It’s been almost one year since Indian launched its all-new motorcycles in Sturgis, one of the most anticipated events in the two-wheeled world in 2013. So far, the Polaris-owned company has not published too much data on the economic performance of the three models, but if we look at the news coming in from the various corners of the world, it appears that Indian is faring well. Now, while this is not necessarily a thing to be judged in terms of either right or wrong, the fact that there are only 3 bikes in Indian’s lineup so far has generated some questions. How could Indian Motorcycle’s future look past 2014, after its first new full year? Is maintaining a 3-bike fleet a good thing, a conservative measure, is it still part of testing the markets?
Indian announced that the model year 2015 bikes would be unveiled at Sturgis, but there’s no info on expanding the roster, so we can (almost safely) presume that the machines will only sport minor revisions, possibly new colors, and maybe a special version loaded up with all the bling the heavyweight motorcycle customer segment seems to enjoy.
I am inclined to believe that no major changes will be made in these bikes for 2015. The engine is new, and Polaris is well-known for its careful approach to engineering and building the power units. The bikes got no recalls (that I know of) and seem to have something for almost each rider in search of such a machine and who is also ready to take a step outside the classic Harley-Davidson range.
However, I cannot help asking myself if a three-bike business is a viable, sustainable model and if it returns enough profit to make things work in the long run. So, without pretenses of being a very fine analyst of the US bike industry, here are some small pros and cons for the current situation.
On the pros side we should count the lucrative aspect of running basically a single platform. Even though Indian is selling the Chief Classic, Chief Vintage, and the Chieftain, we are looking at one single platform, which allows certain variations for obtaining bikes with different looks. This means lower investments in direct manufacturing for engines, radically different frames and all, and, by all means, lower stocking costs.
Producing a limited number of platforms seems to be working quite well in, say, the case of Apple. Apple basically manufactures iPods, iPhones, iPads, Mac Books, iMacs, and Power Macs, give or take. Its products share the same OS, and this makes everything much simpler and stable across their (or third-party) cross-product software. This translates in the legendary stability and is one of the strongest assets for the brand.
At the same time, variations inside the product classes are almost negligible, as per generation, they relate to memory capacity, color, and similar features. Properly advertised, these products sell like hot cakes, proving that this business model can be successful. Could things work the same with motorcycles? Time will tell.
Another pro is the very strong visual impact and identity. Three bikes is a very small number when compared with 95% (or more) of the other brands, but the big gain from this is that these machines will be exceedingly easy to recognize… not unlike Apple products are. And since you can effortlessly recognize a product you like, the first step towards desiring to get it is already taken. Such a feature works regardless of market and national particularities, and it can turn great economic results in time.
However, having such a limited number of bike models in the dealerships may be less healthy when it comes to expanding the business in certain directions. Sometimes this limited offer may strike back and deter a potential customer in search of something different from the brand. Funny thing, a good part of these customers is only looking for rather small differences. Say, an all-black, menacing machine, much like the Midnight versions of certain Star/ Yamaha motorcycles. Of course, this is a truly minor change and it only involves paintwork, with no other technological modifications. And this means a small cost for the manufacturer, but multiple new customers.
Addressability is yet another factor that should be mentioned. What can Indian do for a short young lady or even an older one, who may show up in the dealership with a check book in hand? The bikes are way too big and heavy for them and their engine power and torque may scare them off for good. Some may say that they’re in the wrong place… and be wrong: once a potential customer has entered your showroom with the slightest intention of buying stuff, half of the sale is already done… if you’re not a moron.
The hardest thing is to bring the customer in in your “lair” with a purchase-oriented mind frame, not actually selling him or her anything. I worked in sales for quite some time and I know how stuff works. So what if the potential customer in front of you is 1.50m tall (4’11”)? Does this by any chance mean his or her money is not good enough for you? Of course it doesn’t! So you’d better have something to sell to meet these people’s needs: a smaller bike, all-Indian just like the big ones!
The price range is another con, in that some customers may be willing to buy an Indian but can’t afford to pay 20 grand for it and neither can they get a loan or financing. Or maybe they simply WON’T, since they’re looking for a bike in a certain price segment. Having a wider bike selection to choose from may make the day end with a purchase and a win-win, happy-happy deal.
Some may be looking to spend $13,000 (€9,500) on their new bike, and even though the seller is offering zero interest for the extra 5 grand needed to get the Classic, this will not happen. Most likely because the fellow already went the extra mile for the money he can afford to spend and each dime matters. Honestly, there’s nothing you can do for him or her… and you’ve just lost an opportunity to sell one more bike.
In the end, there is one more thing that cannot be controlled: the demographic changes, which affect all types of business. Truth be told, the number of people who are usually buying heavyweight bikes is declining in the US, and the new markets Indian penetrates don’t look strong enough to compensate for this decline. Simple math tells us that new customers must be attracted in order to keep the boat floating. Reading the above, some measures to attract more buyers must be taken. And since there’s an open war between Harley and Indian, Indian should learn from Harley.
The MoCo, even though accounting for over 50% of the total number of bikes sold in the US, is facing the same problem: their traditional customer base is getting thinner, so focusing on the new generations of buyers is a key element.
Do Street 750 and Street 500 ring a bell? Good, because the recipe IS WORKING for Harley. Cheaper bikes, smaller, intelligently advertised as “still all-Harley,” will sell well, especially to the new young customers, who can’t or won’t spend a small fortune on a bike. They want a bike they can ride every day to work, feel good on it, and tell a story. Try to sell them a $30K (€22,000) CVO and there’s no more story to be told, at least not an H-D one.
All in all, it looks like there is more to gain from expanding the lineup if Indian wants to keep fighting Harley and still maintain decent odds. Forbes reports that around 80% of the Indians were sold to former Harley owners. So, given our particular case (motorbikes), it’s no longer a secret that having a choice or alternative can make the difference between you selling a bike or your competitor selling it to the customer.
