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March 12, 2007 – Raising V-twin sales by lowering price points

March 12, 2007
Filed under Features

CINCINNATI — Little more than six months after revamping its flagship cruiser and unveiling its base cost of nearly $38,000, American IronHorse signaled a new direction at the recently held V-Twin Expo under its new leader.
President R.B. “Buck” Hendrickson told the Texas-based manufacturer’s dealer advisory council, in Cincinnati for the annual expo, the company would produce two new, lower-priced motorcycles — both less than $26,000 — for its 2008 lineup.
The move toward a lower price with bikes that feature less flash but largely the same features represents quite a shift for American IronHorse, which had only one bike with a base cost less than $30,000 in its 2007 lineup.
“One of the things we’re finding is this market has been kind of saturated with that high-dollar motorcycle,” Hendrickson said in an interview with Powersports Business. “When you’re in a niche of this size, you have to drive that niche. This company hasn’t done that in a couple of years.”
Hendrickson, a veteran of the automobile industry, was hired in October as chief operating officer for IronHorse. The company has since added “president” to his title and increased his responsibility in the sales and marketing arenas.
“I’m taking the company maybe in a different direction than it was going,” he said, noting part of that shift means making sure company personnel realize “we’re a manufacturing company that makes motorcycles. We’re not a motorcycle company. That’s a change.”
The lower-price models also represent quite a change for the company, which is aiming for a different consumer target with its new lower-priced cruiser and chopper. IronHorse hopes to draw more of the high-end Harley-Davidson shopper, believing a consumer who is looking at a $18,000 Harley could much easier shift to a $23,000 IronHorse Classic Chopper than a $38,000 Slammer, the bike the company unveiled to its dealers in July.
“If I had been with the company, I don’t know if I would have brought that bike out or not at this point in time,” Hendrickson said, noting the Slammer is selling well in certain pockets of the nation “but you’re not going to sell 1,000 a year.”
Not only will the lower-price bikes reach potentially a different consumer, but they’ll also create a two-tiered level of ownership for the new IronHorse bike buyer.
“Once you buy these bikes, you don’t trade them in,” Hendrickson said of IronHorse’s previous model lineup. “At least with this less expensive bike, you can ride it for a year or two years and you can trade up. That’s one of the things that was wrong with our product line — where did you go? You could never trade (up).”
The new bikes will have limited options, as frame and wheel possibilities will be reduced in comparison to other American IronHorse models. However, consumers will still have a range of paint and color options to choose from.
“I don’t want somebody taking this bike and throwing so many options at it that it becomes $30,000,” said Jeff Long, IronHorse’s vice president of design. “It defeats the whole purpose. So options are going to be very limited.”
Although options will be limited at the factory level, that doesn’t mean dealers won’t be able to add to the bike once it gets to the showroom, a possibility Long foresees.
“Over time, every (IronHorse) bike has become high end where in the past that’s not how we were structured,” Long said. “We are targeting what I think is the audience we used to target.”
Making that move wasn’t a tough sell to the company’s board of directors, Hendrickson said, noting he presented persuasive facts, including the amount of inventory currently in the field, to the board. “Things are changing,” he said of the V-twin industry. “You have to be able to react to it. If people want a lower-cost motorcycle and still want that look, you better be able to stop what you’re doing it and get it out there. But you need to get it out there first.”
Besides convincing the board, Hendrickson and the company also will need to convince their dealer network of the value of the new, lower-priced bikes. That’s because the new bikes will serve as incremental product, meaning they’ll have to be sold in addition to the current number of bikes a dealer already is selling, Hendrickson said.
The new models will have the same profit margin percentage as the rest of the company’s lineup, he said.
Reaction from the company’s dealer advisory council in Cincinnati was positive, Hendrickson said, noting the addition of the new bikes can only improve dealership traffic.
“You might have a guy come in and look for that low-cost bike and like one of the dealers told me last night, ‘If I get them in here looking at that, I’ll still sell them a $38,000 Texas Chopper because I got them in the door,’” he said.
Besides providing a different price point, Hendrickson said the company’s new direction will include a more varied lineup.
“We’re going to try have a more complete line of motorcycles,” he said. “Right now, you have a chopper and a cruiser. Not everybody wants a chopper and a cruiser. There are other styles and models out there.
“You just have to be able to produce it at the right price.” psb

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