The irony of dirt vs street prices

Discussion in 'The Perfect Line and Other Riding Myths' started by MisterNo, May 3, 2020.

  1. Husky360C

    Husky360C Been here awhile

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    Expectations mean exactly nothing with respect to what it costs to buy something.

    The price is determined by market demand.
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  2. Ginger Beard

    Ginger Beard Instagram @motopossum

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    To me, it seemed implied but you are correct, that was my assumption and I should have clarified.

    As someone that has worked in component manufacturing as being involved directly with distributors and manufacturers, I'm honestly surprised that a YZ250f can be sold so inexpensively in comparison to something like a Shadow Aero. From component costs, materials , coatings , R&D costs ,etc on down to total sales volume , there isn't as much profit per unit built into the YZF. The value in getting a top of the line performance vehicle for less than $1000 more than what is tantamount to a motorcycle version of a base model Camry is pretty damn nice.
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  3. Husky360C

    Husky360C Been here awhile

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    Actually the smart manufacturers will strive to only produce the number of bikes they think will actually sell quickly and easily.

    No smart manufacturer wants to oversupply a market such that price drops and per-unit profit is drastically reduced as a consequence. This would be self-sabotage on the part of the manufacturer.

    Ideally a manufacturer wants to produce just enough of a given model to satisfy market demand, and not misuse production capacity for a specific model such that the market for that model is oversupplied.
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  4. Ginger Beard

    Ginger Beard Instagram @motopossum

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    I've worked in manufacturing and distribution at various points in my life and have had the chance to see "behind the curtain" as it were. "Value" is speculative and based upon market whims. There's a reason that a ratty 1971 CB350 will outpace a 2001 Concours in an Ebay bid war and it isn't because the CB is a better bike.
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  5. Husky360C

    Husky360C Been here awhile

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    Airliners and locomotives are machines designed to work as a component in a business that is ( in theory ) supposed to make money.

    Motorcycles are not typically built for the purpose of making money moving goods or people ( yes, there are exceptions but the exceptions are such a small percentage of overall use that they are not significant with respect to the market ). Motorcycles are toys, at least they are for most buyers in the US market.

    The idea that "they are all transportation" ignores important aspects of how the various devices are used, which can profoundly influence market demand for those devices.
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  6. dirt hokie

    dirt hokie Long timer

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    Cant speak much to the street bike market, other then while searching used bikes, there are a lot more nice condition used street bikes of all types then there are of dirt bikes.
    As also been said, with dirt bikes, you are buying performance.
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  7. Davidprej

    Davidprej Davidprej Supporter

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    Yes, I agree, but I don't think that's incompatible with them increasing supply. They would want to increase supply to capture the addition profit. As the supply increased, the profit margin would decrease, assuming static demand, to an optimal point for the manufacturer - ideally.

    In any case, it looks like the consensus is that the components of the dirt bikes are that much better so that they justify the higher price. Not being a dirt bike rider, I did not know that.

    I learn something every day on this site.
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  8. Husky360C

    Husky360C Been here awhile

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    Most knowledgeable motorcycle enthusiasts understand that there is an oversupply of bikes like a Vulcan on the market. That oversupply acts to lower prices for bikes like a Vulcan.

    The supply of good used dirt bikes is ( apparently ) lower and that acts to keep prices for used dirt bikes higher.
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  9. dirt hokie

    dirt hokie Long timer

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    I think its called static vs elastic demand.
    Nobody "needs" a dirt bike. So its a emotional purchase that often has little economic analysis. They have already decided to " waste" $10,000. It may be 8500, or it may be 12000, but they already made the "bad" choice.
    The market is small, but intense for performance dirt bikes.
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  10. Husky360C

    Husky360C Been here awhile

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    There's more to it than that for most manufacturers. A manufacturer will want to use production capacity such that the company makes the most possible money.

    Accordingly, a manufacturer may choose to produce different models of bikes rather than simply producing increasing numbers of a particular dirt bike until per-unit profit
    approaches zero, which it definitely will if the manufacturer produces too many bikes and demand drops far enough.

    In the real world it's a tricky business and some times manufacturers get it very wrong. A good example is the KTM 950 Super Enduro, which dealers had a hard time selling when those bikes were first introduced. Now that bike is a cult bike, but when the 950 SE was new demand for the 950 SE was very poor. In many ways it's a guessing game, relative to what people will actually buy. A manufacturer will make its best guess and then the market will define whether that guess was accurate or not.
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  11. Husky360C

    Husky360C Been here awhile

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    Actually the concept is called "price elasticity of demand".

    https://en.wikipedia.org/wiki/Price_elasticity_of_demand

    If there is a high price elasticity of demand the demand will drop significantly when the price is raised just a bit. If there is a low "price elasticity" the market will continue buying at a more or less constant rate even when the price is raised. Gasoline is a reasonable example of this, up to a point, but when the price of gas gets high enough, people start using alternatives when possible, or even creating alternatives which can then be used. OPEC has been aware of this for decades and has tended to drop the price of oil in order to "pull the rug out from under" the availability of investment capital for alternatives like solar power or electric vehicles. When the price of gas is low enough, the market tends to quit looking for alternatives because alternatives which cost a lot more are not a rational choice.
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  12. 51%

    51% ReadyToRide

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    This. Higher strength lighter weight materials cost more. Engineering effort to remove a few grams from a component while maintaining the required strength cost more. Lower volumes sold mean fewer units to distribute overhead expenses over. Just like computers, the price is inverse to the physical dimensions for a given performance.
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  13. dirt hokie

    dirt hokie Long timer

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    I am stealing that line "price is inverse to the physical dimensions for a given performance"
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  14. StolenFant

    StolenFant Life is good on this side of the grass Supporter

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    Yes, that is a pretty good one. Just the right amount of ?WTF? to break momentum of an argument while everyone THINKS
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  15. glory racing

    glory racing Been here awhile

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    Honda seems to do that quite often.

