What Does a Motorcycle Really Cost

While it's tricky to break down the precise value of an individual motorcycle in terms of the cost of its components, the wages of the people building it and the profit each one gives, the figures are out there to give an insight into the manufacturers' finances.

As each firm releases its annual financial reports, hidden in the unintelligible banks of figures are breakdowns showing not only profit and loss, but also the amounts spent on raw materials, wages, research and development and every other imaginable expense.

What is, perhaps, surprising, is the enormous proportion of the cost of a motorcycle that goes into raw materials and wages – the unavoidable basic elements of actually making the thing.

Looking at the financial figures for major motorcycle firms including Honda, BMW, Suzuki and Yamaha, it's clear that a massive percentage of the money they receive goes into 'cost of sales' – the actual price of making a motorcycle. All of them spend between 70 an 85 percent of their income just on that, and once additional costs like administration, advertising and transport are factored in – still stuff that's pretty much unavoidable when it comes to manufacturing any product – more than 90 percent of their income is accounted for.
Making motorcycles clearly isn't the route to riches, as yet another five or six percent is then channelled into research and development, vital to ensure their products will remain competitive, leaving a profit margin – before tax – of less than two percent for most motorcycle manufacturers. A figure that easily becomes a loss, as with some motorcycle manufacturers have showed.

So the truth is, these motorcycle manufacturers, with high raw material costs to face and big staffing bills to pay, never get to see a large proportion of the cash you actually hand over. In Thailand, most of the money you pay goes to the revenue department... Actually to sell motorcycles in Thailand is for most motorcycle manufacturers even more costly than for instance selling a motorcycle in Europe.

Ask any motorcycle dealer, and you'll be told that you're paying for quality, that the materials are better, the workmanship greater. The phrase 'you get what you pay for' will no doubt be uttered. And of course that's true – up to a point. But finding where that point lies, and where your money is really going, is the key to making the best buying decision, whatever your budget. By taking the most expensive option, are you really getting the latest and best technology, or are you funding a millionaire company company owner's next sportscar? You dealer certainly won't tell you – he probably doesn't even know – but after what you read here, a picture starts to emerge of just what you're really paying for.
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