Revard and BMW

["Tom Brown" <tbrown@xxxxxxxxxxx>]

Jack, Tom, Robert et al:

>I don't have the latest figures, but for the first nine months of 2004
worldwide BMW motorcycle unit sales were down 1.9%.  BMW Motorrad
attributed this to model life-cycle factors.

>The good news is that third quarter worldwide BMW motorcycle unit sales
were up 7.2% over the same period last year.

>The bad news is that third quarter U.S. BMW motorcycle unit sales were
down by 1.6% compared to third quarter 2003.

The above points to a pretty miserable summer for BMW bike sales, yes?  Here's
what I think.  1.  BMW is changing both their Oilhead and K bike lines at the
same time.  They're announcing all these new products while trying to sell the
old ones in the showrooms, especially in the US.   We get the latest Euro news
off the internet and from insider friends before the US dealers do.   Then BMW
waits months, sometimes years before releasing the US models.    This, at
least is changing.  We're supposed to get the RT within 30 days of the Euro
rollout, I think.  That's a first.  I think it has to do with the fact that
the bikes are now running clean enough to pass all emission tests so they
don't have to change them for different markets.  Nice improvment there.

2. They are making many small and quiet improvments in the product, the
distribution system and the parts system.  They're reducing the number of
parts in the bike and taking cost out of it by leaps and bounds while
simultaneously enhancing the product.  They are making them lighter as well
and, of course, they are making them more powerful, fuel efficient and cleaner
burning...at a lower unit cost.  All these things will all conspire to help
the dealers down the road, but I think they have a hard row to hoe for the
next year or so at least.   When these new product are out and the old ones
have all been discounted and sold off, the dealers will begin to make some
money.   If these new products catch on, expect prices to rise rapidly because
of the weak dollar.

The BMW product line is a cut above any other brand when it comes to
workmanship, longevity and practicality for real-world use.   It's a vehicle,
not a toy.    That's the difference between it and a Japanese sport bike.
With a few exceptions, most Japanese bikes are just not built as well.   Even
my Aprilia, which is one of the best made of the sport bikes, gets a "B-" in
Industrial Arts compared to the head of the class BMW.

There are many things I would change on my bike and many other things I have
changed on my bike, but the bike itself is intrinsically WORTH my effort.
That's the point with them, I think.  That's the fascination, for me.  I rip
into a BMW and I see quality in every single part of the bike.   Do I find
stupid engineering in one place or another?  Sure.  There are some real
forehead-slappers on every BMW I've ever seen.   Do I swear at them everytime
I have to remove 140 effing little screws to remove the GD fairing just to
make a tiny throttle body adjustment or get to the battery?  You bet!   But
working on this bike is worth my time.   I work on the Aprilia too.  It's a
nice bike, but it's not like the RT.   It's a big black box under the fairing.
Not much there to engage me.  They're made for racing and adapted to street
riding...different thing and not as effective on me because I'm a street
riding and I've come to that knowledge after long consideration.  I'm not a
hot-dog racerboy.   I'll always want a BMW bike if they continue to be
constructed in the beautiful way they are and as long as they continue to be
so pleasant to ride on normal roads.   I've owned my RT for 1.5 years and it
has 20,000 miles on it.   I've owned my Aprilia 4.5 years and it has 10,000
miles on it.   My car gets far fewer annual miles than my bike and I never
ride the bike to work.

>I don't have a breakdown for overall U.S. BMW motorcycle sales for the
first nine months of 2004 but my guess is that it is not good.  BMW
Motorcycle operating profit is (I think) down by about 13.3% for the
first three quarters of 2004.

>NOTE: the stats are from BMW's September 2004 financial report.

These financials are notoriously difficult to decipher without an honest and
competent insider around to interperet.   It's not difficult to imagine that
profits are down with all the R&D that must be going on to come up with
all-new bike lines for both the R and K series.  They're completely
re-inventing themselves.   Also consider that BMW is practically a privately
held company, so if the Quants decide that their tax bill is too high, they
can decide to report profits in a more conservative manner, unlike most pblic

>So, the general sales climate is the U.S. is poor and a significant
part of the general squeeze on dealers.

>-Jack

I think that's also a factor.   The fall of the dollar is another factor. BMW
will have to either sacrifice profit for business next year and/or their
prices will have to rise dramatically.   I think the new bikes will cost less
to produce than the old ones (this doesn't make the old ones better.) and
there will be fewer spare parts to stock.   Repair should be more
straight-forward and less labor intense while there will be more replacement
of assemblies with new/rebuilt assemblies rather than digging in to individual
parts.


>Having made my living wrenching in bike dealerships in the 80s,  I'm well
acquainted with how tough a business it is, but don't know much  about
the current issues.>>

>I'd prefer not to. I thought I was  replying off-list to one person, but I
didn't look carefully at the "send to"  header. I don't need to dig myself in
any deeper with BMW Motorrad USA than I  already have. I make a comment on an
Internet list and six months later it gets  thrown in my face by a BMW M-USA
rep. Not fun.

>Suffice to say that BMW  has failed to embrace the "new order" of doing
business that all the other major  car and motorcycle companies have. They
will
lose lots of dealers. They ALREADY  have lost lots of dealers. Good people who
got disgusted.

>Tom  Cutter


Tom, I get the digest version of the list so I don't have that confusion with
"reply" keys on these emails.  I had some major trouble on another list
recently and no have all my lists in digest form.   Saves time too.

I think a change is taking place, but the US dealers get a bad deal,
especially in cities that are not sport-touring paradise cities.  Here in
Chicago, we have lost two dealers, but a new one picked up the flag last
spring and has been doing OK so far.   Not great, but OK.

>And how much is the K1200S going to help in boosting sales? It is only
one model of bike and you can get similar performance from other
manufacturers for less money. I know that will not deter the BMW
faithful, but I doubt their numbers are enough to make a significant
difference.

Robert

Robert, I think there are a lot of sport bike guys that are getting older and
may want something a little nicer that still screams.   The K11RS is a little
too bulky with too long a wheelbase.   It's a nice bike; smooth, strong engine
and beautiful styling, but it offers too little of everything except smooth
power.   This new K will be better handling, lighter much more powerful and
will have a decently short wheelbase.  It will continue to offer shaft drive,
cruise control, a nice sized charging system for accessories and will have
that BMW craftmanship thing going on...a sport bike for grownups...I like it.
I think it will bring others into the dealerships as well.

This new K-bike drive line will be a base for several other bikes.  We've seen
the K12R naked bike already.   I think we might expect this mill to make it
into the LT eventually and possibly an RT or RS sort of bike as well.   Time
will tell.  One thing is certain, we haven't seen the only two iterations of
this K platform.

There was a time when K bikes outsold R bikes.  That time could come back.

- -TB

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