    ?WTH? Where does one go to look up what that means?
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  16. OrangeYZ

    OrangeYZ Long timer

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    Look at the front fork on your bike.
    That tube is perfect. It started out as very precise thin walled material, then was ground perfectly, then was polished perfectly. Making those things perfect takes time which is money.
    A Vulcan has 3 inches of that, a YZ250F has 13 inches of it.
    And what's inside those tubes is even more impressive on the YZ250F, and even less impressive on the Vulcan.
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  17. foxtrapper

    foxtrapper Long timer

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    Chuckle, I love how many folk missed my jibe. I didn’t think it was overly subtle.

    Cars, bikes, boats, planes, ships, etc are all about moving people. They are all transportation.

    Some are big, some are small. Some carry lots of people, some only a few. But they all move them around.

    Some are expensive, some are cheap. Some are hard to get, some are pretty easy.

    Some are easy to use, some not.

    Regardless, the price reflects what people are willing to pay.

    And contrary to the nay sayer comments, anyone can buy a locomotive or ship. But even cheap ones can have some interesting logistics that offset the price. That’s why I didn’t bring home either of the train cabooses I’ve been given. They were free! My old Navy ship is only $1.
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  18. dirt hokie

    dirt hokie Long timer

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    Few things are as expensive as free boat
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  19. markjenn

    markjenn Long timer

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    Interesting discussion, but I'd sure like to see some data to support the OP's original question.

    Do street bikes, dirt bikes, adventure bikes, and dual sports depreciate at significantly different rates on average? Cheaper bikes generally depreciate more slowly than expensive bikes (just like cars) but beyond this, I'm not sure there is much difference in average depreciation rates. For example, both a 2015 Honda CB500X and a 2015 Honda CRF250X cost about $7K new and both are worth about $4K now.

    - Mark
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  20. DKCJ

    DKCJ a life behind bars

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    I'll contribute my two cents worth to this to interesting conversation.

    I spent a few years as an MC product planner for a major manufacturer.
    Part of my job was to prepare detailed pricing comparison charts & data by model against the competition.
    That is an obvious requirement for setting wholesale and retail pricing.

    However, there are two pricing components that determine the above mentioned numbers, one was our cost (volume is a big factor here), and the other is the overall GP (gross profit) target for the product line. The first is obvious, the second less so but has a huge influence on pricing.

    Costs are interesting to look at.
    Back in the heyday of the 600 cc sport bikes for example, the competition was so fierce that production upgrades happened almost ever year. These are expensive because, as previously mentioned, dropping a pound here or there or adding a horsepower or two to an already highly tuned bike cost huge sums in R&D. So a state-of-the-art 600 cc four was an expensive bike that had little profit margin. But "Win on Sunday, sell on Monday" drove the manufacturers. Performance mattered.
    Also because many people correlate price with displacement, the 250 and 400 cc equivalent bikes had little chance outside the Japanese market because they cost the same (or even more!) to build because while they were physically smaller, they had the same tech. Most consumers would say "No way I'm paying 600 money for a 250 or 400." while ironically often paying liter bike money for a 600.

    By comparison a cruiser has modest performance and very different customer demands. These bikes can remain essentially unchanged in production for many years using low cost (heavy) components and therefore production costs are relatively low and ongoing R&D costs almost zero. Recreation dirt bikes are similar.

    Popularity (demand) also drives profit expectation. ADV bikes are the current rage and so everyone is offering their version (even H-D).

    Modern off-road competition bikes are essentially the equivalent of the old 600 sport bikes in terms of cost. New and improved every year, tons of R&D money, intense competition, and a very demanding customer base. All the associated prices reflect this.

    GP target is a sticky one. Every vehicle has one but that runs up against the reality of the marketplace (demand) and where the competition is at (supply). So sometimes prices have to be adjusted to achieve the overall. Kind of like how CAFE works for the car manufacturers re fuel consumption.


    The USED market is a very different but interesting beast .
    Unwanted when new but now appreciated and desirable is a timeless story.

    One thing I have observed is that the more general the application, the greater the long term desirability. So older recreational dirt bikes generally have a more solid price than an equivalent old flogged motocross bike - although exceptions obviously exist.
    Nostalgia can be a huge driver of prices too as anyone who tries to buy a mint Z50 or CT70 (for example) will find out.

    Other uncontrollable factors can shift pricing significantly.
    A horribly cold spring and miserable wet summer in the northern climates can dampen retail sales and lead to overstock, which leads to discounted prices.
    A rise in insurance rates can severely dampen sales - 1000 cc sport bikes for example.
    Demographics plays a role. As riders age we tend to get more upright 'travelling' bikes, hence the current ADV bike boom.
    Also with demographics, can the young people afford a motorcycle when they may be struggling to pay for a home and a car?

    Sorry if I strayed off point but this is a most interesting thread so thanks to all the contributors.
    Again the above is just my two cents worth.
    #40