New Or Used?
Guest Blogger NathanMT01 joins us today with a topic he wrote on why we should buy new or used bikes:
There have long been two groups of motorcycle purchasers. The ones who were out to buy a new bike, and those who were out to buy used. The echo’s of claims on which is better still ring clear from both groups, often times contradicting each other. Riders with new bikes justifying their purchases with claims of:
-“I want to ride. I don’t want to waste time fixing somebody else’s problems.”
-“Those used bikes are outdated. I want the newest technology (ABS, fuel injection, electronics, etc.).”
-“I can buy a new bike for the same amount of money I would spend to buy the used and fix it up.”
In the meantime, there’s always the used rider in the background with a grin on his face, knowing that he didn’t just sign up for a monthly payment for the next few seasons, or spend a considerable amount of the household budget, which he’s going to have to explain to his wife. Their claims do not fall on deaf ears:
-“That new ride loses at least 30% of its value as soon as I sign the papers.”
-“It’s paid for, no interest or payments needed.”
-“The price of the bike and parts needed are cheaper than buying a new one, and keeps me riding.”
We could go on and on about this old debate, but is it possible to claim an actual winner in this circle during our tough economic time? It would seem so. In the close of 2007 we were still experiencing the high amount of overstocked and overproduced models from manufacturers, along with prices that were reasonable, compared to now. The market almost called for this overstock, and there was no shortage of purchasers signing away for 0 down, 0 interest factory loans and factory credit cards. Honda was still selling the VTX1800 from 2006 (which they made over 20,000 of, arguably the most overproduced motorcycle ever), the Goldwing was still made in the USA, and the rebates for new purchasers were plentiful. Used motorcycles for the well seeking purchaser were a dime a dozen, and so readily available that auction prices were down, and every 7-11 in the country had a full rack of Trader magazines full of used rides, creating an advertisers dream. But in essence, the market had shown at that time and comparatively speaking, new motorcycle prices were down, and parts prices were up. That was the trade off balance, allowing dealers to push just about anything they wanted to suit customer demand within their region. Choose wisely between a new motorcycle with heavy rebates and expensive insurance, or a used motorcycle for less than your yearly taxes, and cough up the dough for the parts.
Manufacturers, in the light of the start of the crisis, panicked. In late 2008 when 2009 models were rolling off the line, production was severely cut back to numbers reaching 75% with some makes and models. Lending almost completely froze for powersports, and if a dealership experienced a decline of 50% in customer traffic, the remaining 50% of customers were cut again by another 50% who the banks wouldn’t approve. After all, who do you know that walks into a dealership and drops $9,000 on a new ride, paid in cash? Hence the beginnings of the market swap. Cut production means cut prices, right? Wrong. Cut production in all sectors (not just the motorcycle business) along with a severely deteriorating world economy means a cut in the Yen to Dollar value, which means higher prices, along with fewer motorcycles offered. In January of 2009 dealers received their pricing for late release models as usual, but along with these prices came a (gulp…) price increase on all previously released models. Honda came first with almost 20%, followed by Suzuki and Yamaha, and finally Kawasaki. So what about the used?
Supply and demand, which the manufacturers take no less than several seasons to adjust to, consumers adjust themselves. Used motorcycles now being the hot commodity, started rising in prices. But the wonderful thing about used bikes is that the manufacturers don’t control the price or the quantity, the consumer market does. It’s a self-adjusting situation, and no sane rider is going to buy a used bike for 20% more money than he saw the same bike last month. The used bikes already on the market started to filter out, but the ones coming into the market generally were about 5% higher, although there are many hot deals to be found as consumers are looking for cold hard cash, and that ride in the garage is worth a few mortgage payments. Dealers, noticing the increasing amount of customers walking right past the advertisements of false discounts on new bikes and making a beeline to the parts department, start to adjust. The parts department now becomes the sole destination for more customers than ever, as riders without the money, mood, or credit to buy new start fixing up their old rides, and once “new” buyers switch to the “used” market. The benefits of course are falling prices in hard parts. Discounts galore, parts managers negotiating with suppliers, more riders disassembling old rides and parting them out on Ebay, and a fast exploding network of internet sites for fixer-uppers are just a few examples of how the market has turned in the favor of the pre-owned motorcycle market in the past few years of this hard economy.
In earlier times, it would be difficult for anyone to claim victory in the age old argument of new versus used, because the tradeoffs were all about personal preference, and each riders own unique situation. But, as we progress into the start of the 2010 riding season, it already seems that again this year (at least the start of it) will claim the “used” market first place in the debate, as new models increase in price along with falling rebates, while hard parts prices seem to be relatively stable, especially with the amount of options and competition between sources. It’s nice to know that even in this economy, riders can still look forward to some good news once in a while, and come out on top.
[Many Thanks to Nathan for writing this for us. Look for more articles from him in the future!]