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Honda says: 2010 a horrible year for the motorcycle industry

Honda's state of the nation
Thanks to: CMG Online. September 4, 2010 - Written by Editor 'arris on Saturday, August 14th, 2010


Warren Milner says days of slashed prices are over. Part of the recent Honda Canada get-together in Cape Breton was a talk by the company big cheese, Warren Milner, about the annus horribilis that is drawing to a close and the annus mirabilis that is coming next.

To put it bluntly 2010 has been a horrible year for the motorcycle industry as a whole (save for some of the Euro brands who seem to have done relatively well). Milner blames this on having too much stock in a world where the recession slashed demand.

The result? Pricing of non-currents was slashed (via promotions) and 2010 models were priced down to close any gap between U.S. and Canadian pricing to prevent bleeding of sales to the U.S.

According to Milner this has actually pretty much achieved its objective with old inventory almost sold off, and Honda seeing a return to the number one sales slot, but at a price: people started to view motorcycles (especially the Japanese brands) as something of lesser value.

And he raises an interesting point. How did the Euro brands manage to not only avoid the hardest part of the industry dip but actually manage to increase sales and profits? According the Milner, the Japanese have been battling on price whereas the Europeans have been battling on lifestyle and value – a mistake he also accepts blame for.

Now all this price-based battling might all sound good to you and me – cheap bikes, what’s not to like? But the cost has been a bare-basics sales model with little to no after-sales support and no money to go to supporting the sport and keeping the industry healthy.

To put it frankly, it’s an unsustainable model, and as Milner put it, the motorcycle business needs to become profitable again if it is to survive. Globally, the big four Japanese brands are all bleeding money and they’ve projected that this will continue for the next couple of years!

The good news is that Milner thinks they’ve hit the bottom with some encouraging signs such as a slight increase in recent sales in Canada.

So what will we see in 2011 from Honda? Don’t expect any more discounting, for starters. In fact the MSRP may even go up by a few percent. They’re also going to bring in a few more new models to try and fill some gaps.

For example, the CBR125R has proved to be a great seller and tool for getting the much needed young blood back into biking. The race series boasts a grid with 90% of the riders under the age of 16, and 30% women. This year at the Mosport round they even had more riders wanting to compete than they could fit on the grid.

But then Honda failed to ultimately capitalize, asking CBR125R buyers to make a 475 cc and $6,000 leap to a CBF600 when Kawasaki had a Ninja 250 for a mere $5,000. This worked well for Kawasaki, with the Ninja 250 topping the street sales chart in Canada.

This is good news for those who fret that the industry is not doing anything to bring new blood into it, though rather frustrating for Honda who would like to see that new blood stay within the brand. Expect to see something to fix this in 2011.

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Opinions?

Memo to Warren Milner: Shitecan the whole "Powerhouse" concept, apologise to and bring back on all the loyal dealers you alienated and then watch your yearly sales figures increase. Honestly, what were you thinking?!

Wonder how much they had to slash the price of DN-01's to get people to buy 'em?

jstark47 wrote:Wonder how much they had to slash the price of DN-01's to get people to buy 'em?

I have never seen one on the road.

Ultimately I feel that the leadership of Honda Canada continues to screw themselves through arroance and bad decision making. Although Mr Milner states that "the days of deep discounting are over", this is the same thing that he said two years ago. At that point (two years ago) Mr Milner was stating how the Honda products were being undercut by the competition at multi-line dealerships and that the Powerhouse concept would allow them to raise prices to make the brand more profitable. So the price of a VFR (with a seven year old design) was cranked to 15+K at the powerhouse dealers. Surprisingly (sarcasm) none sold. Now they are discounting them for $9500. Had they kept the prices reasonable (say 11-12K) perhaps they would have sold a reasonable allotment of them.....

The arrogance carried on with all of the fees that were tacked on to new bikes. Shortly after the Powerhouse dealer was opened in Calgary I was shopping for a new kids bike. I was quoted $700 in additional fees on top of the "price" for a Honda 70. I bought a Yamaha PW80 for $1300 all in instead. I am sure that many others did the same.

This is a quote found on another forum and it helps give some real insight in to the jilted dealers perspective. The quote is from Doug MacRae who owns Blackfoot Motorsports in Calgary.
"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 Canada 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

Posted by: Douglas MacRae | August 12, 2010 at 06:37 PM"

You know if someone told me 5 years ago that Honda would be where it is today I wouldn't believe them at all. Honda is a great motorcycle brand, high quality and high reliability; I'll cross my fingers they figure out the tangled web they wove to again be #1 in the market...

High_Side wrote:This is a quote found on another forum and it helps give some real insight in to the jilted dealers perspective. The quote is from Doug MacRae who owns Blackfoot Motorsports in Calgary.
"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 Canada 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

Posted by: Douglas MacRae | August 12, 2010 at 06:37 PM"

Perfect. That is exactly the kind of fallout that I had expected would happen, but up until now never had any proof. Thanks for posting this!

High_Side wrote:Ultimately I feel that the leadership of Honda Canada continues to screw themselves through arroance and bad decision making. Although Mr Milner states that "the days of deep discounting are over", this is the same thing that he said two years ago. At that point (two years ago) Mr Milner was stating how the Honda products were being undercut by the competition at multi-line dealerships and that the Powerhouse concept would allow them to raise prices to make the brand more profitable. So the price of a VFR (with a seven year old design) was cranked to 15+K at the powerhouse dealers. Surprisingly (sarcasm) none sold. Now they are discounting them for $9500. Had they kept the prices reasonable (say 11-12K) perhaps they would have sold a reasonable allotment of them.....

The arrogance carried on with all of the fees that were tacked on to new bikes. Shortly after the Powerhouse dealer was opened in Calgary I was shopping for a new kids bike. I was quoted $700 in additional fees on top of the "price" for a Honda 70. I bought a Yamaha PW80 for $1300 all in instead. I am sure that many others did the same.

This is a quote found on another forum and it helps give some real insight in to the jilted dealers perspective. The quote is from Doug MacRae who owns Blackfoot Motorsports in Calgary.
"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 Canada 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

Posted by: Douglas MacRae | August 12, 2010 at 06:37 PM"

Wow I can't believe Honda did that. I can understand trying to sell the motorcycle dealerships at your car dealerships too (always wondered why this didn't happen even if it was very limited). But why would you STOP motorcycle dealerships from selling your brand? I mean a motorcycle dealership is going to know the most about the bikes too (if they get the right salespeople). At a car dealership I can't imagine you ever getting someone knowledgeable about motorcycles unless one of the sales people happens to by coincidence also own motorcycles. Even then why would they waste time selling bikes when they can probably make more commission off of cars?

Sure you can have that CBR600 but if you take that money and put it into the downpayment of a car you can own this whatever for $X a month.

Can't remember where I read it, but Yamaha is haemmoraging (spelling? Ahh hell) cash as well. Mainly because pretty much its entire product line is composed of lifestyle/leisure goods; motorcycles, ATVs, musical instruments, snowmobiles, home theater/audio, boats and boat engines, etc. Obviously the first thing that people cut down on during a recession is expensive toys.

HYPERR wrote:

jstark47 wrote:Wonder how much they had to slash the price of DN-01's to get people to buy 'em?

I have never seen one on the road.

I actually see one in parked in front of a store on the way to college last week for a couple of days.