The Cost of Parts, Accessories and Motorcycles


In the knowledge that selling motorcycles alone is never going to be a profitable business, dealers make a much bigger percentage mark-up on parts, particularly those that we all need on a regular basis, the consumables. And since that mark-up is percentage based – often as much as 50 or 50 percent of what you pay stays with the dealer – difference in price between brands are exaggerated. For instance, a chain/tire/helmet that costs 5,000 THB probably cost the dealer around 3,000 THB, wholesale – 2,000 THB mark-up.

But something that retails for 10,000 THB would have an 4,000 THB mark-up. Still 40 percent, but the amount above and beyond the actual manufacturing cost that you're paying is on the increase.

That might give the impression that dealers are robbing you blind on certain products, but the truth is that while some carry big margins, just as many offer little in the way of profit. If all dealers cut their margins on tires, prices elsewhere would have to rise to compensate – even if you've only been riding a brief time, you've probably already seen motorcycle shops near you disappear; few people in the motorcycle industry make a lot of money, so to survive in the industry is to walk a tightrope – offering deals that will attract you, the customer, while still paying the bills.

One of the few areas where profits o seem to flow freely is towards the top end of motorcycle kit, where, it might be argued, you're paying for the 'name' rather than simply the cost of the product. Shoei's yearly figures reveal that the cost to make its kit was just 63 percent of the income it received for it, and even after transport (1.98 percentage), advertising (5.92 percentage), salaries and bonuses (5.61 percentage) and various other expenses were taken into account, it still left an operating income that accounted for 10 percent of its overall income from sales. Compared to the money in making motorcycles, that's an impressive margin, and the men at the top get to enjoy it, with 'directors' benefits accounting for 1.14 percent of the firm's entire sales income.
Shoei are not alone, other motorcycle accessories big name brands are operate the same way...

Whichever way you break it down, it's clear that when it comes to motorcycles, parts or kit, even 'premium' brands aren't making unduly large amounts of money.

When it comes to making a buying decision the old adage that 'you get what you pay for' isn't far wide of the mark. Of course, there are always exceptions: you can be sure that the raw materials and labor alone don't justify the extra cost of a Desmosedici RR compared to a regular Ducati motorcycle. In the case of limited-production products like that, every customer is footing a much bigger part of research and development bill – a fixed cost that's normally spread thin across big production runs, but goes a long way to explain the seemingly disproportionate premium charged for exclusivity.

The flip side of that is that anything that's popular and made in big numbers will be cheaper, even if it's just as good in terms of quality as a more exclusive version – whether you're talking about motorcycles, parts or anything else. R&D costs are absorbed by the bigger production runs, and manufacturers can use greater leverage on raw materials suppliers to cut a better deal; you may lose out in terms of bragging rights, but you save cash.

The truth is that if you're looking for an evil villain, responsible for financially scalping you whenever you buy anything for you motorcycle, you're in for a fruitless search. Of all the directions your money goes, there's only one element that seems disproportionately high and that's TAX.
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Anonymous User

Saturday, 12 May 2012 @ 12:44 PM ICT
For bikes that most Thais ride that are built here, taxes are lower than in many nations.

Imports, of course, pay through the nose. Big bike imports pay through all orifices. To the Thai government, bikes that do not employ Thai workers to be built or are too fast for the roads according to the speed laws (virtually all roads) should be punished by taxation. And anyway, who's buying these bikes but the relatively rich, many of them foreigners.
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