

On the flip side, the costs of developing a competitive racing motorcycle are not trivial, with individual front line racing bikes costing anywhere from $50,000 to over $1 million. As astronomically expensive as a factory racing program is, it is nothing compared to the R budget required to make world beating production motorcycles. And to disseminate the message that a brand makes the most desirable motorcycles requires a marketing budget many times more again. To boost an entire brand into the winners circle in the eyes of consumers, the brand must reflect the winning qualities of value and quality. The former is a matter of industrial management, the latter a nebulous perception propagated by emotional and error prone human reporting. Your neighborʼs anecdotal evidence that his bike is better than yours is hardly scientific evidence of superiority, but seeing that brand fight at the highest levels of performance in a race against other brands is.

There is the luck factor and the negative possibility of spending money only to finish poorly, weekend after weekend, behind key competitors. This risk is significant and can lead to tremendous collateral damage to a brand, as we have seen with Kawasaki and Aprilia in MotoGP, and Toyota and Jaguar in Formula One. However the point to be made is that racing and telling a compelling story together not only mitigates a large part of this risk, but can actually enhance brand strength.

Consider Ferrari, a small car manufacturer who went more than 21 years without winning a championship between 1979 and 2000. During that time the brand reputation soared despite this, because of the association with auto racingʼs top championship class. Losing didnʼt hurt because they fought hard against automotive giants like Honda and Renault with vast budgets many times their own. In effect, Ferrari turned racing for second or third place into a marketing win because they fashioned an image as the small, passionate underdogs, attracting people of similar minds. Without ever spending one penny on advertising they garnered tremendous excitement from fans and pushed the brandʼs perceived value skywards, and have sold every car they make for decades.

Bread and Circuses.

Racing is not only great entertainment, it is good business. While for manufacturers is it represents a cost item on the budget sheet, the benefit of having a well planned and presented racing program offers many times that in reward. If it were not so, then Honda, Yamaha and the others would have halted racing a long time ago, especially in light of the recent economic meltdown. But they didnʼt. Yamaha in fact stepped up its spending on racing, choosing to self fund their own MotoGP squad despite posting the greatest loss for any motorcycle company in history in 2009, and the closure of many factories since. There may be nothing to connect Jorge Lorenzoʼs M1 and the New Jupiter MX selling down the road in Indonesia other than the sticker on the tank, but to most people that association is compelling. The rationale for this is the same as ever it has been: race on Sunday and you do indeed sell on Monday, because no matter what you sell, people love a winner.

Michael Uhlarik is a veteran motorcycle industry consultant and award winning designer of motorcycles for brands like Yamaha, Aprilia, Bombardier, and many others. He is the founder of Amarok Consultants, and the chief designer of the Amarok P1 electric racing experiment. He lives in Halifax, Nova Scotia.

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