Big business discounting is ‘hurting motorcycling’

Big business pushing sales through discounting is hurting the motorcycle industry in Australia, says a motorcycle importer and multi-dealership owner.

James Mutton is the dealer principal of two multiple-franchise dealerships (Brisbane Motorcycles in Windsor and Caboolture), the Australian importer of Norton Motorcycles and a former British Superbike racer.

Most notably, he is the son of veteran industry identity Brett who put the cat among the pigeons with his 2017 broadside at big businesses for forcing “mum and dad dealerships out of business”.

Two-year slump

Two years later, much of what Brett said is happening and the industry continues to spiral downward.

James took over the business when brain cancer forced Brett into retirement.

He has similar outspoken views to his father about the motorcycle industry, so we thought it worthwhile sounding him out.

James says the industry is in a two-year slump because of a “multitude of factors that all hit at the same time”.

They include:

• Tighter finance requirements that prevented many riders from securing finance to buy a motorcycle;
• Young people did not want to take up the lifestyle. “It’s not an image they want to be a part of,” James says. “The whole VLAD consorting laws and anti-bikies PR couldn’t have helped, even though that’s not what 99% of riders are about.”; and 
• With a decrease in sales, dealerships could not attract the right staff, which affected customers’ dealership experiences.

Discounting war

James says the result of the drop in new bike sales volume was that big dealership groups, such as MotorCycle Holdings (a publicly listed company that owns TeamMoto and many other dealerships), began aggressively discounting to increase sales turnover.

While that may sound like a boon for riders, James says it is devaluing their bikes and hurting the industry.

“The MotorCycle Holdings business model revolves around sales volume, finance and discounts,” James says.

“Customers are now able to buy a new bike at a really good price but it has no value on resale.

“So there is now a stack of cheap second-hand bikes on the market. Used bike sales are doing well, but at the expense of new bike sales.

“Customers now expect discounts on all new bikes which is a bubble that will eventually burst.”

James says even some of the prestige brands that never used to discount, such as Harley-Davidson, BMW and Ducati, are now discounting.

“Through no fault of their own they are forced by the rest of the industry into running aggressive sales campaigns,” he says.

For example, BMW is currently running a campaign through TeamMoto offering five free years of servicing.

James says the depreciation in the value of new prestige bikes is eroding the loyalty of riders to these brands and is causing long-term damage to the brand image.

He claims customers are now rebelling against the big dealership conglomerates.

“This is a passion-based industry and not big business,” he says.

He could be right. When MotorCycle Holdings went public in 2016, their share price started at $2.53 and reached a peak of $5.22 at the end of 2017. It is now down to just $1.46.

Solutions

Just as there were many reasons for the slump, James says there are many facets to solving the problem.

“We need a 10-year plan; that’s the amount of damage that’s been done to the industry,” he says.

James suggests that manufacturers, distributors and motorcycle industry organisations collectively fund motorcycle promotion.

“Everyone is scrapping over the last dollar and won’t put their hands in their pockets to pay to promote riding,” he says.

“More needs to be done at a higher level to make more people want to ride.

“The manufacturers are fighting over their share of a diminishing pie rather than trying to grow the pie.

“No one is actively marketing motorcycling in general to make the pie bigger.

“The whole industry is losing with everyone focussing on losing the least amount. We need to build value back into motorcycles.”

Dealers

James says the problem is too big for just dealers to solve.

“Dealers don’t control the market,” he says.

“All we can do is make the experience good for the customer so they tell other people.

“People want to be remembered when they come back to a dealership.”

James says a key ingredient for dealer success is to offer demo rides.

His dealership even has two expensive Nortons on demo.

“There are some things about bikes you can’t appreciate until you’ve ridden it and feel it,” he says.