I'm the CEO of Krämer Motorcycles USA - Ask Me Anything

Fy

Fly-and-ride is an interesting idea. Logistically a little difficult, but not impossible. Cost/pricing would be the biggest thing. I might steal this idea, if you don't mind, and talk about it with MotoAmerica.

 

Preface: not trying to debate or argue; just want to get a perspective.

Before I ask my question, I have a clarifying question: when you say that 10% margin is what dealerships run off based on brand. Do you mean that this is the average for a store's margin for motorcycle sales across all brands or is that their margin as an enterprise (including accessory sales, service, etc.)? I just want to know what you mean by that.

Now for my actual question, when you say that the cost of the tariffs has to be passed onto the customer, can you explain why?

 

I need a few weeks off to recharge (whatever that actually means) -- the last few months have been a marathon at a sprinting pace. I am looking for that next project, and have a couple things in mind. I'll probably consult in the meantime, and already have some business lined up for that.

Bajaj coming to KTM's rescue adds a ton of confidence in the brand. The bigger issue is how long it takes for them to get back to 100%. The factory is slated to open later this month. Dirt bikes will take priority over street bikes. I'm sure we'll see some projects and models get the axe before then. That's a lot of wrenches to dodge, but they're 10mm ones, not 32mm ones.

For the last year, I've been in talks with other OEMs to use their motors. Interest has been high...but keep in mind, it takes like 2+ years to build a motorcycle from the ground up. It took us 16 months to do the APX, and we had 30% of the bike figured out before we started.

So, we'll see.

 

Stop talking to whomever you are talking to. They don't know shit.

ALL the teams are on different springs. I'm sure some teams have played with valving at this point. You can use unicorn tears for fluids, if you can find an ample supply of them. Basically everything you just listed is factually incorrect.

 

If a dealer is selling you an $11,000 motorcycle, then they probably bought it from the OEM for $10,000. They make $1000 on the sale, which is a 10% margin. Parts are usually higher, 30%-50%, sometimes even higher.

The 10% has to be passed on because if it isn't passed on, then no money is made. In that same example, the dealer would make $1,000 on the sale, but also owe $1,000 on the tariff. They would effectively breakeven.

This is the super-super simple explanation of it, but illustrates the problem.

 

Kyle Wyman did a really good fly-and-ride program for the old XR1200 series. He would be a good mind to pick about how to set it up.

 

Send me a Kramer and a Ducati 450 engine. I have a sawzall and a welding machine, and I'm not afraid to use them.
Also, if fly and ride were to happen, how picky are they about the age limit in that class? Grey hair okay?

 

Just tell them that age is a social construct.

 

Yea, I pretty much know this about the guy. He was blaming the rules for suspension issues, said yall wouldn't let them change springs etc. unless yall did it.

Kurlon said that anything in the RB is usable. MA should fix their damn RB, its been screwed up for years(actually the FIM listed parts). I know for a fact that prices are wrong for certain susp. carts.

 

'Quietly' isn't gonna do it. They have phones - they need to call their state reps and raise hell. The tariffs are only happening because Congress ceded their authority to the executive.

 

Thirty pages before we went political! If I were an orange man, I would like orange bikes.

 

Thank you for checking in here and updating us, @cota.kitty . Always great to learn your (formerly inside) perspective, given the efforts you've put into this class and program.

You had explained the 'open suspension tuning' issue in depth months ago on here. Shouldn't have been any confusion for those serious enough to do their homework.

 

Thank you for the definition and explanation.

As a consumer, this is where the train goes off the tracks for me. The dealer's only recourse should not, and cannot be, to pass through these costs to customer. Consumers can't be the sponge that absorbs every market bump just so the dealers, distributors, and OEMs don't have to change their business as usual approach. This article states that a motorcycle dealer's benchmark for net operating profit is 7%. That's all in across all revenue and expenses. Given that, the dealer has a number of other options to execute on before passing on the costs to the consumer. As the article suggests, they could: negotiate w/ distributors on flooring costs and terms, increase overall mix of service and P&A sales, grow their used business, etc.

More pragmatically, tariff pass throughs killing sales. Dealers have to know that if they pass through these costs they'll choke one of their larger free cash flow pipelines. From where I'm sitting, that doesn't make sense. Sure, on the dealer's motorcycle sales, which is a % of their total revenue mix, they'll net zeros on those sales, but they'll still be able to pay floor costs, stay eligible for volume bonuses, and below the line distributor and OEM rebates.

Again, not trying to argue, but as a consumer I find the "make the customer pay" corollary to be a lazy solution that unfairly burdens consumers.

 

Lifestyle accessories to the rescue! Can the dealers safely pass the tariff on branded panties on to the consumer?

 

Have you ever run a small business? You can’t afford to eat that big number, especially when new sales are already low margin.

 

It is clear you are discussing this from a customer's perspective.

Operating a power sports dealership these days is a stressful, difficult task. You can love motorcycles all day long, but you'll continue to see stores closing their doors, as has been a trend for a while ago.

Consumers want discounts from thin margins. That's unrealistic.

Please support the family owned and run dealerships, especially with your parts and accessory purchases. We need these brick and mortar businesses now more than ever.

 

I thought that immediately, he must not own his own business, collect's a check and the boss is getting rich.

 

Couple of things:

- The dealer is someone's customer too.

- You're proposing big strategic changes to respond to immediate tactical challenges. Tariffs could change five times by the time any of that happens.

 

No doubt. They advocate for themselves in the same way. The distrubutors and OEM no doubt get the same message "lower our costs, don't compress our margins." Why can't customer do the same?

Does the industry have a history of making large strategic changes to enrich the customer experience? It seems to me that most challenges are historically solved by a similar tactic: raise the price.

 

It's not exactly cancer medicine we're talking about, here. The customer doesn't have to buy the product.