St. Louis, MO
Posted - 02/28/2011 : 11:21 AM
Before we return to Harley's present and future woes, it's good to review the natural life cycle of a motorcycle rider. Be patient-there's a method to the madness of reviewing what seems to be obvious:
Motorcyclists have always ridden dirt and off-road-after all, there were very few roads and almost all of them were unpaved for most of the past century. For most of that time, there was little to no difference between the motorcycles that rode off-road and on: there were just motorcycles. And a great many 40-plus riders today began by riding small bikes around the yard or farm rather than their father hauling specifically dirt bike motorcycles to a special area set aside for special motorcycles made for the dirt.
Playing in the dirt as children: This however changed for these After Boomers. By Gen Y, there were even tiny dirt bikes and consequently, very young children can and do start riding mini dirt bikes when they are as young as four or five or riding along on an ATV. For a vast number of people, dirt biking is generally a family affair-fathers take their children and whether or not Mom rides, Moms often go along. Extended families-brothers, uncles, grandfathers are often present as well. And people can and do continue to dirt bike into their senior years-though the age of riding retirement tends to be lower than with street riding due to the higher physical toll. The cost of entry into dirt biking can be lower than street riding-though it certainly can be expensive-which also tends to attract men in their family years. In fact, many men who give up street bike riding take up or return to dirt riding when they marry and have children as a safer, family-oriented choice when their children still live at home.
Another advantage to dirt biking is that children's friends are often exposed to riding even if their own family members don't participate. Dirt biking then can be a linear experience-some start young and ride until they are old. But it also has natural points of entry at every point until later-middle age-if not as young children, then as teens or young adults or young family guys or as a middle-aged man: there's no discernible disadvantage to starting later or advantage to starting younger in terms of skill or prowess.
Dirt biking is also less-lethal-though no safer from common injuries-than street motorcycling, which adds to its positive image.
Street entry is later: Otoh, as a general rule, the soonest someone can legally ride a street bike on their own is sixteen. Prior to that, and unlike dirt biking, though, they can be and often are, passengers. And when they're passengers, they're riding with either a parent or someone the parent trusts such as a close family friend or relative.
Historically, a great many riders enter motorcycling in their young adult years. They tend to buy less expensive motorcycles at this period of time but, at least in the UK, buy a new motorcycle with some frequency.
As they reach their late twenties, many riders give up street motorcycling. Most cite family or career as the reason for leaving. Tight finances due to family are frequently cited. There are other reasons-most often relocation-that are also given. When family is the issue, the responsibility towards their children is most often cited (rather than their spouse's personal dislike of the activity).
Historically, a great number of motorcyclists continue to ride through their family/growing career years.
The Mid-Life Rider: The mid-to-late forties is the next natural entry point for riders either as returning or as new participants. At this point, children are older and are leaving the home, finances begin to ease allowing the purchase of a motorcycle and all that entails. By the late forties and on, both men and women are hitting a plateau in their careers. For some, this is the peak of their career.They tend to buy more expensive motorcycles as an initial motorcycle purchase and as subsequent purchases. Multi-bike ownership is more common in this group.
Returning riders cite favorable early experience-riding on the back of a family friend or relative's motorcycle, off-road experience or that they owned a small, cheap motorcycle in college-as a strong motivator to returning when change in their lives made that feasible.
Industry research indicates that riders buy their last (new) bike in their early sixties.
By seventy, more and more retire from motorcycling due to health/age or death.
All along the way-including the pre-sixteen years, of course, too-close-a-call or crashes, injuries or death also lead to attrition from both dirt biking and street motorcycling.
Why this is important: There's a natural cycle of waxing and waning to participation in motorcycling. There's a natural cohort of those 18-30 who enter into street riding and a natural cohort of those who enter (or re-enter) in their 40s.
Riders beget riders: It is particularly important because of one of the main drivers to bring new riders into motorcycling is a peer group. German research found that "the most important mechanism initiating someone into the motorcycle world is to have contact with someone already in there..." but "a youngster won't become "fascinated with the product, if the pool is composed primarily of people our potential convert cannot associate with."[i]
They go on to find that, "as a higher proportion of the relevant peer group performing an activity makes it more attractive. Not only will [it] increase the number of potential entrants but also ensure that existing motorcyclists ride more." The more riders there are, the more chances non-riders have to come into contact with one. We've seen this work very well in terms of the current Boomers.
Exposure to dirt biking as children and if they come into contact with street riders they admire-or, as we'll see-are exposed to racing, increases the likelihood they will ride when they are legally old enough to do so-particularly if there is a big enough pool of motorcyclists already on the streets to inspire them.
Size matters: The size of generations, then, matters a great deal and, if the cohort is big enough, could produce a boom-or a bust-by itself. The Silent Generation (or The Lucky Few) was 42 million strong while Baby Boomers-are almost 80 million strong. Even if the same percentage of each generation had decided to ride street at the same point in their life a boom cycle was created simply because there are so many more Boomers entering motorcycling within a short period of time. And we see that Boomers were responsible for two boom cycles-one when they were young and then one when they were in mid-life.
Gen X, though is 51 million while the subsequent generation (Gen Y or Millennials or Echo Boomers) are 75 million.
The youngest of the Lucky Few are 64. The youngest of the Boomers are 45.
Gen Xs were born between 1965-1979 making the oldest in their early forties and the youngest 30. This smaller generation is, as a general rule, in the opt-out part of the street cycle-though they may be or about to begin dirt biking.
A generation that's almost as large as the Boomers, Millennials or Echo Boomers were born in from 1980-2000 making the oldest 29 and the youngest is just nine.
So, if we compare generations to the life cycle of motorcycling, we see that few of the Lucky Few will be buying a new motorcycle and fewer still are still riding while the vast majority of the Boomers who are either going to return to riding or decide to start have either returned or started.
