Can Millennials Save the Motorcycle Industry?
Can Millennials Save the Motorcycle Industry?
For Fed Pacheco, it was a long journey from motocurious to motorcyclist.
There was a rail years ago in Texas on his uncle’s Suzuki Boulevard, not long after Pacheco had emigrated from Venezuela. A few years later, he determined to take a railing course and got his motorcycle license, however he still didn’t pull the trigger. But when Honda unveiled its fresh Rebel 500 in November, the 27-year-old eventually went all in.
“I just embarked obsessing about it, to be fair,” he said. “The railing season was coming up and I thought ‘You know what? Maybe, it’s not that crazy.’” Pacheco traced one of the very first Rebels on the market to a dealership in Fresh Jersey, walked in and paid $6,800 on the spot. The bike was still in its shipping box.
Honda’s Rebel is the latest entry in a parade of fresh bikes designed for first-time riders; almost every company in the motorcycle industry has scrambled to make one. They are smaller, lighter, and more affordable than most everything else at a dealership and very likely wouldn’t look out of place in the 1960s—back when motorcycling was about the rail, not necessarily the bike. They are also bait for millennials, meant to lure them  into the easy-rider lifestyle. If all goes as planned, these little equipments will help companies like Harley-Davidson coast for another fifty years.
“They’re fresh motorcycles, but they’re also fresh thinking,” said Mark Hoyer, editor-in-chief of Cycle World magazine. “They’re selling this perception of lifestyle . it’s a cultural movement; a rebranding of the entire motorcycle industry.”
It’s also the manufacturing equivalent of a mid-life crisis. Motorcycle sales in the U.S. peaked in two thousand six at 716,268 and promptly commenced to skid. When the recession hit, the market went down hard. Bike sales fell by forty one percent in two thousand nine and another fourteen percent the following year, according to the Motorcycle Industry Council. That’s not surprising considering the economy at the time: A motorcycle is a picture of discretionary spending, and they can be tricky to finance even in a healthy credit market. Even now, with the stock market on a historic bull run and after the U.S. auto industry posted its best year on record, traffic in motorcycle stores has stayed slow. In 2016, U.S. customers flipped off with 371,403 fresh bikes, toughly half as many as a decade ago.
And then there’s the generational time-bomb. In 2003, only about one-quarter of U.S. motorcycle riders were fifty or older. By 2014, it was close to half. The market has been cruising on a demographic that may only be able to buy one more bike. 
Abruptly, bike-makers despairingly need fresh riders and millennials, evidently, are the best hope. Not only are there more of them than GenXers, but they have a longer expected lifetime value, which is corporate way of telling they’re a further away from needing a hip replacement. 
Around 2010, bikemakers made a major strategic shift: Sturgis was out; Coachella was in. They needed something cool to demonstrate on the wealthy, quasi-hipster music scene, something far from the fat-fendered, chrome-soaked hogs humming around South Dakota. “Everybody is attempting to do the same thing,” said Lee Edmunds, manager of Honda’s motorcycle marketing. “They’re all realizing they need to have more people come in at an entry-level stage.”
Harley-Davidson led the charge, perhaps because it predominates the U.S. market for large motorcycles and has the most to lose. Inbetween two thousand six and 2010, the number of big-engined Harleys registered in the U.S. plummeted by almost half. The company has hosted railing academies for first-timers since 2000, but it quickly ordered its engineers to design a true starter bike.
Unveiled in 2013, the Street 500 resembles a conventional Harley in the way an Ivy League quarterback resembles an NFL lineman. The engine, just bashful of 500cc, won’t turn any goes in Daytona Beach or wake anyone up in suburbia. The seat sits relatively low to the ground and the entire package can be had for just under $7,000. The Street 500 quickly became the standard kit in Harley’s railing schools, which churn out 65,000 fresh riders a year.
“There was a requirement to be more relevant to urban environments,” said Anoop Prakash, the company’s director of U.S. marketing. “Prior to the Street, we certainly believed and knew many riders would embark in another brand.”
At about the same time, Kawasaki launched its Ninja 300, a subdued version of its famous sport bike. It has the same angry wasp styling, albeit with a much smaller powerplant and pricetag—$Five,000; anti-lock brakes could be had for $300 more.
In 2014, Ducati joined the first-timer fray with its Scrambler, resurrecting a sub-brand that it last made in 1974. The contemporary version is essentially an 803cc engine packaged in six different trims, from a no-frills “Classic” to a stripped down café racer. The engineering lends itself to tinkering and Ducati encourages buyers to customize their Scramblers with add-on elements.
