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Switching Gears; Motorcycle, Scooter Market Requires Entirely Different Focus

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With the sudden surge in fuel prices last summer, one would think sales of motorcycles and scooters would have drastically increased as well, as consumers looked for fuel-sipping transportation rather than their gas-guzzling trucks and SUVs.

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While there is some truth to that assumption, a deeper look shows otherwise. Yes, sales of scooters and dual sport bikes rose roughly 42% and 23%, respectively. But overall cycle industry sales were down 7.2%, with off-road bikes falling 30% and street bike sales falling 5%, according to the Motorcycle Industry Council.

“There was a short-lived spike in only a few segments when the cost of fuel went up, but without financing available, consumers are finding it difficult to make new unit purchases,” said Stan Foxworthy, marketing director for Pirelli/Metzeler Motorcycle Tire.

“New bike sales are in parallel with the automotive industry – there are plenty of people out there who want to buy motorcycles, but they can’t get credit for them,” agreed Bob Graham, senior manager of motorcycle & kart products for Bridgestone Americas Tire Operations.

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But one thing is for certain: even if sales haven’t increased drastically, miles driven on motorcycles and scooters has.

“I don’t think people went out and bought a motorcycle, but the people that already owned them began riding them more when they were faced with the mid-summer fuel costs,” Graham said. “People who only rode them once in a blue moon began riding their motorcycles to work every day.”

This trend is perhaps the one tire dealers should be more focused on, because after all, “sales of tires are determined by how much the bikes are ridden, as opposed to how many are sold,” he noted. “All of a sudden, you’re talking about an incredible increase in miles driven, which translates to higher sales of oil, batteries, tires, etc.”

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It seems like a win-win situation for tire dealers, but with stiff competition, plus a highly technical and completely different type of market, entering the motorcycle and scooter tire segment would be difficult at best.

Market Specifics
In the cycle tire market, consumers are used to one-stop shops that offer everything – new or used bikes, accessories, parts, apparel and service – all in one convenient location.

“In the Motorcycle industry, there are no ‘tire only’ shops, as the profit margins are tight with high competition, and would not keep a store open for long,” Foxworthy said.

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Should they choose to enter this market segment, a tire dealer’s main competition would be motorcycle dealers, of which there are roughly 12,000 in the U.S. – 8,000 are franchised with a large manufacturer like Honda, Yamaha, Suzuki, Kawasaki or BMW, while about 4,000 are independent shops that strictly sell used motorcycles, according to Graham.

“But they all have one thing in common: selling tires, parts, equipment and performing service,” he said.

The market also differs widely from a service standpoint, with motorcycles and scooter requiring different tools, equipment and technical knowledge.

“Motorcycle and scooter maintenance varies significantly from four-wheel vehicles,” said Vickie Johnson, vice president of Michelin’s two wheel North America unit. “It could be a dealer opportunity, but only if the dealer is prepared to hire and train staff to sell and service motorcycle tires specifically; invest in motorcycle-specific equipment, tools and manuals; and inventory a significant number of motorcycle/scooter tire SKUs.”

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Michelin alone offers more than 250 SKUs for motorcycles and scooters, she noted. And in terms of equipment, a dealer should expect to invest in motorcycle-specific lifts, workstands, tire levers and other small hand tools.

“Everything in this market is different from the passenger/LT markets,” Graham said. “At your average tire dealership, salespeople and technicians specifically speak the automotive language – they’re familiar with the equipment needed to work on various automobiles and tires. When you get into the two-wheel world, you have technicians and salespeople just the same, but it’s all different. There are different products, equipment, methods, systems, etc., and each employee in a dealership would need to be up to speed on the motorcycle side in order to be successful.”

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“When looking for advice on tire selection, these riders expect a dealer who ‘walks the walk and talks the talk,’ so it’s imperative to have staff who have a high level of motorcycle tire product knowledge, preferably with first-hand riding experience,” Johnson said.

For example, removing and installing motorcycle wheels is entirely different from passenger cars, and air wrenches don’t provide significant time savings. “Also, technicians need to be aware that a motorcycle’s brake disks are usually attached to the wheels, necessitating appropriate precautions,” she said. “Incorrect installation can sometimes cause damage to another part of the motorcycle, which will be the responsibility of the dealer performing the installation. Installers should also familiarize themselves with correct methods for setting chain tension when installing rear wheels. It is very important that the tire fitters are properly trained.”

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The clientele in this market segment differs, as well. Whereas many car, truck and SUV drivers look at their vehicles solely as required transportation, the majority of motorcycle consumers are enthusiasts, and driving is their hobby.

“In our industry, we’re not dealing just with transportation, we’re dealing with recreation,” Graham said. “Money is not as big of an issue as it can be on the automotive side, where people have to drive their car so many miles to work each day whether they want to or not – and most of them want to do it in the least expensive way they can.”

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He mentioned many motorcycle consumers are Baby Boomers, who are at a later point in their lives that offers financial stability. “They seem to be less affected by the current economic downturn and unemployment rates. We don’t anticipate a lifestyle change for them – they have motorcycles that are probably already paid for, and they’ll be out riding them.

“It’s all disposable dollars,” Graham continued. “A lot of these motorcycles are $10,000 to $20,000 – that’s an expensive weekend toy. But there are people out there who have $20,000 toys.”

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An added benefit of the enthusiast nature of these consumers is that tiremakers like Bridgestone, Michelin and Pirelli don’t have to constantly remind them to follow important safety measures like proper tire inflation.

“Because it’s recreational and people are spending money on their motorcycle by choice, not because they have to, they are more aware of tire safety,” Graham said. “There are some very knowledgeabe people out there because this is their passion – they read all the magazines and they check all the Web sites to keep up on all this stuff.”

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While each of these manufacturers expect modest growth in the motorcycle and scooter segments in 2009, the market is clearly not without its challenges. Tire dealers who are most likely to suceed in this segment will have to invest the required amount of time, knowledge, and money for a large inventory and all-new equipment. A highly trained sales and service staff is the first step, but keep in mind that you would be competing for loyal customers against motorcycle dealers who have been offering everything these enthusiasts need in one place for quite some time.

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