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More satisfied with the sticker price

January 23, 2009
Filed under Features

Buyers of new street and dual purpose motorcycles are more satisfied with the initial price of a motorcycle today than they were five years ago, according to the 2008 J.D. Power and Associates’ Motorcycle Competitive Information Study.
The enhanced appreciation for the sticker price not only extends to all brand categories, from domestic to European to metric, but to all major model segments.
The reasoning for the improved perception of the price is harder to single out for dealers, who weigh the more savvy buyer to the worsening economy and its effect on supply and demand as possible explanations.
Consumers in the J.D. Power and Associates’ study were asked to rate the “initial price of a motorcycle” between 1 and 10, with 10 being “outstanding” and 1 being “unacceptable.”
Overall, the percentage of consumers who gave the cost rating the three highest scores — a 10, 9 or 8 — amounted to 54 percent. That percentage has risen slightly since last year, roughly three percentage points, but noticeably during the past five years. In 2004, consumers gave top scores only 42 percent of the time.
All three brand categories have seen noticeable gains, with metric brands gaining the most increase. Sixty three percent of consumers gave metric brands the top scores, a nearly 14-percentage point gain over five years ago.
Domestic brands, including Harley-Davidson, have seen the next highest increase, at 12 percentage points. Buyers in the 2008 survey give top cost rating marks to domestic brands 47 percent of the time.
European brands also receive top marks 47 percent of the time, a 9-percentage point increase over five years ago.
Bob De Haven, owner of Patriot Harley-Davidson in Fairfax, Va., believes the survey’s results make a lot of sense. De Haven says the quality of Harley-Davidson motorcycles has risen and the price largely has fallen in those five years.
“If you think about five years ago, Harleys were selling generally above MSRP,” he said. “A lot of dealers were scalping people and today Harleys are selling at or below MSRP so people should be happy with that.”
Jay Dabney, dealer principal of Skip Fordyce Harley-Davidson in Riverside, Calif., sees the increased customer satisfaction over the price of new bikes as a byproduct of the weakened U.S. economy.
“We’re just all competing for a constrained amount of demand,” Dabney said, noting that leads to dealers lowering prices to MSRP or even below MSRP.
Glenn Hansen, American Suzuki Motor Corp.’s communications director for its motorcycle and ATV division, noted the survey’s findings are in line with what Suzuki has seen with its own surveys. Suzuki surveys new unit consumers one month after their purchase and asks how satisfied they were with the purchase price and overall deal.
Hansen said the same trend has emerged with Suzuki’s survey, showing “people are more satisfied that they got a good deal, but far smaller increase in that satisfaction level” than the J.D. Power findings.
What is driving the more satisfied rating on the metric side is a debatable issue for dealers.
Robert Hintz, general manager of The Engelhart Center in Madison, Wis., saw a number of first-time buyers this year that were spurred to look at alternative transportation due to the higher gas prices this summer.
“We had a lot of customers come in and say, ‘Wow, is that all a motorcycle costs?’” he said. “That average person on the street, all he hears is the Harley-Davidson pricing because that’s the one drum that gets beat everyday. Their buddy has a Harley and he spent $25,000. So when they come in and see this Japanese bike that is sitting here on the floor and it’s under $7,000, they go, ‘Is that it?’”
Greg Kirn, finance manager of Action Power Sports in Waukesha, Wis., wonders if the increased satisfaction isn’t a byproduct of a more knowledgeable customer. “The metric buyer seems to be pretty Internet savvy as far as comparing prices and doing their shopping” before purchasing, he said.
Cost of ownership
Just like the initial price of a motorcycle, new bike buyers also were more satisfied with the cost of ownership compared to five years ago. Overall, 58.6 percent of new buyers gave a 10, 9 or 8 score — the three highest scores on the 1-10 ranking system — to the cost of ownership. That is a 21-percentage point increase over five years ago.
Again, the increase was spread throughout the different brand categories as well as bike model segments. The touring segment saw the biggest increase, with 57 percent of buyers giving the top three marks to the cost of ownership rating compared to just 32 percent five years ago.
Cost Rating of the Initial Price of the Motorcycle
The dual sport rider was the most likely new bike buyer to give their cost rating a “10.” The below percentages represent all brands.
10 Outstanding: 16.8%
9: 15.8%
8: 21.5%
7: 12%
6: 6.1%
5 Average: 19.4%
4: 4.8%
3: 2.2%
2: 0.7%
1 Unacceptable: 0.7%
Price Paid For New Motorcycle
The below percentages represent all brands.
$5,000 and below: 7.1%
$5,001-$6,000: 3.6%
$6,001-$7,000: 4.4%
$7,001-$8,000: 4.8%
$8,001-$9,000: 4.9%
$9,001-$10,000: 6.7%
$10,001-$11,000: 6.6%
$11,001-$12,000: 5.6%
$12,001-$13,000: 4.7%
$13,001-$14,000: 3.7%
$14,001-$15,000: 2.8%
$15,001-$16,000: 6.6%
$17,001-$20,000: 20.5%
More than $20,000: 18.1%
Cost Rating of the Overall Cost of Ownership
Cruiser riders gave the cost of ownership a score of “10” almost 20 percent of the time, an increase of 10 percentage points compared to five years ago. Below shows results from all brands.
10 Outstanding: 17.9%
9: 19.4%
8: 21.3%
7: 12.3%
6: 8.3%
5 Average: 15.9%
4: 3%
3: 1.1%
2: 0.4%
1 Unacceptable: 0.4%
— Neil Pascale

For further information on the survey, contact Tim Fox, research manager at J.D. Power and Associates, at 248/312-4373 or at tim.fox@jdpa.com.

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