This guest post was written by Michael Uhlarik of Motorcycle Global. Michael is a Motorcycle Industry Strategic Product Planning Consultant with many years of experience. 

Most urbanites today own smartphones with a data plan. Seated in a public space, they can purchase anything with a tap of the finger. Even complex transactions for expensive products like cars and rental properties that involve finance, credit applications, government permits and deliveries across multiple countries are now routine features of modern mobile life.

Why is it then that the motorcycle retail experience is confined to lump sum purchases at brick-and-mortar dealerships? There are some manufacturers who offer online credit application or pre-orders, but the global motorcycle industry is by and large still operating in the business environment of the twentieth century. The hardware experience has managed to keep up with the times, but the purchase and ownership experience has not.

To the 85 million American consumers in younger generations, this disconnect is huge, and it has led to serious market consequences. The North American motorcycle industry has been shrinking despite a global sales boom, largely for failing to capture young riders while its base of baby boomers ages out of motorcycling. The business innovation needed, and the solution to getting new butts in the saddle, may reside in your back pocket.

Pleasure In Small Bites

It may come as a shock to most people in the U.S. but the average cost of a new motorcycle in many parts of the world today is around $1500. For the price of a new iPhone 11 Pro, you can ride away on a highway legal 150 cc motorcycle that can cruise at 100 km/h (60 mph), haul 200 kg (450 lb) of load, and take you to work, home and into the countryside all week long using $5 worth of fuel. And $2,000 buys a quality electric scooter (moped) with 100 km (60 miles) of range and a 70 km/h (45 mph) top speed that will run all week on $3 worth of electricity.

Cheap to buy, easy to use, and unintimidating, small motorcycles have always been the gateway to healthy, long-term motorcycle consumption. For hundreds of millions of people around the world these small commuter bikes are a staple of transportation right now. Westerners may dismiss these as pitiful mopeds or machines unworthy of the term motorcycle, but that would overlook their tremendous contribution to the industry.

1971 Honda CB125

1971 Honda CB125

In markets like the United States and Britain where motorcycle culture is dominated by heavyweight, high performance machines, the historic sales peaks were all overwhelmingly driven by small, inexpensive and low-powered bikes. Ask most baby-boomer motorcyclists what bikes they started out on and they will inevitably name small Japanese bikes like the Honda CB175 and Yamaha RD200. Fun, reliable, but easy to master and costing less than $500 ($3,000 in today’s money), machines like these pushed U.S. sales to a record 1.1 million units in 1971. To hard core enthusiasts, small motorcycles were and will always be a source of derision—but if cast in the right way they can be irresistible to newcomers.

Its Not You, It’s Me

The typical global commuter today is an urbanite, living in an apartment or house in suburban areas, and travels less than 40 kilometers (25 miles) per day. Motorcycles are a good fit for this demographic because they are economical, easy to park and more fluid on congested road networks. Even in wealthy cities like Paris, London, and Milan, hundreds of thousands of affluent commuters choose bikes like the Honda SH125 or Piaggio Liberty scooter because of their balance of the these qualities. Of the top 20 best selling motorcycles in Europe today, eight are vehicles that produce less than 5 hp and cost under $3,500.

Honda SH150 PHOTO CREDIT : Honda Motor Europe

Honda SH150
PHOTO CREDIT : Honda Motor Europe

The electric scooter (moped) in Europe is experiencing explosive growth, around 50% per year, rapidly taking over the market space that used to be occupied by the 50 cc two stroke, and encroaching on the fat middle ground of 125 cc four strokes. In Europe that combined market is 700,000 vehicles strong, larger than the entire U.S. market for all motorcycles in all categories.

After decades of  being ignored, younger demographics are finally seeing many new small-displacement bikes available; however, they are priced out of reach for most new riders. To an established person in midcareer, $5,000 may not seem like a lot of money for a new motorcycle, but for anyone fresh out of college or just entering working life, with multiple pressures competing for a limited salary, it is too much. Asking these consumers to commit to a high-interest loan on a product portrayed as a recreational good is a nonstarter to a generation that carries historicly high college debt, is weary of commitment, and needs a vehicle that reflect their actual needs and values.

