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Backmarker: Occupy All Street

Thursday, February 9, 2012
World economic conditions in recent years have greatly impacted the motorcycle industry as brands struggle to cope with reduced demand.
A sluggish economy has greatly impacted the motorcycle industry as brands struggle to cope with reduced demand.
The Occupy Wall Street movement never technically occupied Wall Street in New York – but it sure occupied a prominent place in American media and pop culture last summer. The movement’s catch phrase, We are the 99%, entered the language. The protesters may not have agreed on what, exactly, they were mad about but they sure as heck agreed on who they were mad at: the remaining 1%.

The phrase ‘one-percenter’ used to mean something very specific to American motorcyclists; it meant outlaw bikers. But the motorcycle industry’s sketchy recovery from its 2009 collapse is a lens through which the 99%’s view of American economic life can be examined in more detail.

I pondered the ways in which the motorcycle industry reflects the larger economy back in October, when it seemed that every motorcycle web site went gaga over the NCR M4 ‘One Shot’.

The One Shot was only powered by relatively plebian air-cooled Twin, but it weighed less than 280 pounds - an avoirdupois achieved by the liberal application of carbon fiber, titanium and magnesium. It all came with a $70,000 price tag.

As beautiful as it was, I wondered whether, with America still mired in a recession (or at best just beginning a shaky recovery) this was the right time to bring a $70k bauble to market – especially bearing in mind that the One Shot was unlikely to make any trackday trust fund baby lap any faster than he’d go on a five year-old ‘gixxer 750. Then, I realized that I was seeing the bike from a 99%er’s perspective, and concluded that in fact, NCR was bringing its new bike to market at the perfect time.

Beautiful  Absolutely. Affordable  Not so much.
Beautiful? Absolutely. Affordable? Not so much.
You can argue the morality and politics of America’s increasing divide between the rich and, well, everyone else. And you can find ways to blame, well, us, for decreasing social mobility. Well-meaning people could, I suppose, disagree on the best ways of closing that divide or even whether or not is morally or politically imperative. My purpose in writing this is not to foment ‘class war’ or supercharge ‘the politics of envy.’ But the underlying facts make it clear that while times are still very tough for most of us, the richest 1% of the population are doing fine and the richest one-tenth of 1% are accumulating wealth at an astonishing rate.

When the first GSX-R750 was introduced in the mid-‘80s, it represented an amazing equalizer. Any working stiff with regular-sized pay envelope could afford a vehicle with a performance envelope that made the CEO’s Ferrari look stupid.

Back then, the average S&P 500 CEO made between 50 and 100 times the average employee’s salary. Nowadays, the average CEO is pulling down over 250 times the average worker’s wage. For the only people who could ever afford a $70,000 motorcycle, it’s more affordable than ever.

Motorcycles selling at less-stratospheric prices still illustrate the realities of economic life in 21st century America. For about 20 years ending in 2008, the motorcycle manufacturers (companies like Honda and Harley-Davidson, whose destinies are tied to the 99%) blithely ignored the warning signs of a ‘motorcycle bubble.’

During that period, the average age of motorcycle buyers increased almost one year with each passing year. As the Baby Boomers struggled to recapture their lost youth by buying motorcycles – in large measure financed by home equity loans – manufacturers focused on increasingly large-displacement and expensive models. Most people were willfully blind to the housing bubble, but the motorcycle industry had no excuse at all for failing to promote the bikes (or programs) that would bring in new young riders.

When I lived out in SoCal, I’d walk my dog past McMansions, and I was always struck by the way each triple garage was loaded with adult toys; motorcycles, watercraft, quivers of high-end surfboards, $7500 bicycles; so much stuff that they had to leave their lifted trucks on the driveway. All that stuff had been bought by people using their McMansions as ATMs, happily spending home equity. When I raised the risk of a housing bubble collapse in conversations with motorcycle industry marketing executives, they always looked at me with a special pity reserved for Canadian socialist types that just didn’t understand how wealth was created.

“Why,” they’d ask, “would we promote $3500 bikes, when we can sell $13,500 bikes that don’t cost that much more to build?”

My response was, Sure the boomers are refusing to acknowledge their advancing age; sure 50 is the new 30, and 60 may be the new 40. But I’ve got news for you; 75 is still frickin’ 75. The boomers would, eventually, have stopped driving the market for expensive, large-displacement bikes, even if the housing bubble hadn’t burst. But burst it did, and motorcycle sales collapsed in ’09.

