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Sympathy For The Devil
Blog Date - 22 January 2018
I went to the - ahem - "Motorcycle Trade Show" last week. Of course I'm not a motorcycle trader myself but I do have friends in low places and I managed to tag along on their coat tails.
I always thought the trade price for a motorcycle would leave a lot, I mean a LOT of room for profit for the retail vendor. We all know motorcycle dealers are a wealthy bunch living in swish houses, driving flashy cars and taking regular holidays to exotic locations. They can do this because they make a fortune off each and every motorcycle they sell.
Between the dealership owner and the end punter there is a sharply dressed salesman too. They will also drive a flash car, own a nice house and put their children through private education because of the huge commissions they make.
All this is done at the final purchaser's expense. What should have been a 2k motorcycle costs 6k because the dealer, the salesman and the tax man all want their bite of the cherry.
Showrooms like this don't come cheap.
Now even at a trade show I did not learn the markup on a GSXR1000RR rrrrrr. but I did see the markup on a couple of Chinese 125s. I figured a 2k smart 125 Chinese bike would cost the dealer about 1k - leaving them with a grand in hand. Nope. About £600.
Well £600 ain't bad! Whoa, hang on a minute. Out of the final 2k price tag the tax man will want 20%, that's £400. £200 left over? Well that's not bad if all you have to do is charm a punter. Yeah but there's the shop rent to pay. And the heating bills. And the business rates. And the advertising. And the sales team. And so on and so on. £200 does not go far these days.
If my sums are right Sharon got her bike at trade price.
I am sure it is not quite as bad as I'm making out, after all let's face it there are some wealthy dealerships out there. There will be something I've missed I'm sure. I do remember one salesman telling me that they make very little on the actual motorcycles. I didn't believe him, that's just sales pitch nonsense, but I'm wondering if there is a nugget of truth in there.
Is it genuinely true that motorcycles themselves are barely worth selling? Is it true that motorcycle shops make most of their money on servicing, parts sales, clothing sales and ancillary sales? Having taken just a tiny peek under the cover of the business I think it might be.
However I must tow the party line. Dealerships are all rip-off merchants out to fleece each and every honest hard working biker for every penny we have. Perhaps. Maybe.
The Rocket Centre is now closed so selling motorcycles can't be THAT easy.
Are you a long suffering, badly done to, misunderstood motorcycle dealer? We'd love to share your side of the story here on Bikes And Travels. Contact ren@bikesandtravels.com
Reader's Comments
Ross said :-
That sounds a fair assessment, the only bit you've missed out is the sales target incentives and bonuses the importer will pay to the dealership 'if' they meet their targets...hence pre-registered bargains for us punters and bikes being offered at or even below cost price. The end of a sales quarter can be a good time to buy if the salesman is close to his target and needs one or two more deals to get him over the line!
22/01/2018 11:41:57 UTC
Ren - The Ed said :-
Cheers Ross. The main thing is just how little markup there was on the bikes with prices listed. Getting into selling Chinese motorcycles might be quite easy but it is certainly not a get rich quick scheme.
I reckon winter is a good time to buy as sales are slow. As for pre-reg bikes well they're kind of like putting off the inevitable? Lets say you pre-reg 10 bikes in '17 to get the stats up, then you've got to sell those 10 bikes before you can start on the '18 stats. I dunno, but who cares. Pre-reg bikes are usually a bit cheaper and just as new.
22/01/2018 12:49:10 UTC
Pocketpete said :-
I once bought a Toyota yaris and following an extensive semilegal battle over a previous car the dealer settled the matter by selling Paula the new yaris at cost price.
When I looked into the deals available they were only making £ 340 on a £ 9000 car.
If you take into account pdi checks cleaning and getting the DVLA paperwork done. It's hardly worth selling.
From experience thrxdealer takes in the cash from servicing and parts. For example just how much do these parts cost. Surely a brake leave doesn't cost 40 quid or the plastic bracket for a my brake reservoir £80.
Don't get me started on service workshop hourly rates.
22/01/2018 22:23:43 UTC
Ren - The Ed said :-
Blinkin 'eck! You see all the shiny showrooms and polished floors and you'd think they were making 5 grand on each car. That's why the hourly rates are high - something has to pay for all that polish.
23/01/2018 11:44:31 UTC
Tom McQ said :-
As an ex-salesman, I can tell you that all the money is in the used vehicles. And without the new vehicles being sold (with small margins), there would be no profitable used bikes. I recently part-exchanged a bike and saw them sell it 3 days later for £2000 more than they gave me! And I spoke with the new owner who told me they said they couldn't offer him any discount because they had "nothing in it"! ??????
28/01/2018 17:38:04 UTC
Ren - The Ed said :-
2 grand! Knowing used car dealers that's a fair old markup. So it seems the money is in the used bikes, servicing and spairs. Interesting.
29/01/2018 07:15:24 UTC
Bob said :-
Buy old bikes which have reached their residual value, run them for a bit then sell them for the same residual value.
Works with cars and vans too....
29/01/2018 09:35:09 UTC
Ren - The Ed said :-
The only problem with buying bangers is the people who've owned them before. I know...because I wouldn't want to buy a bike an idiot like myself had owned.
29/01/2018 10:59:42 UTC
Keith m said :-
When I bought my z300 the salesman said he wasn't making a penny on it. I obviously asked why are you selling it then?. He said that they had brought this bike in at £3900 and I think they retailed at the time at £4400-£4600 His boss wanted the bike moved on. So I brought it hundreds of pounds under trade with 300 miles on it.
03/02/2018 20:27:42 UTC
Ren - The Ed said :-
I can't speak for the Kawasaki's prices but I can believe it's true. Right, scrap the bike shop idea Sharon - too much like hard work and we're not gonna get rich quick.
03/02/2018 21:00:36 UTC
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