Blog: Are new bikes too expensive?

Steve Rose
By Steve Rose

BikeSocial Publisher. Has been riding since before Frankie said ‘Relax’, owned more than 100 bikes and has written for, edited or published most of the UK’s best known bike magazines. Strangely attracted to riding high miles in all weathers, finds track days ‘confusing’ and describes the secret to better riding as ‘being invincible’. 

Steve Rose THUMBNAIL

 

There’s a lot of chatter about new bike prices. £12,000 for a new Triumph Scrambler? Cue social media frenzy. I could mention how, in real-terms, including inflation etc bikes are cheaper than almost ever before, but that doesn’t matter. When you have ‘the conversation’ about spending the family’s holiday money on a new motorcycle, the only thing that matters is the extra nought on the big number.

It’s a far cry from 20 years ago, when cheap European imports drove prices down by 25 per cent in a year. I remember asking a Triumph spokesman in 1997 why their new T595 cost more in my local Triumph dealer than it did in the independent importer selling the same bike, made in Hinckley, exported to Europe and then re-imported to Nottingham, for £1000 less.

His reply was that bikes were priced ‘At a level we feel the individual market can stand.’ Nice idea… but it only took a couple of savvy independent importers and the whole thing collapsed.

The rise of PCP finance over the last ten years allowed manufacturers to nudge up prices and regain lost ground, but you’d be surprised to discover;

  1. Just how little profit a dealer makes on each new bike sold
  2. Just how much it costs to run a modern motorcycle dealership complete with clothing, accessories and a fully equipped and staffed workshop

As biking becomes a leisure thing, a dealership’s business becomes seasonal. That’s tricky for the sales department, but if you want the best mechanics, you’ll need to keep them busy through winter. Likewise, if you want to stock just one model of a £250 crash helmet from one manufacturer in all five sizes and eight colour schemes, you’ll be stocking 40 helmets at a cost of around £6000. For a stock of 30 helmet types that’s close on £200k of stock just in helmets.

These days with more machines bought on PCP the list price becomes less important to a larger percentage of customers (because for PCP it’s the monthly payment, deposit and final value that matter). The list price drives the final balloon payment, which is based on the bike’s predicted value when the finance ends. This is good…mostly, but there are bikes whose value drops significantly because of over-supply, discounting or a technical problem that affects demand. This year, for example, there are large numbers of a Japanese adventure bike coming back into dealers from PCP and, because of significant discounting on unsold bikes, the used price has been dropping unusually quickly meaning the bikes being returned could be worth less than the final balloon payment, meaning in turn, zero equity for the riders to re-invest in their next PCP.

If you want the latest, big-spec bikes you’ll be lucky to stay south of that £12k mentioned for a new Triumph Scrambler XE. Most manufacturers (including Triumph) do a lower-spec version of their premium models for much less money. Kawasaki’s H2SX and Yamaha’s MT-10 are good examples of this.

Away from PCP those who want to just buy one still have to pay close-on full price for a Wizz-Bang 1200 with wings. While the manufacturers hold their nerve, you’ll mostly get your money back in a few years because all resale values are being managed through PCP.

But the really interesting part of the market is when you remove yourself from the need to have a top-of-the-range bike with an engine as big as your car. Honda’s 2019 CBR650R for example has the latest fuel-injection and electronics, sophisticated ABS and enough power and handling to be a genuine contender as a sports bike, but the list price is just £500 more than a CBR600F cost in 1995. There are superb machines around for sensible money and these older models are where the discounts can be found. All bikes have improved. Suspension has got better, brakes too and everything has ABS. The latest fuel injection gives performance, economy and clean emissions and we take things like reliability for granted.

I was once reprimanded by a dealer for writing articles using exact prices on his great deals because by the time you read it the bike was sold and many were one-offs maybe in an unpopular colour or old stock, that no one can repeat. Once published those prices become every customer’s starting point.

So I won’t name names or deals (if I can find them on BikeTrader you can too), but if you’re looking for a Japanese or Austrian motorcycle right now, especially one under 800cc, there are some very good deals on pre-registered, zero miles or ex-demonstrator bikes that’ll do everything you want and be worth pretty much what you paid when you come to sell them too.

One example I can quote is a mate of mine who bought a new Yamaha MT-07 in 2016. He paid just under £5k for it then as a zero-miles pre-registered bike and has just sold it with 14,000 miles on the clock for £4600. That’s £4 a week in depreciation. He paid cash but it was the popularity of PCP that helped him because PCP is keeping resale values on (most) nearly new bikes high, meaning that anyone who does get a great cash deal on a new bike is laughing at trade-in time.

So, are new bikes too expensive? Your ‘expensive’ is another rider’s ‘good value’. The whole market has changed as new prices have risen. My 2002 Yamaha Fazer 1000 appears to have increased in value by £500 in the last two years.

It’s never been easier to ride a new bike even if you don’t actually own it. Used bike values are strong and there are good discounts to be found on many bikes too. If you don’t want all the toys, buy the cheaper, less Amstrad version and if the PCP bubble bursts (which it might, at some point), the customers will be ok because they can always hand the bikes back and walk away.

 

 

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