“We call it a naked bike,” said Jason Chinnock, chief executive of Ducati North America. “It was attempting to bring something to market that had a nod to the nostalgia, but also the simpler way motorcycling was approached in the 1970s.”
About a year later, BMW pulled the cover off its G three hundred ten R, a neat, 350-pound version of its famous touring bikes. Anti-lock brakes are standard, and with a sticker price of $Four,750, it’s less expensive than adding “smoke white” merino leather to one of BMW's 7-series sedans.
Ultimately, Honda spinned out the Rebel that Pacheco fell so hard for. Pacheco is cofounder of a Manhattan marketing shop called Thirsty Studio—it’s his job to know what a brand represents and what a product projects. In the end, the Honda felt more right to him than the Harley-Davidson that he learned to rail on. “It didn’t feel cheesy to me at all; it felt tasteful,” he explained. “And I could certainly tell they were advertising to people like me.” 
Make no mistake, the economics on these bikes isn’t superb. Profit margins are far fatter on something like a Honda Gold Wing F6B, an 844-pound locomotive that starts at $20,500. But that engorged kit doesn’t hold much street cred where Pacheco parks in Manhattan, in part because the folks buying those big cruisers are quickly transitioning from the roadhouse to the golf course.
The problem, however, with this unexpected industry pivot to junior customers is that it may be coming too late. For years, it was too effortless to just keep building fatter, more powerful bikes. “They got more complicated, more expensive and more intimidating,” said Edmunds at Honda. “For a long time, all the manufacturers could do that, because that baby boomer market was so yam-sized.”
Chinnock, at Ducati, calls it “the horsepower game.”
The fresh breed of puny bikes, meantime, has quickly become the most promising part of the business. Inbetween two thousand eleven and 2016, sales of motorcycles with engines smaller than 600cc enlargened by 11.8 percent, while fatter, more powerful bikes managed only a 7.Four percent build up.
In its very first total year its Scrambler was on the market, Ducati sold 15,000 of them—28 percent of its total business. “These riders were not looking at Scrambler as an entry to the world of Ducati; they looked at it as a entire fresh thing,” Chinnock said. “It’s kind of one of those business mistakes you’re OK with.”
Harley-Davidson, meantime, has a fresh marketing tagline: Nine bikes for under $12,000. Prakash, the marketing chief, violates it down to $6 a day. Skip the latte; buy a bike. 
Can Millennials Save the Motorcycle Industry?
Can Millennials Save the Motorcycle Industry?
For Fed Pacheco, it was a long journey from motocurious to motorcyclist.
There was a rail years ago in Texas on his uncle’s Suzuki Boulevard, not long after Pacheco had emigrated from Venezuela. A few years later, he determined to take a railing course and got his motorcycle license, tho’ he still didn’t pull the trigger. But when Honda unveiled its fresh Rebel 500 in November, the 27-year-old ultimately went all in.
“I just commenced obsessing about it, to be fair,” he said. “The railing season was coming up and I thought ‘You know what? Maybe, it’s not that crazy.’” Pacheco traced one of the very first Rebels on the market to a dealership in Fresh Jersey, walked in and paid $6,800 on the spot. The bike was still in its shipping box.
Honda’s Rebel is the latest entry in a parade of fresh bikes designed for first-time riders; almost every company in the motorcycle industry has scrambled to make one. They are smaller, lighter, and more affordable than most everything else at a dealership and most likely wouldn’t look out of place in the 1960s—back when motorcycling was about the rail, not necessarily the bike. They are also bait for millennials, meant to lure them  into the easy-rider lifestyle. If all goes as planned, these little equipments will help companies like Harley-Davidson coast for another fifty years.
“They’re fresh motorcycles, but they’re also fresh thinking,” said Mark Hoyer, editor-in-chief of Cycle World magazine. “They’re selling this perception of lifestyle . it’s a cultural movement; a rebranding of the entire motorcycle industry.”
It’s also the manufacturing equivalent of a mid-life crisis. Motorcycle sales in the U.S. peaked in two thousand six at 716,268 and promptly began to skid. When the recession hit, the market went down hard. Bike sales fell by forty one percent in two thousand nine and another fourteen percent the following year, according to the Motorcycle Industry Council. That’s not surprising considering the economy at the time: A motorcycle is a picture of discretionary spending, and they can be tricky to finance even in a healthy credit market. Even now, with the stock market on a historic bull run and after the U.S. auto industry posted its best year on record, traffic in motorcycle stores has stayed slow. In 2016, U.S. customers flipped off with 371,403 fresh bikes, toughly half as many as a decade ago.