I guess we will see more from Indian, maybe not for 2014 Sturgis. Being an ultra-conservative brand is no longer good for business. The world is changing quite a lot, and flexible options seem to be the best model. Can you imagine a 600-900cc Indian in the very image of the 2014 Chief Vintage? How cool would this bike be?
I am inclined to believe that no major changes will be made in these bikes for 2015. The engine is new, and Polaris is well-known for its careful approach to engineering and building the power units. The bikes got no recalls (that I know of) and seem to have something for almost each rider in search of such a machine and who is also ready to take a step outside the classic Harley-Davidson range.
However, I cannot help asking myself if a three-bike business is a viable, sustainable model and if it returns enough profit to make things work in the long run. So, without pretenses of being a very fine analyst of the US bike industry, here are some small pros and cons for the current situation.
On the pros side we should count the lucrative aspect of running basically a single platform. Even though Indian is selling the Chief Classic, Chief Vintage, and the Chieftain, we are looking at one single platform, which allows certain variations for obtaining bikes with different looks. This means lower investments in direct manufacturing for engines, radically different frames and all, and, by all means, lower stocking costs.
Producing a limited number of platforms seems to be working quite well in, say, the case of Apple. Apple basically manufactures iPods, iPhones, iPads, Mac Books, iMacs, and Power Macs, give or take. Its products share the same OS, and this makes everything much simpler and stable across their (or third-party) cross-product software. This translates in the legendary stability and is one of the strongest assets for the brand.
At the same time, variations inside the product classes are almost negligible, as per generation, they relate to memory capacity, color, and similar features. Properly advertised, these products sell like hot cakes, proving that this business model can be successful. Could things work the same with motorcycles? Time will tell.
Another pro is the very strong visual impact and identity. Three bikes is a very small number when compared with 95% (or more) of the other brands, but the big gain from this is that these machines will be exceedingly easy to recognize… not unlike Apple products are. And since you can effortlessly recognize a product you like, the first step towards desiring to get it is already taken. Such a feature works regardless of market and national particularities, and it can turn great economic results in time.
However, having such a limited number of bike models in the dealerships may be less healthy when it comes to expanding the business in certain directions. Sometimes this limited offer may strike back and deter a potential customer in search of something different from the brand. Funny thing, a good part of these customers is only looking for rather small differences. Say, an all-black, menacing machine, much like the Midnight versions of certain Star/ Yamaha motorcycles. Of course, this is a truly minor change and it only involves paintwork, with no other technological modifications. And this means a small cost for the manufacturer, but multiple new customers.
Addressability is yet another factor that should be mentioned. What can Indian do for a short young lady or even an older one, who may show up in the dealership with a check book in hand? The bikes are way too big and heavy for them and their engine power and torque may scare them off for good. Some may say that they’re in the wrong place… and be wrong: once a potential customer has entered your showroom with the slightest intention of buying stuff, half of the sale is already done… if you’re not a moron.
The hardest thing is to bring the customer in in your “lair” with a purchase-oriented mind frame, not actually selling him or her anything. I worked in sales for quite some time and I know how stuff works. So what if the potential customer in front of you is 1.50m tall (4’11”)? Does this by any chance mean his or her money is not good enough for you? Of course it doesn’t! So you’d better have something to sell to meet these people’s needs: a smaller bike, all-Indian just like the big ones!
The price range is another con, in that some customers may be willing to buy an Indian but can’t afford to pay 20 grand for it and neither can they get a loan or financing. Or maybe they simply WON’T, since they’re looking for a bike in a certain price segment. Having a wider bike selection to choose from may make the day end with a purchase and a win-win, happy-happy deal.
Some may be looking to spend $13,000 (€9,500) on their new bike, and even though the seller is offering zero interest for the extra 5 grand needed to get the Classic, this will not happen. Most likely because the fellow already went the extra mile for the money he can afford to spend and each dime matters. Honestly, there’s nothing you can do for him or her… and you’ve just lost an opportunity to sell one more bike.
In the end, there is one more thing that cannot be controlled: the demographic changes, which affect all types of business. Truth be told, the number of people who are usually buying heavyweight bikes is declining in the US, and the new markets Indian penetrates don’t look strong enough to compensate for this decline. Simple math tells us that new customers must be attracted in order to keep the boat floating. Reading the above, some measures to attract more buyers must be taken. And since there’s an open war between Harley and Indian, Indian should learn from Harley.
The MoCo, even though accounting for over 50% of the total number of bikes sold in the US, is facing the same problem: their traditional customer base is getting thinner, so focusing on the new generations of buyers is a key element.
Do Street 750 and Street 500 ring a bell? Good, because the recipe IS WORKING for Harley. Cheaper bikes, smaller, intelligently advertised as “still all-Harley,” will sell well, especially to the new young customers, who can’t or won’t spend a small fortune on a bike. They want a bike they can ride every day to work, feel good on it, and tell a story. Try to sell them a $30K (€22,000) CVO and there’s no more story to be told, at least not an H-D one.
All in all, it looks like there is more to gain from expanding the lineup if Indian wants to keep fighting Harley and still maintain decent odds. Forbes reports that around 80% of the Indians were sold to former Harley owners. So, given our particular case (motorbikes), it’s no longer a secret that having a choice or alternative can make the difference between you selling a bike or your competitor selling it to the customer.
I guess we will see more from Indian, maybe not for 2014 Sturgis. Being an ultra-conservative brand is no longer good for business. The world is changing quite a lot, and flexible options seem to be the best model. Can you imagine a 600-900cc Indian in the very image of the 2014 Chief Vintage? How cool would this bike be?
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