Entry-level mounts like the Kawasaki Ninja 250 and Honda CBR250R are on a path toward becoming top-selling models. For the moment  however  even these are out of reach for the American middle class.
More affordable entry-level mounts like the Kawasaki Ninja 250 and Honda CBR250R are one path toward more riders.
Since then, it seems we’ve hit bottom and may be on a little bit of a rebound. Indeed, for some companies, like Ducati and BMW, 2011 was a good year. According to reports right here on MCUSA, Ducati sales increased 43% from 2010 to 2011. BMW sales were up 7.4%, too.

It’s hard to tease accurate motorcycle sales figures out of the Japanese Big Four, but according to the Motorcycle Industry Council’s figures, on-highway motorcycle sales growth overall was under 2%. The impression that I have is that both Honda and Kawasaki are placing far more emphasis on their 250cc entry-level sport bikes these days, and that the Ninja 250 is, in fact, Kawasaki’s best-selling model.

99%ers might take that paragraph as evidence that expensive bikes like the Ducati Diavel and Multistrada, and the BMW S1000R – bikes that are targeted at the 1% (or at most the top few percent) – are selling well.

And if the middle class baby boomers have been brought low by the collapse of housing prices and if the middle class is not yet benefiting from the larger economy’s recovery, at least the Big Four have realized that they need to promote affordable transportation to new riders; it’s about time.

Harley-Davidson’s sales also rose, by 5.8%, outpacing the industry as a whole. You could interpret H-D’s reported sales as illustrating the state of both the 1% and the rest of us. The Motor Company’s lineup is, of course, all large displacement bikes and the average new Harley is a pretty pricey machine. But for the first time in years, it has promoted the ‘low end’ of its line; bikes like the $10,000 ‘Nightster’ that target younger riders.

If you take Harley, BMW and Ducati’s sales out of the MIC’s stats, the implication is that the rest of the manufacturers’ sales were still falling in 2011, albeit not as fast as they fell in ’09 or 2010.

I’ve got bad news for Kawasaki and Honda: those little, hitherto unloved 250cc entry-level sport bikes may now be your best selling models, but for most of the American middle class, even bikes with MSRPs as low as four grand are, for the moment, beyond reach. If the motorcycle industry as a whole is ever destined to see 1,000,000 unit years again, it will only come with a sustained economic recovery, and after a newly sober middle class pays down plenty of debt.

So, why am I not worried? Partly, I suppose, because after almost a decade of making my living (such as it was) by writing about motorcycles – which effectively made me a part of a media machine that both promoted motorcycle sales and was funded by the motorcycle industry in the form of advertising – I now have a job at a grocery store. Hey, people will keep eating, no matter how bad things get.

And because, while those of us in the 99% may be slow to buy new bikes in the future, there’s no reason to think that we’ll stop riding altogether.

The increasing economic divide between classes may have some interesting ramifications for riders and their culture.
Looking out at motorcycles in pop culture, I’m seeing less emphasis on expensive custom bikes, and more buzz about guys building street bobbers and cafe racers out of ‘80s commuters. These days, it’s almost a point of honor to say that you bought a bike for $150 on Craigslist and spent $400 customizing it in your own garage. That’s cooler than paying some reality TV star’s shop $30k to do it for you.

So, we’re going to ride. I think of it as Occupy All Street.

My guess is that the divide between the guys who show up at the Rock Store on badass, low-budget, cafed-out ‘80s commuter bikes and the occasional trust-fund baby who comes out on his One Shot will get even wider. So what? Motorcycle riding has always been about rebellion.

Hollywood’s first really iconic portrayal of a motorcycle ‘one percenter’ came when Marlon Brando played Johnny, in The Wild One. You know the story; Brando’s gang terrorized a small town.

A local girl asks Brando, “What are you rebelling against?”

Brando’s sneering response became one of Hollywood’s classic lines.

“Whaddaya got?”