And then there’s the generational time-bomb. In 2003, only about one-quarter of U.S. motorcycle riders were fifty or older. By 2014, it was close to half. The market has been cruising on a demographic that may only be able to buy one more bike. 
Abruptly, bike-makers despairingly need fresh riders and millennials, evidently, are the best hope. Not only are there more of them than GenXers, but they have a longer expected lifetime value, which is corporate way of telling they’re a further away from needing a hip replacement. 
Around 2010, bikemakers made a major strategic shift: Sturgis was out; Coachella was in. They needed something cool to display on the wealthy, quasi-hipster music scene, something far from the fat-fendered, chrome-soaked hogs humming around South Dakota. “Everybody is attempting to do the same thing,” said Lee Edmunds, manager of Honda’s motorcycle marketing. “They’re all realizing they need to have more people come in at an entry-level stage.”
Harley-Davidson led the charge, perhaps because it predominates the U.S. market for large motorcycles and has the most to lose. Inbetween two thousand six and 2010, the number of big-engined Harleys registered in the U.S. plummeted by almost half. The company has hosted railing academies for first-timers since 2000, but it quickly ordered its engineers to design a true starter bike.
Unveiled in 2013, the Street 500 resembles a conventional Harley in the way an Ivy League quarterback resembles an NFL lineman. The engine, just timid of 500cc, won’t turn any goes in Daytona Beach or wake anyone up in suburbia. The seat sits relatively low to the ground and the entire package can be had for just under $7,000. The Street 500 quickly became the standard kit in Harley’s railing schools, which churn out 65,000 fresh riders a year.
“There was a requirement to be more relevant to urban environments,” said Anoop Prakash, the company’s director of U.S. marketing. “Prior to the Street, we certainly believed and knew many riders would commence in another brand.”
At about the same time, Kawasaki launched its Ninja 300, a subdued version of its famous sport bike. It has the same angry wasp styling, albeit with a much smaller powerplant and pricetag—$Five,000; anti-lock brakes could be had for $300 more.
In 2014, Ducati joined the first-timer fray with its Scrambler, resurrecting a sub-brand that it last made in 1974. The contemporary version is essentially an 803cc engine packaged in six different trims, from a no-frills “Classic” to a stripped down café racer. The engineering lends itself to tinkering and Ducati encourages buyers to customize their Scramblers with add-on elements.
“We call it a naked bike,” said Jason Chinnock, chief executive of Ducati North America. “It was attempting to bring something to market that had a nod to the nostalgia, but also the simpler way motorcycling was approached in the 1970s.”
About a year later, BMW pulled the cover off its G three hundred ten R, a neat, 350-pound version of its famous touring bikes. Anti-lock brakes are standard, and with a sticker price of $Four,750, it’s less expensive than adding “smoke white” merino leather to one of BMW's 7-series sedans.
Eventually, Honda flipped out the Rebel that Pacheco fell so hard for. Pacheco is cofounder of a Manhattan marketing shop called Thirsty Studio—it’s his job to know what a brand represents and what a product projects. In the end, the Honda felt more right to him than the Harley-Davidson that he learned to rail on. “It didn’t feel cheesy to me at all; it felt tasteful,” he explained. “And I could certainly tell they were advertising to people like me.” 
Make no mistake, the economics on these bikes isn’t excellent. Profit margins are far fatter on something like a Honda Gold Wing F6B, an 844-pound locomotive that starts at $20,500. But that engorged kit doesn’t hold much street cred where Pacheco parks in Manhattan, in part because the folks buying those big cruisers are quickly transitioning from the roadhouse to the golf course.
The problem, however, with this unexpected industry pivot to junior customers is that it may be coming too late. For years, it was too effortless to just keep building fatter, more powerful bikes. “They got more complicated, more expensive and more intimidating,” said Edmunds at Honda. “For a long time, all the manufacturers could do that, because that baby boomer market was so thick.”
Chinnock, at Ducati, calls it “the horsepower game.”
The fresh breed of puny bikes, meantime, has quickly become the most promising part of the business. Inbetween two thousand eleven and 2016, sales of motorcycles with engines smaller than 600cc enlargened by 11.8 percent, while fatter, more powerful bikes managed only a 7.Four percent build up.
In its very first utter year its Scrambler was on the market, Ducati sold 15,000 of them—28 percent of its total business. “These riders were not looking at Scrambler as an entry to the world of Ducati; they looked at it as a entire fresh thing,” Chinnock said. “It’s kind of one of those business mistakes you’re OK with.”
Harley-Davidson, meantime, has a fresh marketing tagline: Nine bikes for under $12,000. Prakash, the marketing chief, cracks it down to $6 a day. Skip the latte; buy a bike. 
