Here's an interesting read:
I'll quote it in a following post for those who don't want to go to the link.
Here's an interesting read:
I'll quote it in a following post for those who don't want to go to the link.
August 10, 2010
Motorcycle industry in Canada "Bankrupt" says Honda
"Listened to a fascinating presentation here in Cape Breton by Warren Milner, the senior marketing manager for Honda Canada's motorcycle division.
According to Milner, "as far as we're concerned, the motorcycle business (in Canada) is bankrupt. We've hit rock bottom, so now we're going to rebuild."
And he's talking about Honda - the largest motorcycle seller in the country.
The problem for Honda is twofold: It's been selling its motorcycles cheap in order to fight against the recession and the lack of cash out there for a discretionary product like a motorcycles, and its image sucks. Although it's been getting rid of its back inventory at firesale prices for the last year or two, it really hasn't been selling much new 2010 product and isn't making any money.
In fact, although Honda is apparently doing okay globally with its bike sales (thanks mostly to scooters selling in Asia), Milner says that the other three Japanese manufacturers, Yamaha, Suzuki and Kawasaki, "are losing huge money. And projections for the next two years are that they'll lose huge money."
So what's to be done?
Well, the days of cheap sale prices on Honda motorcycles are over for the moment. The inventory's cleared out - just about all its dirt bikes, for example, are now sold and unavailable until next year. Milner says the company just can't afford to keep offering the incentives that have been available because there's no money left to back up the product once it leaves the showroom.
And here's the curious thing with the motorcycle business in North America. With cars, the Japanese reputation is for quality and technology, and customers have been content to pay a little more for that over the Detroit vehicles, which have now caught up and are battling that image. But with motorcycles, people expect Japanese bikes to be cheap, because that's the way it's always been. They'll pay more for Harleys and BMWs and Ducatis and Triumphs because of the lifestyle image associated with them, but in comparison, there really is not much of a lifestyle image associated successfully with any of the Japanese products.
So now, the MSRP is going to be pretty much what you pay for your new motorcycle. And Milner expects - hopes - the other three Japanese makers will do the same thing.
But in return, there'll be investment in the future. The best-selling bike in Canada right now is the Kawasaki Ninja 250, which is not technically expensive to produce and is bringing a new generation of riders to the street. Right behind it in sales is the Honda CBR 125R, which is aimed directly at young people and novice riders, and can be had for the price of a cheap scooter.
And perhaps most important for Honda, it will be trying to change the reputation of its Powerhouse dealerships, which are considered by many riders to be horrible fancy box stores where a Civic salesman will try to sell you a Shadow.
The Powerhouse principle is that everything in the store is Honda, because the company doesn't like the salespeople in multiline dealerships selling customers anything but Hondas, which happens whenever one of its rivals decides to boost the incentive that week for a particular motorcycle. But motorcyclists like to buy bikes from other motorcyclists, and they don't like stores that have cars on display on the other side of the showroom (though this seems to work okay for BMW - different breed there).
So Honda's going to be running a campaign that tells people about its 40 Powerhouse stores, which currently account for 40 per cent of its motorcycle sales: How the sales people are not allowed to cross over between cars and bikes, for example, and how you can watch your bike being serviced, and pay posted prices for the work performed on it.
In fact, not all of the Powerhouse stores sell cars - those are the "Auto Powerhouses" - but they do all sell the generators and outboards and lawn mowers that Honda also brought out here to this presentation. And that's still part of the problem. Motorcycle guys, including myself, were introduced to the line of power equipment and happily went back and forth here cutting the grass, when we were really out here to ride bikes. It was fun (and the lawn mower was great - I'm going to buy one) but where's the priority? Do they cross over?
Apparently, a large survey here recently asked for an answer to the statement: "The problem with Honda is..." And according to Milner, "The product itself is not the problem. There are some holes in the lineup, but that's easy to fix. They don't like Powerhouse and they don't like 'Honda.' They feel it's run by a bunch of car people who don't care about motorcycles. We have an image problem"
So look for campaigns coming up to try to change that image problem. They'll be intensive campaigns, too, and tough to miss, because as Milner says, "It's over unless we can do this."
- mark r.
...and even more interesting is this feedback comment from the president of Blackfoot Motosports. there's some sour grapes in here, of course, but who the hell within Honda thought that it was a good idea to try to sell motorcycles [=excitement] thru the same outlets that sell lawn mowers and generators [ = more frikkin chores; maybe I'll run away for a few hours on my bike]? pure genius! and the 'car guys' vs 'motorcycle guys' comments ring true too.
(perhaps a contributing reason why Jim Pattison Suzuki failed as a motorcycle dealership?)