The 99% couldn’t say it better.
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Comments
fuzzandtanya   February 18, 2012 07:58 AM
It seems to be a buzzword these days.........how do you get people to start buying motorcycles again? Well to answer to the motorcycle industry for the most part is.....it's not in your control! Certainly cutting prices will help somewhat, but lets face it, we have other financial responsibilities much more pressing than worrying about getting another new bike. We all want homes, cars, trucks, clothes and the ability to eat-out too often. We already overspend on all these daily items so don't be too suprised if you don't have anything left over for a new toy too. Then just buy a bike on credit right?.........that's what got us in this mess in the first place. It's time to keep with the reality check, focus on what is important (the real essentials in life) and the motorcycle industry is just going to have to wait it's turn for people to have their finances sorted out, their jobs re-secured long-term and to actually have some extra cash over their required savings. You people remember what a savings account is right? I'm all for promoting the motorcycling lifestyle...it's the best. But I'm also more interested in seeing people living within their means and if it makes the motorcycle industry wait it's turn to return to their previous glory, then so be it. It's better to have less toys in your garage, and not be required to work overtime all the time. You'll ride your used bike more with the extra time availble, you'll be able to spend more time with your family like you should and maybe, just maybe we'll raise kids with values learned from our recent mistakes.
Piglet2010   February 10, 2012 08:03 PM
Well, motorcycles sales in North America are relatively unimportant for Honda (less than 8% of worldwide motorcycle sales revenue, and less than 1.5% of total worldwide revenue: http://world.honda.com/investors/library/annual_report/2011/honda2011ar-all-e.pdf ), unlike Harley-Davidson whose survival is tied to North American sales. Of course, Honda was mostly responsible for growing the US motorcycle market back in the 1960's, while H-D has never had the combination of interest and ability to do so.
Piglet2010   February 10, 2012 07:49 PM
Whatever happened to using motorcycles for transportation, instead of just being weekend toys? That could expand the market in the US to easily more than 10 times its current size. Heck, with the right gear one can ride all year around - my Yammie TW200 is fun to ride in the snow.
guambra2001   February 10, 2012 07:38 PM
@snellfest well said.......period.
Snaefell   February 9, 2012 05:37 PM
In response to Wildpig- Mark Gardiner sold pretty much everything he owned, moved to the Isle of Man, qualified for and finished the 2002 TT races he entered in. In my mind, this fact alone is the definition of your "getting saddle time in and experience." He did what I and many other motorcycle roadracers dream of doing yet are too afraid or intimidated to do. He also wrote a book about his experience, which I own, love, and have shared with others as an example of both great writing and sharing of motorcycle racing on real roads. He has worked in the industry professionally, tested bikes/everything, and I feel that this article NAILS it, regardless of your socio-economic stature or whatever bike you ride. Dynamic times we live... This is my first post ever on MotoUSA, and which is sad, but Mark and his article deserve better than ignorant trolls posting personal attacks. Call me naive, but people should get what they deserve, and Mark Gardiner definitely deserves respect for his many accomplishments.
GhostRider11   February 9, 2012 05:02 PM
Good read, Mark. The (4) Japanese factories had become too comfortable with the economy when things were good! Only updating already dated models enough to make sales was a bad business plan. When the economy hit bottom, middle-class people were forced to spend their (extra hobby) money on more important things like rent,food and keeping the heat on. BMW and Ducati started producing and marketing their products at reasonable prices to those of us (middle-class Americans) looking for extreme performance and/or exotic styling worthy of our hard-earned dollars! The BIG-4 fell out of grace due to their lack of involvement in various racing series as well! The Japanese will need to combine extreme performance with exotic styling at affordable prices geared towards the middle-class buyer. It's the middle class that keeps the world in the black (if ever possible)... not the rich and not the poor!
Piglet2010   February 9, 2012 04:52 PM
@ wildpig - I knew what you were going to write before I a read it. Your myopia will lead to the near death of motorcycling in the US, as no younger riders are brought into the fold. Or maybe you think $15K, 800+ pound cruisers are good starter bikes.
Rucuss54   February 9, 2012 01:10 PM
Buckle down and deleverage boys and girls.
Choco   February 9, 2012 09:06 AM
Great article Mark!

Trickle down economics turned out to be trickle on the middle class. The entire economic argument was based on the notion to preserve the ability to get filthy stinking rich by moving money (other people's) around and taking a percent off the margins. The incessent push by the wealthy to drive down wages has resulted in subsistance-level income so after the rent, mortage, fuel and food bills are paid, there is nothing left, especially for motorcycles. I don't have much hope as the most debilitating "ism" facing America today isn't socialism, communism, or even fascism (although close) it's careerism Careerism (taking care of your own ass first and to hell with the larger community) is why politicians screw us, why the media won't cover anything of substance, why our money system is based on debt not on assets or spending, why a private banking cartel is allowed to print and issue a sovereign nation's money. But Mark and others are onto it and let's put the power back into "We the People." Our economy becomes vibrant and viable when a lot of people have discretionary spending. This spending spreads money around all over, and motorcyles, apparrel, trips, vacations, all disperse money to a larger community.

Right on Motorcycle USA for having guys like Mark on the payroll and for letting him be free to speak freely. Freedom is one of the reasons we all like to ride.
wildpig   February 9, 2012 03:44 AM
wow exactly what was that article-- a politicial/ economic speech from the perspective of a screaming newbie tryin to fool the old timers into thinkin the author has m/c saddle time an experience? and who in the hell EVER spells out one percenter? duh? 1% er dude,,, and pull yer head outta yer butt an get some saddle time in.