Demand vs. model mix: striking a delicate balance

Publish Date: 
Mar 24, 2014
By Mike Vaughan

I HAD THE PLEASURE of attending a Triumph Motorcycles North America event earlier this year, and it reminded me that 2014 marks the 20th anniversary of the brand's re-entry into the U.S. market.

It caused me to wonder about other startups and revivals during roughly the same period that didn’t make it. Why do some succeed, like Triumph, Victory and KTM, and others don’t, like Excelsior-Henderson and the previous two Indian attempts in Gilroy and South Carolina?

It seems that no matter what you do, you're going to have too many bikes, or too few.

Most start out with pretty good ideas. Take MotoCzysz: its design, when it launched and probably even now, was one of the most advanced ever put forward, with radically creative suspension and chassis solutions. Excelsior-Henderson could possibly have made it; the cruiser market at the time was accelerating like a Saturn rocket.

The Gilroy Indian may have had the most potential of any of pre-Polaris versions, but developing a distinctive Indian didn’t happen quickly enough and eventually those investors backed away. I didn’t follow the second attempt too closely, but I don’t think that the owners had a real grasp of the motorcycle market or what they needed to do to make Indian successful, things I don’t think will happen under Polaris ownership.

Over the years I’ve been asked to consult on several revivals and planned startups, sometimes on a board, sometimes just to review marketing and sales plans, and sometimes just an extended conversation. I didn’t consult on Triumph, but I got a real education from observing John Bloor. He definitely knows how to build a company.

Read Mike Vaughan's review of the new Triumph Commander and LT here

Most of the folks I’ve dealt with have good ideas about product, and most brands could be viable if the assumptions in the marketing plans were correct. Where things seem to go askew, in my view, are in forecasting sales and the costs involved in generating them.

I know from my experience with Kawasaki and Triumph that it’s not an exact science, and even well-established companies like Kawasaki and undoubtedly the rest of the industry have difficulties getting future demand and model mix right. It’s a difficult and complicated process that hinges on an endless list of factors that includes the nation’s economic climate, dealer makeup, geographic distribution, financing, model mix, competitors’ model mix, etc. Some of these factors are out of the OE’s control.

It seems like no matter what you do, you’re going to have too many vehicles, or too few. Unfortunately for everyone, the “too many bikes” are ones you wish you didn’t have, and the “too few” are the bikes you wish you had more of.

Most plans that I’ve reviewed underestimate the amount of cash and time it will take to establish or re-establish the brand, and overestimate their ability to build a dealer organization and generate demand for their products. In the early days of Kawasaki, as an example, there was a belief among many of the Japanese that all Kawasaki had to do was build product, ship it to the United States, and people would buy everything they made. Why? Because Kawasaki was known, at least in Japan, for building a great product. In reality, it doesn’t work that way.