"We sold Honda's motorcycles in Canada before Honda Canada Inc even existed, so did many other Honda dealers, that had their dealerships agreements terminated with out cause, to make room for the new 'Powerhouse Concept' ultimately to be owned and operated by Honda car people.
This culling of the real Honda Motorcycle dealers and personel was Honda Canada's way of severing the ties with the past, without compensation or consideration to the businesses and/or the people that made Honda the #1 selling motocycle franchise in Canada for too many years to count.
Since 1970, Blackfoot Motosports represented Honda in Calgary and surrounding area and over our 38 year business relationship, we represented the Honda brand with passion and enthusiasm, making Honda the premiere Japanese brand in this dealership.
On July 13, 2006, we received the 'Summer Build Out' order of 413 Honda motorcycles into our dealership warehouse. This represented a very large post season purchase and confirmed our dealerships committment to the Honda brand.
The very next day, after 38 years of business with Honda Canada Inc, Jerry Chenkin, Vice President of Honda Canada Inc. came to our dealership at exactly 9:00am in the morning, and dropped off a letter of cancellation with our receptionist, and immediately left the building.
This came totally unexpected and in my mind, was totally unprofessional. How can a dealership of 38 years, with millions of dollars invested in infrastructure representing the Honda Brand in Canada, be terminated, without cause, or discussion?
The very same day, Richmond Motosports, Riverside Motosports, McBride Cycle, Cycle World (both locations in Toronto) and Hully Gully received the same letter of termination from Mr. Chenkin, , without cause, or consideration for years of service.
For most of the 38 years we sold Honda, Blackfoot was amongst the top 5 selling dealers in the country if not the top selling dealership. In additon, Honda Canada financed our Blackfoot Racing to manage the Pro Motocross team in Canada. After delivering Honda Canad Inc. over 14 Canadian National Championship #1 plates, you would think that some sort of discussion would have been in order.
Over the next three years, Honda Canad Inc has terminated most of Canada's motorcycle franchises without consideration. Now they make comments about the motorcycle industry being bankrupt;is this not the very definition of self destruction and irrogance.
You sleep in the bed you make ultimately. Honda used to be the best ran Japanese motorcycle company in Canada, now after cleansing the Canadian dealers and removing all the motorcycle personel from corporate head quarters, they still cannot see the forest for the trees. Car people are not motorcycle people, no wonder their market share in Canada is sliding into oblivion."
Without Predujice: Douglas MacRae President Blackfoot Motosports
sounds like Honda Canada are reaping what they sowed! too bad...
wow ... good post! good to know.
Disgusting behaviour. I hope the dealer cancelled their order afterwards. Scenarios like that would make me want to switch to another brand and market the SHIT out of it.
It would appear Honda is having a double shot of karma on the rocks.....
I'm the kind of person who steers clear of companies who practice business in silly ways. Makes me not want a Honda next time I'm in the market.
While motorcycles sales have definatley been noticeably slower over the last year, I would hardly call it "bankrupt." I also belive it is mainly due to a slowing economy which is impacting more than just motorcycle sales.
I worked at RMS back when they were a Honda dealer and through the time that the contract was terminated. For the 2 years I was there, Honda was by far the most popular motorcycle that left their doors. Head and toes above Suzuki, Kawi and Ducati. Everyone was shocked when Honda pulled out because of the pure numbers that the dealership produced. And I agree, they are reaping what they sowed.
"Our products are the best, this is how we will market them to you and you will like it"
Honda Canada seems intent on digging its' own grave with a shovel that has a blade forged from arrogance and a handle made of hubris.
No trees were harmed to display the above message ..... however a large number of electrons were terribly inconvenienced
It appears HCI left a bad taste for many dealers/franchisees in 2006. However, as in many things...it was probably done for reasons of economics. If things were really good then, why would they cancel those contracts? Not all things appear as they seem at the time but it might even be a good business decision then to cancel those contracts. If you look at the current state of economy now and if HCI had to support so many scattered franchisees and help carry them through this economy, they'd be crying about this bankrupt thing a lot sooner! At least now, they only have a few Honda Dealers to support with less fats! My
And of course the 30 to 50% disparity in MSRP between Canada and America in these years of dollar parity have nothing to do with the ailing motorcycle market.
My bike is so much faster than yours that I dare you to ride it, you lame little turd. Do you have the balls to ride this BOTTOMLESS PIT OF TORQUE?
~Hunter S. Thompson
"On July 13, 2006, we received the 'Summer Build Out' order of 413 Honda motorcycles into our dealership warehouse. "
man! 413 more motorcycles to sell (I don't know the industry, but that seems like a LOT in a market the size of Calgary!), mid-July, and your dealership gets pulled the next day. sheeesh...