Modern Vespa

Harley Davidson hit the panic button after seeing a precipitous drop in August dealer sales. The sales drop was bad enough to cause The Motor Company to cut their estimated profit for the year and cut production. The timing of this coincides with the demise of the subprime mortgage market, the deflation of the national housing market bubble, and the first net drop in employment in four years, among other things. I hope I'm wrong, but I can't believe this is a good omen for modern Vespa sales. No matter how you cut it, August was a month to forget.

Let's hope this is just another post where I've gone and gotten it all wrong.

Look at the bright side: maybe all those Harley buyers who don't have the money for Harley can now afford to be a Vespa owner.

P.S.--I'm really glad I just sold my house last month!

Me, too. There's such a thing as being in the right place at the right time, isn't there?

An ex motocycle salesman I know gave me this equation to help me understand...

Home equity + desperate, hanging out bastard = Harley Davidson.

The subprime crash affecting HD sales probably proves he is right (about half of it anyway).

Comparing HD to Vespa in the marketplace and their respective niches isn't exactly apples to apples, IMHO:

1. PRICE POINT
Comparing price points, many folks wouldn't have to take out a home equity line of credit or turn their house into a cash/equity ATM to purchase a $5-$7k Vespa compared to a $10k-$20k and up HD. Not that it's unheard of to do so for a Vespa or less expensive motorcycle, but comparatively, HDs barrier to entry is WAY more steep and would more likely need to be fed by creative finance if you take the national average annual income (somewhere around $50-$60k last time I looked) into account.

2. VESPA MARKETING = VESPA IS COOL SECOND CAR OR CAR REPLACEMENT. HD MARKETING = BIG, BADASS AND WORTH EVERY PREMIUM DOLLAR
I don't often hear about people replacing their car(s) with a Harley, but I've often heard of people doing so with a Vespa. Although Vespas are on the premium side of scooter models price-wise, they're still cheaper to purchase and insure than a conventional new car, truck or Harley. The Vespa customer might be more sensitive to the idea of "thrift" compared to the typical HD customer. Definitely an assumption on my part.

3. RISING GASOLINE PRICES
Yeah, I know gas the last few months has come down somewhat, but I think most folks agree in the long run, it's only heading higher. And, if on top of that bad times really hit the economy as a whole (the "R" word), I'd imagine more folks would be looking for ways to spend less than more. If you need to get around, and your situation allows for 2-wheel commuting, I'd imagine Vespas, and scooters in general, have an advantage to bigger bikes as an answer to this problem.

All that said, I do believe the subprime mortgage fallout will have a huge effect on the power sports industry as a whole, but I think it will hit the different segments in varying degrees, ranging from "ouch" to "@#$%!!!". I'd bet on KYMCO and Vespa to be far less affected than Harley Davidson, Ducati, BMW, Victory and the like. The custom chopper builders? I'd imagine they're going to feel some real hurt. Water craft? Pain. Just pain.

Personally, I think Vespa and Kymco could turn this economic downturn into an opportunity if they're smart.

My wife and I have been managing with one car for the past couple of years after 30 plus years of being a two- and even three- car family. We gave our second car to our daughter and had intended to replace it sometime.

A few months ago my wife said, "Michael, how about if you get a motorcycle?"

So my decision to get the MP3 was in large part to get an economical vehicle to commute to my office, and leave the Isuzu Trooper in the garage (my wife walks to work most days).

I really do hope that others (many others?) will start making the same decision here in Los Angeles. It would be great to see more scooters on the streets.

i don't know about harley, but june, july, and august were the best months i ever had. it was crazy with scooter sales. we litteraly sold out of scooter in august and i had to order more otherwise the floor would have been empty. had a few people come in and buy 3 at a time.


i think scooters are a whole nuther animal. i still only see a rise in scooter sales. i'm getting big burly redneck types coming in too, people you would have never thought of buying a scooter, wanting scooters because they're sick of spending $100 a week in gas in the half ton.

our shop sold 2 bikes this year, down from 7 last year. granted, they cost 60k, but still.

Right on. That's exactly what I'm talking about in both examples. There's a huge price difference between $60k Harleys and $3k-$7k scooters, Vespa or otherwise. In a way, if you buy into the Vespa as "high-end" perception-wise, they're almost affordable luxury vehicles in their own class.

That is, if you buy into that notion.

Interesting point. Just for the record, though, the $60k number is a gross exaggeration. In fact, the Harley I'm buying is $10k out the door, which is pretty close to the OTD price of a Vespa. That's what made me wonder if Harley's sales woes might be a harbinger of things to come in the high-end scooter segment. Also, because Harley is a publicly-traded American company, they are obliged to provide information about sales and financials, so we get immediate feedback on them, which is going to be interesting to watch over the next 12-18 months, to say the least.

As I said to start with, I'm not wishing anybody any misfortune, I'm just pondering whether their is a linkage between the market segments. Interesting posts so far, everybody. Thanks.

If HD is having a sales slump, it sure hasn't affected their motor plant. The company I work for grinds the rockerarm shafts for them, and we're churning them out like mad.

I'd guess that since most Harleys are purchased as 'recreational vehicles' a great number of them were funded by home equity where as a lot of scooters come out of people's 'transportation' budget.

This credit crunch is an odd one. Good interest rates but you actually have to qualify for the loan. How un-American! (and an over-reaction by the lending community)

I agree completely. Scooters are seen as economical (but I suspect they're just as much of a money pit as any motorcycle once you count the accessories you want to add on to the bike) while H-D's are seen as just the opposite.

True, there are definitely HDs that don't come close to $60k, but I'd consider those models closer to the 50cc & 150cc Vespas in the model line. The OTD price on my LX150 was just over $5k (if I'm remembering correctly). It would be interesting to know which models/price points in HDs lineup sell the most. I think that info would be a better indication of how much an impact this could all have on them. I never thought that at all. You brought up a great topic, IMHO. I love watching this stuff. It would be interesting to see how the power sports manufacturers tune their model line ups to deal with this economic turn. Just as we see the Japanese auto makers pushing smaller cars back into their lineups, it'll be interesting to see if "economy model" becomes a popular with motorcycles and scooters.

Something tells me "no", but I hope I'm wrong. If the Vespa S is truly an econo-style offering from Vespa and is priced accordingly, that could fit the bill. Actually, all said, if there is a sudden upswing in sales of Taiwanese scooters here in the States, I'd imagine that could work in Vespas favor. For every Camry there's a driver who wants to drive an Audi A4 to different.