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Listened to a fascinating presentation here in Cape Breton by Warren Milner, the senior marketing manager for Honda Canada's motorcycle division.
According to Milner, "as far as we're concerned, the motorcycle business (in Canada) is bankrupt. We've hit rock bottom, so now we're going to rebuild." And he's talking about Honda - the largest motorcycle seller in the country.
The problem for Honda is twofold: It's been selling its motorcycles cheap in order to fight against the recession and the lack of cash out there for a discretionary product like a motorcycles, and its image sucks. Although it's been getting rid of its back inventory at firesale prices for the last year or two, it really hasn't been selling much new 2010 product and isn't making any money.
In fact, although Honda is apparently doing okay globally with its bike sales (thanks mostly to scooters selling in Asia), Milner says that the other three Japanese manufacturers, Yamaha, Suzuki and Kawasaki, "are losing huge money. And projections for the next two years are that they'll lose huge money."
So what's to be done?
Well, the days of cheap sale prices on Honda motorcycles are over for the moment. The inventory's cleared out - just about all its dirt bikes, for example, are now sold and unavailable until next year. Milner says the company just can't afford to keep offering the incentives that have been available because there's no money left to back up the product once it leaves the showroom.
And here's the curious thing with the motorcycle business in North America. With cars, the Japanese reputation is for quality and technology, and customers have been content to pay a little more for that over the Detroit vehicles, which have now caught up and are battling that image. But with motorcycles, people expect Japanese bikes to be cheap, because that's the way it's always been. They'll pay more for Harleys and BMWs and Ducatis and Triumphs because of the lifestyle image associated with them, but in comparison, there really is not much of a lifestyle image associated successfully with any of the Japanese products.
So now, the MSRP is going to be pretty much what you pay for your new motorcycle. And Milner expects - hopes - the other three Japanese makers will do the same thing.
But in return, there'll be investment in the future. The best-selling bike in Canada right now is the Kawasaki Ninja 250, which is not technically expensive to produce and is bringing a new generation of riders to the street. Right behind it in sales is the Honda CBR 125R, which is aimed directly at young people and novice riders, and can be had for the price of a cheap scooter.
And perhaps most important for Honda, it will be trying to change the reputation of its Powerhouse dealerships, which are considered by many riders to be horrible fancy box stores where a Civic salesman will try to sell you a Shadow.
The Powerhouse principle is that everything in the store is Honda, because the company doesn't like the salespeople in multiline dealerships selling customers anything but Hondas, which happens whenever one of its rivals decides to boost the incentive that week for a particular motorcycle. But motorcyclists like to buy bikes from other motorcyclists, and they don't like stores that have cars on display on the other side of the showroom (though this seems to work okay for BMW - different breed there).
So Honda's going to be running a campaign that tells people about its 40 Powerhouse stores, which currently account for 40 per cent of its motorcycle sales: How the sales people are not allowed to cross over between cars and bikes, for example, and how you can watch your bike being serviced, and pay posted prices for the work performed on it.
In fact, not all of the Powerhouse stores sell cars - those are the "Auto Powerhouses" - but they do all sell the generators and outboards and lawn mowers that Honda also brought out here to this presentation. And that's still part of the problem. Motorcycle guys, including myself, were introduced to the line of power equipment and happily went back and forth here cutting the grass, when we were really out here to ride bikes. It was fun (and the lawn mower was great - I'm going to buy one) but where's the priority? Do they cross over?
Apparently, a large survey here recently asked for an answer to the statement: "The problem with Honda is..." And according to Milner, "The product itself is not the problem. There are some holes in the lineup, but that's easy to fix. They don't like Powerhouse and they don't like 'Honda.' They feel it's run by a bunch of car people who don't care about motorcycles. We have an image problem"
So look for campaigns coming up to try to change that image problem. They'll be intensive campaigns, too, and tough to miss, because as Milner says, "It's over unless we can do this."
Source: Mark Richardson's Wheels
According to Milner, "as far as we're concerned, the motorcycle business (in Canada) is bankrupt. We've hit rock bottom, so now we're going to rebuild." And he's talking about Honda - the largest motorcycle seller in the country.
The problem for Honda is twofold: It's been selling its motorcycles cheap in order to fight against the recession and the lack of cash out there for a discretionary product like a motorcycles, and its image sucks. Although it's been getting rid of its back inventory at firesale prices for the last year or two, it really hasn't been selling much new 2010 product and isn't making any money.
In fact, although Honda is apparently doing okay globally with its bike sales (thanks mostly to scooters selling in Asia), Milner says that the other three Japanese manufacturers, Yamaha, Suzuki and Kawasaki, "are losing huge money. And projections for the next two years are that they'll lose huge money."
So what's to be done?
Well, the days of cheap sale prices on Honda motorcycles are over for the moment. The inventory's cleared out - just about all its dirt bikes, for example, are now sold and unavailable until next year. Milner says the company just can't afford to keep offering the incentives that have been available because there's no money left to back up the product once it leaves the showroom.
And here's the curious thing with the motorcycle business in North America. With cars, the Japanese reputation is for quality and technology, and customers have been content to pay a little more for that over the Detroit vehicles, which have now caught up and are battling that image. But with motorcycles, people expect Japanese bikes to be cheap, because that's the way it's always been. They'll pay more for Harleys and BMWs and Ducatis and Triumphs because of the lifestyle image associated with them, but in comparison, there really is not much of a lifestyle image associated successfully with any of the Japanese products.
So now, the MSRP is going to be pretty much what you pay for your new motorcycle. And Milner expects - hopes - the other three Japanese makers will do the same thing.
But in return, there'll be investment in the future. The best-selling bike in Canada right now is the Kawasaki Ninja 250, which is not technically expensive to produce and is bringing a new generation of riders to the street. Right behind it in sales is the Honda CBR 125R, which is aimed directly at young people and novice riders, and can be had for the price of a cheap scooter.
And perhaps most important for Honda, it will be trying to change the reputation of its Powerhouse dealerships, which are considered by many riders to be horrible fancy box stores where a Civic salesman will try to sell you a Shadow.
The Powerhouse principle is that everything in the store is Honda, because the company doesn't like the salespeople in multiline dealerships selling customers anything but Hondas, which happens whenever one of its rivals decides to boost the incentive that week for a particular motorcycle. But motorcyclists like to buy bikes from other motorcyclists, and they don't like stores that have cars on display on the other side of the showroom (though this seems to work okay for BMW - different breed there).
So Honda's going to be running a campaign that tells people about its 40 Powerhouse stores, which currently account for 40 per cent of its motorcycle sales: How the sales people are not allowed to cross over between cars and bikes, for example, and how you can watch your bike being serviced, and pay posted prices for the work performed on it.
In fact, not all of the Powerhouse stores sell cars - those are the "Auto Powerhouses" - but they do all sell the generators and outboards and lawn mowers that Honda also brought out here to this presentation. And that's still part of the problem. Motorcycle guys, including myself, were introduced to the line of power equipment and happily went back and forth here cutting the grass, when we were really out here to ride bikes. It was fun (and the lawn mower was great - I'm going to buy one) but where's the priority? Do they cross over?
Apparently, a large survey here recently asked for an answer to the statement: "The problem with Honda is..." And according to Milner, "The product itself is not the problem. There are some holes in the lineup, but that's easy to fix. They don't like Powerhouse and they don't like 'Honda.' They feel it's run by a bunch of car people who don't care about motorcycles. We have an image problem"
So look for campaigns coming up to try to change that image problem. They'll be intensive campaigns, too, and tough to miss, because as Milner says, "It's over unless we can do this."
Source: Mark Richardson's Wheels
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