Big business discounting is ‘hurting motorcycling’

James Mutton Brisbane Motorcycles discounting teammoto

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”.

Brett Mutton Brisbane Motorcycles mum and dad dealer conglomerate
Brett Mutton of Brisbane Motorcycles

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 Mutton Brisbane Motorcycles discounting
James in his Windsor dealership

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.

MotorCycle Holdings Ltd share price history Discounting
MotorCycle Holdings Ltd share price history

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 Mutton Brisbane Motorcycles discounting Norton
James with his two demo Norton Commandos

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.

8 Comments

  1. my 2c after living in the US for over a decade… coming back here I was *really* surprised that dealers didn’t open on a Sunday – everywhere else I shop is and my local HD dealer were staffed so they could roster fairly and keep all departments open 7 days a week (even service). They had loaner bikes or a taxi service for when your bike was in for a service. Ample parking for cars and bikes, well stocked parts and accessories, and decent coffee (you paid a couple of bucks for barista coffee, or the machine was free) meant it was a destination as well as a chore… and I’d usually walk out with something I’d not needed 😉 Even our local Norton/Ducati dealer was more like a cafe that sold and services bikes than a car dealer.

    I do absolutely get that the margins are tighter and market smaller here… so the cost of opening on a Sunday might not be sustainable with staffing costs but the industry needs to do more to attract new riders and to counter all the negative press. Our local Harley Heaven does a good job of being a friendly destination, but I’d probably not drop round just for a coffee, and it’s not exactly central so you have to make a deliberate trip … having a new FXDR sat in the local Westfield however would get a bunch of tire kickers, but hopefully interest and a couple of sales… Make it more of an industry thing and staff the booth with some passionate folks who can help promote bikes (all brands, all sizes) and you might just plant the seed in a teen or an adult bored with the same-old commuter cages… and you have the opportunity to counter the “all bikies are out to sell drugs and speed at 100kph past your kindy” press.

    The AMA in the US do a great job as an association, as a grass-roots sport supporter, as a PR coordinator, mounting legal challenges (eg against the current E15 gas proposals), educating, working with insurance companies to be ‘fairer’ to bikers and generally helping the industry be a bit more cohesive … where is the Aussie equivalent (and how can I help?!)

  2. Has any one noticed what Harley is doing?
    Changing: their targets; their image; their models; their dealers and their marketing. Yes new initiatives with heaps of promos all over the world.
    Yes they are desperate every time a baby boomer dies the H/D traditional market shrinks. So why launch 100 new models by 2020? they are desperate for new customer base. Actually it’s how they started. looking at potential and designing producing and upgrading to create a wider demand.
    Suits me I think they needed to change

  3. A big issue for me being an everyday of the year rider is servicing taking up to three days from the dealership I brought it from.
    I had my bike serviced yesterday and for the first time in four years was offered a loaner bike, this made the experience awesome,.
    What a great way to get loyal customers interested in getting a new bike and dealerships attain customer loyalty .

  4. Hi James agreed on all points! Unfortunately the motorcycle industry (the big groups) care about themselves and no one else! I used to have 3 scooter stores which was a great introduction into 2 wheels, which I have since closed because they were not profitable I sat on the MTAA motorcycle industry to try and lobby government to be pro motorcycles to no avail. I believe that the industry needs to come together get an MP on side to push the cause, why is rego on a motorcycle nearly $500 a year? A joke considering the amount of damage a bike does to the road compared to a car? Footpath parking should be a given if the government wants to cut down on conjestion! Etc etc! The pushbike fraternity all work together and lobby hard and get there way! They sold more pushbike than cars last year. Good luck with your challenge there is a lot of work to be done to change the way people and governments think.

  5. You will probably find makers like ‘hero’ are still doing very well..They are
    making bikes for transport .Not as a ‘lifestyle choice’ The inherent snobbery
    of owning european or american machines has made the high price part of the attraction
    you could add norton and a few other ’boutique’ brands to the list. Really they are just going
    out of fashion.

  6. why don’t bike retailers open on the weekends (sales teams) and roster sales teams off on Monday/Tuesday. With kids sport and Saturday commitments it took ages to get a free Saturday so I could get to a dealership to even look at bikes. Also I have a real issue with many dealerships leaving no car parking spaces. Often if you’re out shopping for a bike, it’s because you don’t have one and want to buy one. So to sum it up, make it easier for the punter to come in, to try a bike, to get info about the bike, and maybe they’ll buy more.

  7. Didn’t I say this exact same thing ages ago? No bike ads on TV. No bikes in “pop up” displays in shopping centres. No bikes at “lifestyle” events. No buses with motorcycle ads on the side.
    The manufacturers are screwing themselves.
    You need to make a customer want your brand. Dealerships are the front of your experience. Support your dealers who are passionate about your product, help them by advertising your damned machines. Make the lifestyle desirable and MEET THE POSSIBLE CUSTOMER ON THEIR TERMS! GET YOUR PRODUCT OUT THERE! ADVERTISE IN THEIR SPACE! An American burger chain can open a pop-up and have people lining up around the block, and moto manufacturers can’t be arsed putting up a display where the Everyman can see/touch/ask about it?
    Start firing your advertising staff. They’ve failed you. They’ve done 2 decades of damage in Australia alone.

    1. As far as I know, it not legal in Queensland for Motor Trades to open on a Sunday.
      If was, Team Moto would be first to be open on every Sunday and at every store they own.
      Have you not noticed that all Car Dealers are closed on Sundays?
      The recent Inquiry into Trading Hours, showed NO Community and Industry support for this.
      People in these Industries need a life too.

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