But Gen X, a much smaller generation, is in the midst of their family/career years and have opted out for now from riding or have turned to dirt biking. And when they return over the next ten years, the generation just isn't big enough to make a boom of riders in their 40s and 50s on their own.
The Echo Boomers, though, are just coming into their own in terms of street-and this is the generation that grew up with dirt bikes far more than other generations. Iow, a new boom cycle could begin very shortly instead of having an up to ten-year bust cycle as in the past.
Simply by the numbers, the boom and bust cycles follow generational size more closely than economic bubbles and recessions. And that has extremely important implications for not just the next ten years-but for 20 years from now as well:
If Echo Boomers take to the streets, they replace the exiting Boomers in terms of numbers of riders to a large degree-though not quite to the degree that Boomers had. This does not account for any extra generational impetus to ride. While the numbers are roughly equivalent, the Echos are entering at the young end of the street cycle while the Boomers are exiting, obviously, at the older end.
Gen Xers, otoh, replace the Lucky Few-they are entering the street as the mid-life riders as the Lucky Few are exiting. There are more Gen Xers, it's true but over the next 20 years, there will be far less 40+ riders as the bulk of the Boomers enter their 70s.
Iow, Echo Boomes-if they decide to ride street-will actually echo the boomers and create two boom cycles. If Gen Z is smaller than the Echoes, a bust will result when Echoes opt out in their 30s-early 40s.
And who is replacing who, is critical because it will determine, to a great degree, the prosperity of the motorcycle industry:
Economic implications: The natural life cycle of the (male) motorcyclist is closely linked to purchasing power as industry statistics show. As a general rule, the Under-30 buy inexpensive motorcycles and 40+ riders buy more expensive ones.
Profit margins on smaller/inexpensive bikes are tight and manufacturers make far more on more expensive motorcycles, but to make money on inexpensive motorcycles, a far greater pool of participants is needed. Northern North America is where the vast number of expensive motorcycles are sold while far, far more small, inexpensive motorcycles are sold worldwide.
But here's the thing: once again, as a general rule, racing drives innovation and expensive motorcycles go a long way towards paying the costs of racing. Innovations then trickle down to the expensive motorcycles and then to the inexpensive, smaller motorcycles sold anywhere but in Northern North America.
Racing is also a primary means of marketing-it both incites (young) (men) to ride and signals what's desirable. As Ambroz and Olaya found, "In countries where the motorcycle motor sport is both actively practiced and present in media channels, the likelihood that motorcycle riding is going to be attractive to new entrants is higher."[ii] But as the German researchers point out, its a phenomenally expensive form of advertising that is paid for by and large the sale of more expensive motorcycling.
Expensive motorcycles, then, aren't just a profit center-they are integral to both innovation and marketing. This, of course, does not apply to Harley either in terms of innovation nor marketing. However, it did apply to Buell in terms of racing (though not particularly expensive motorcycles).[iii]
What this means for high-end motorcycles: The huge generational bulge of the Lucky Few and Boomers resulted in a huge market for expensive motorcycles-and not just for Harley. But the Lucky Few are beyond that last new bike purchase and soon the bulk of Boomers will be as well.
Otoh, the huge Echo generation will gravitate towards less expensive motorcycling-and especially if economic recovery from the recession means this age group either is under-employed or under-paid.
If the model is correct and barring any untoward influences either pro or con motorcycling, the first implication of the life cycle of motorcycling is that expensive motorcycles are going to take an even larger hit than they have in 2008-2009:
The bulk of Gen X-ers are still a few years out from that decision to return/to learn to ride. The market for expensive motorcycles then is likely to continue to shrink as Boomers pass the last new bike threshold and exit riding. Expensive motorcycle market is likely to begin to rebound in about five years as sufficient numbers of Gen Xers re-enter riding or find it for the first time. But because Gen X is so much smaller than the Boomers, the market for expensive motorcycles won't be at the levels it has been in this last boom. That is, not until the Echo Boomers return to riding or find it for the first time 15-20 years from now. And, even then, it won't match this last Boomer boom.
Otoh, if Echo Boomers follow the pattern, the market will be very good for less expensive motorcycles for at least 10 years.
As a consequence, marques that offer both inexpensive models and expensive models are positioned to catch the young rider now and in the near future and, if there's brand loyalty, then catch them again when they return as the older rider with more discretionary income.
Otoh, marques that specialize in high-end motorcycles are not as likely to do as well in the near future.
BMW, Harley-Davidson and Ducati are some of the marques that are most likely to suffer the most in the next five years-at the least-if they are not able to develop less-expensive entry models.
Harley's subsidiary, Buell, as I reported in a prior entry, was the only division that was still experiencing growth as the market for expensive Harleys was shrinking. Buells were far less expensive than Harleys and attracted a much younger demographic. Buell also was visible in the racing world while Harley racing is most definitely a niche attraction. Harley's decision, then, to discontinue the brand takes Harley even farther out of position to take advantage of the Echo Boomers who are getting ready to ride because of Harley's singular entry in the less-expensive bike market-the several varieties of Sportster.
On the other hand, the Big Four, among others, that have extensive less expensive models are in the best position to capitalize on the huge Under-30 Echo Boomer potential market.
But what kind of motorcycle are Under-30s in the Echo (not to mention Generation Z or the New Silent Generation) likely to ride? That's the subject of the next entry.
[i] Wanted: Easy Riders The Aging of the German Motorcycle Rider Population and its Implication on the Motorcycle Market by Kristjan Ambroz and Camilo Olaya, 2006.
[iii] This is not to justify how Harley strong-armed the AMA in recent years to change the rules to allow Buell's participation.