WHEN I HEARD that Kawasaki had once again dipped into the auto industry talent pool to hire its most recent sales and marketing executive, I was curious about why someone would leave the relative comfort of the car business for the uncertainty of the powersports business.
At the same time, I wanted to ask them what our industry needed to do to once again start making substantial forward progress.
Richard Beattie is the third automotive executive Kawasaki has secured over the years, beginning in the late 1970s, to help solve its marketing and sales challenges.
Beattie came out of retirement after a 20-year career with Ford Motor Co. Highlights of his tenure include transitioning Jaguar and Land Rover into and out of the Ford Group, and then working with Tata Motors and assisting the absorption of Jaguar into that group’s portfolio.
Beattie was not a motorcyclist when he signed on with Kawasaki about 15 months ago. He is a long-time participant and fan of auto racing and an avid pilot, and says he understands the enthusiasm that motorcyclists feel toward their motorcycles.
Dealernews: What are the major differences between the car and motorcycle business?
Richard Beattie: The product is extremely new to me, but the process, not so much. The products themselves are very different. A motorcycle is a very discretionary purchase in this market; in other markets it’s basic transportation.
While everybody wants to talk about motorcycles, that’s less than half of our business in total. We’ve also got side-by-sides, which are growing pretty fast. To some extent they’re close to cars. In fact, I’ve been in similar locations off-roading in these relatively inexpensive, fun side-by-side vehicles that I’ve also been to in $100,000 Range Rovers — places like Moab and other off-road environments. That side of it is very similar.
But the two-wheel side is very different. When you’re dealing in the car business, yes, there is emotional involvement when you buy a BMW. Even if you’re buying a Ford and it’s your first car, it’s an emotional purchase. It’s not that bland — a car’s a lot of money too. When somebody’s buying a new car, it’s lovely to see how excited they are about it, so there’s a lot of emotion in it, but these days it’s more a way to get from A to Z.
Fifty years ago, kids in America were arguing the virtues between Camaros and Mustangs, but youngsters today don’t seem to have that same interest. For them it’s more basic transportation. Would they like a Mustang? Yeah, that would be cool — don’t get me wrong, I’m generalizing. The bike business, though, is still very much about passion, and for some youngsters a way to get some sort of motorized transportation, whereas a car is still very much a means of transportation, as well as an ability to make a statement, if that’s what you want to do.
"When you have [overcapacity] and you’re fighting with everyone else, it means bigger discounting, brand damage, low margins and basically doing business to keep the lights on, rather than making lots of money to invest in new products."
— Richard Beattie
Look at the car market in this economy. The car business is now back to pre-recession sales levels, whereas the motorcycle business is around 50 percent of what it was. Of course that translates into enormous overcapacity from which the auto business has recovered, even though it’s always more competitive, with more players.
The motorcycle business still has that overcapacity, and when you have that and you’re fighting with everyone else, it means bigger discounting, brand damage, low margins and basically doing business to keep the lights on, rather than making lots of money to invest in new products. That’s very different.
The car business has recovered much more quickly than the toy business. There’s all sorts of conjecture on why that is. There’s an insurance in the car business called leasing, which has changed the purchase cycle. We don’t do that in the motorcycle business and there are apparently lots of reasons why we don’t. [Editor's note: leasing is starting to appear in certain motorcycle market segments, although not for new models.]
The car business also has a relatively stable dealer body. There are some issues (there always are) with certain brands. The more traditional brands are probably still over-dealered for the volume of product they’re putting through.
In the car business, you occasionally get shared showrooms, but even in a shared showroom situation there’s a definitive separation between Brand A and Brand B, whereas in the bike business it’s a smorgasbord of brands. It’s basically “What color do you like?” and then that’s the selection that you have.
We have a hundred or so standalone Kawasaki dealers. God love ‘em, they do very well, they stay focused, they make money and we have a great relationship with them. But we have a thousand dealers or thereabouts in all, so the vast proportion of them are multi-brand guys — and again, no issues with that at all. It’s not surprising, after all, somehow you’ve got to cover the rent, so adding franchises to your portfolio is a very sensible way to go. It’s just very different from the car business. You get more of a brand experience there.
There are exceptions in the bike business, Harley-Davidson, Ducati, Triumph, the so-called luxury brands offer a little bit more exclusivity. Certainly Harley-Davidson does. Those guys, the Ducatis, and Triumphs of this world manage to squeeze their corner of the showroom effectively through structured margin control, performance clauses and all that stuff, and probably for good reason, and good reason usually means good for the manufacturer and good for the dealer. If it’s just for one, it never works. Over time it’s got to work for both of them.
[He points to a poster on the wall of ATVs.] Those guys just have bikes so they can stick the bikes in the Triumph corner of the showroom. Kawasaki comes along, and we’ve just added another four-wheel side-by-side, so this poster on the wall isn’t even up-to-date, and this is just a selection of what we have to sell. So it’s totally unreasonable for me to demand showroom space for everything we have as being exclusively Kawasaki.
Having said that, at the other end of the spectrum, we’re a little bit lax, we and our dealers, and I think I speak for the other OEMs as well in that I think there could be a better brand experience for our shoppers than we offer now. Some guys will say, “Whoa, hang on a minute! The brand experience is all about me and my dealership!” I get that, too. We have some terrific dealers, multibrand dealers that sell great volume for us and our competitors, and essentially speaking, they are the brand. The dealer is the brand and that’s terrific. They’ve built a successful business model, to their credit. You asked about where the differences are, that’s one of the biggest. How we go to market at the showroom level is very different in the bike business than the car business.