And that bottom line is contingent on a bike that he says will likely be ready for the U.S. market in the first quarter of 2012 — granted everything goes smoothly during the approval process with the Environmental Protection Agency and the California Air Resources Board. The bikes will retail for between $16,000 and about $20,000. Up to this point, the company has focused on delivering bikes in Europe that are Euro III compliant. Van Epps points out that the wait for EPA and CARB approval has allowed the company to fine-tune its U.S. market strategy.
This lineup will include the Commando 961 Cafe Racer and the Commando 961 Sport, both available as single or two-seaters in four color choices — silver, red, yellow and black. Van Epps says the factory can hand-build about 100 bikes a month right now, and can push the production up to 200 a month if necessary.
"Our goal is to sell motorcycles as they're made. I think another component is the value of the bike. By keeping a truly British bike with a high level of quality, the bikes retain value," Van Epps says. "We are at the high end of the market. Our bikes start out at about $16K and go up to about $20K. We don't have plans to build a bike simply at a price point. We build bikes and the price point is whatever comes out of it."
Dealernews asked Van Epps to share more details about the company's volume plans in the U.S., information about efforts to retain dealership profitability, stocking and flooring and Norton's enduring appeal.
Dealernews: What are the plans for U.S. sales volume?
Dan Van Epps: It's important that we understand the volumes we're talking about in the U.S. We figure that the U.S. market will be somewhere between 20 and 25 percent of the volume of Norton motorcycles.
We never see a day when we exceed 10,000 motorcycles. If you take the number of motorcycles that would end up in the U.S., let's say it's 2,000 to 2,500 motorcycles a few years down the road, and you divide it by the number of dealers we have planned — about 50 — you do a little simple math that our volume per dealer will be very similar to the other European manufacturers [they carry]."
DN: How will the company work to help Norton dealers be profitable?
DVE: The key point is exclusive market areas for the dealers. It seems clear to us that for any given brand, there are too many dealers carrying that same brand in any given market. We want every Norton dealer to have a market that's large enough, that, if they can justify it, aggressively local promotion of Norton and allow them to reap the benefits of those efforts.
With a strictly limited number of dealers, even though Norton total volumes are smaller, each dealer is going to realize sales on par of other brands. Another component of the value of a Norton dealership is control of inventory … the point being that excess inventory, whether in our warehouse or at a dealer's warehouse, erodes margin and depressed prices. Some inventory carrying is of course a reality, but it's our job to manage it intelligently. The day that the average Norton dealer has motorcycles stacked in his warehouse is the day that they'll have to replace me.
The optimum situation will be that a consumer may have to wait a couple of weeks for a bike to arrive. That's great news for everybody. It retains the value of the brand and of the model. The way that we're building bikes, we're hand-building motorcycles in our factory. We don't plan to crank up production based on an Excel spread sheet and push them into the U.S. market, and then find a place for those to go and when they don't go there, with flooring terms and discounts, push into dealer warehouses. That's not our program.
DN: How will Norton USA's stocking/flooring work?
DVE: Each dealer, we want them to display just enough bikes to allow a customer to understand their choices. Each one will also be required and requested to have at least one demo bike, maybe two, in stock. We have some pretty good incentives for them to do that.
We do not want dealers to have stacks of unsold inventory in their warehouse. When that happens, margins erode. And we don't plan to front-load any dealer. The plan is build bikes in Castle Donington, load them in container, ship them to the U.S. and deliver them to customers waiting for motorcycles.
DN: What is the lasting appeal of Norton motorcycles?
DVE: Norton always had this appeal that's kind of hard to describe. I think part of it was the style, part of it the sound. While we might remember all of its streetbikes, Norton has also had a pretty glorious racing history. Norton had a pretty interesting approach to racing in that they made race-specific motorcycles and street-specific motorcycles. The two never really crossbred. That's an interesting approach and it's one that we're embracing also.
If you intermingle designing race bikes and streetbikes, you compromise both. [We have] the approach of using racing to develop ideas and systems and win races, and to keep street motorcycles as sort of a separate entity.
When I started thinking about taking on this task and was talking with Stuart Garner about what we could do and what the structure of the company would be and how we could manage it, I started to look around at what was Norton right now and we looked at this large group of Norton clubs. I was surprised at how strong the Norton owner's clubs are and the number of chapters. There are more than 35 Norton owners' clubs chapters officially in business around the U.S. It was a bit of a shocker, the number of members they have and the level of enthusiasm they have. They've been carrying the flag for Norton for the last 30 years.