The $100 Motorcycle

If America’s motorcycle market decline is structural, a reflection of poor product fit and current socioeconomic factors, a solution could be motorcycles on subscription. Offering consumers a new 15 hp motorcycle starting at $100 per month, with the option of upgrading, exchanging, or canceling, is a surefire way to get new butts in North American saddles. The under-40 crowd will not go to a brick-and-mortar bike shop—so bring the bike to them. Integrate insurance, a helmet and proper gloves as a perk. Reward low mileage and offer to forgive excess wear by discounting upgrades, keeping consumers in the brand. None of this is radical or even new, but it is a business model that can bring motorcycles back to North America in large numbers.

Gen Z man and woman with SuperSOCO

PHOTO CREDIT : VMOTO

As consumers today buy everything with one touch of their smartphone, with more products and services increasingly offered on fixed monthly subscriptions, it was inevitable that personal transportation evolved in that direction too. The rise of cars-as-a-subscription and ride-sharing have clearly demonstrated that the concept has market appeal.

Most luxury car brands like Mercedes, Porsche, and BMW offer subscription plans that give consumers the use of different models that they can swap between, depending on moods and needs. A compact sports sedan from Monday to Friday, then a convertible or SUV on the weekend, for example, all ordered from an app and delivered clean and fully fueled to your office or residence. Ranging from $600 to $3,000 per month, these subscriptions cost about 20% more than traditional leasing, but they provide unrivaled flexibility, the opportunity to enjoy different vehicles, and usually include insurance, maintenance, roadside assistance and other perks.

PHOTO CREDIT : Gogoro

PHOTO CREDIT : Gogoro

The sharing economy has bled into two-wheeled transportation faster than anyone predicted. The San Francisco startup Bird launched electric-assist bicycles as a sharing service in 2016 and grew so fast it was acquired by UBER for $200 million. Users pay a fixed annual fee, plus charges based on either time or distance traveled. You can use any vehicle in the fleet and walk away when you’re done.

Sharing services do have a significant downside compared to the subscription model, however. They are impersonal and can feel like public transit, with basic and often battered vehicles that are literally disposable, becoming liabilities when not in use. Subscription assigns a specific, clean, new vehicle to an individual, which brings a pride of ownership even if the user keeps the vehicle only for a few months at a time, which in turn promotes good treatment and allows some personalization to take place.

A $100 per month subscription motorcycle does not need to be ugly or compromised in function. At EICMA, the world’s biggest motorcycle show, dozens of startup brands pitched low cost, good quality, Chinese-made motorcycles last year that were high on retro style, very road-capable but lightweight and easy to use. Low seat height, decent road performance and unintimidating specs never looked so good.

All of the above are available now, include ABS and are fully compliant to EU5 emission and safety standards

All of the above are available now, include ABS and are fully compliant to EU5 emission and safety standards

Generating Generation Z Bikers, Attracting Generation Alpha

The lesson of sales history is clear: the path to creating new riders and growth is through low-power motorcycles that tickle consumer emotions but match the prevailing economics of the mass market. Young people throughout history have wanted fun products that respect their perspectives and life circumstances.

Negotiating prices is passé. Having to travel to your purchase is unacceptable. Being tied to a depreciating asset and having to flip it to obtain the newest feature is a 20th century concept. These are business facts in today’s digital marketplace. A clever ad campaign or adding an espresso bar to a bike shop located in a remote industrial building may help capture a few existing bikers on the fences, but will be invisible efforts to young neophytes.

A stylish, low power motorcycle as a subscription at a price anyone can afford, wrapped into an inclusive package that comes to you ready to ride, is the only way North American masses can fall in love with the motorcycle again. The hardware exists, at prices that make the economics viable. The economic framework and infrastructure exist to deploy them. Most importantly, the market, the millions of digital natives actively looking for a last ten mile solution, is ready.

The only thing left to do, is for someone to do it. The first company that does so will claim the largest untapped personal consumer mobility market in the world.

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