Yes! I mean No! The correct answer is maybe. It all depends on if you care about money at all, the love of which is the root of all evil. If you’re not worried about your income stream or getting the absolute best deal on a new bike, now is as good a time to buy as any and better than most since it’s springtime, and all the pretty new horses are out!
The conventional wisdom this spring seems to be that with the global pandemic going on, manufacturers and dealers are hurting for business and will bow and scrape for your low-ball offer. Maybe they will. It all depends. You’ve got your ideas about what the future will look like and so does your dealer. Just like investing in the stock market (investing in anything, really), it’s all about walking that fine line between fear and greed.
If you believe the government is doing the right thing by “opening up the economy,” that the pandemic will soon be in remission and all will soon be right with the world again (or if you believe the whole thing was way overblown to begin with), then you probably want to beat the rush, get in there now and get a new bike before they’re all sold out – especially if you can find a dealer who believes the opposite, that the downturn will continue and wants to move inventory now. A positive outlook for the future would include the idea that, once the crisis has passed, many people will have learned how cool it is to work from home, that they’ll barely need a car or to put gas in the one they already have, that they’ll fly off less to distant holidays – and all that increased cash flow and freedom should totally stimulate sales of all kinds of feel-good items including new motorcycles.
For their part, bike manufacturers and dealers are doing their best to make the transaction as painless and socially-distant as possible. Many OEMs, including Kawasaki, Indian and Yamaha to name just three, have rolled out programs like Indian’s Click.Deliver.Ride. deal, which lets you haggle, purchase, and accessorize completely online, then have your new bike dropped at your doorstep.
Meanwhile, the U.S. Treasury is printing greenbacks at record pace in an attempt to forestall economic collapse. Interest rates were already at historic lows following rate cuts last year to keep the economy juiced; now they’re even lower (yours truly just refinanced his mortgage down to 2.75%!). Other conventional wisdom used to hold that paying cash for things like motorcycles was always the best way to go: Now that borrowing money is almost free, it definitely pays to have a look at manufacturers’ financing offers (or possibly your bank or better yet, credit union). The fiscally astute use OPM (other peoples’ money) whenever it pencils out.
Every manufacturer seems to be offering deals right now; then again, when aren’t they? Now more than usual. Since I’m bumping around on Indian’s website, I see they’re offering “no payments till November” on what looks like all their models. That’s quite the test ride. You’ll need a down payment, or a trade, but after that you’re looking at just 1.99% over five years. Indian makes it nicely transparent right on their site: “Example: $13,499 financed at 1.99% APR over 60 months = 60 monthly payments of $212.89; financed amount of $12,149 with $1,350 down payment, total cost of borrowing of $624.50 and a total obligation of $12,773.60.”
Paying $624 to borrow $13.5K for five years is, historically, ridiculously cheap. Park the theoretical $12K you didn’t spend in an index fund for five years, and if you get an 8% annual return (it was easily doable there for a while), you’ll have $17,632 according to the gub’mints calculator. You just made $5000 by using Indian financing.
For lots of younger riders, the problem with dealer financing is going to be the requirement to have comprehensive insurance, but if you can swing that, it seems like nearly all the manufacturers are offering deals so sweet, even expensive insurance might be worth it. Oh yeah, you’re probably going to need top-notch credit to get the 1.99% rate. But it never hurts to apply, and it lets the dealer know you’re serious. Also, they’ve been selling cars with 0% financing for years. I wouldn’t be surprised to see that extend to motorcycles if it already hasn’t. I didn’t check every manufacturer’s site.
Triumph makes nice motorcycles too. Here’s its online deal: For the month of May, Triumph is offering customers their choice of outstanding incentive options on the purchase of new Triumph motorcycles – up to $1,200 in Triumph Cash available on select models OR special financing available as low as 1.99% APR. Other options include super low monthly payments with Triumph Triple Financing (including ability to combine with Triumph Cash incentive on MY19 & prior Street Twin and Street Triple models) OR special NO money down / NO interest / NO payments until October 1. Finally, as an additional offer for adventure-minded enthusiasts, every new model- year 2019 and prior Tiger 1200/Explorer purchase receives a FREE pannier set. It’s the perfect way to kick off your own summer of adventure on a brand new Triumph motorcycle! Offers valid through May 31.
But the best reason to finance instead of buying with YOM (your own money) is that if the best-case scenario V-shaped recovery the government is currently predicting turns out to be less rosy, and you do wind up losing your income stream, you can always, ahh, just give the bike back. Your credit will be dinged for a while, but the bank will get over it. They really do depend on all of us to do our duty and buy more stuff.
Our Facebook friend James Torongo, who actually sounds like he knows what he’s typing about (possibly because he’s a retired VP of Finance who spent 45 years in commercial manufacturing credit and cash management and a four-time ‘Economic Forecaster of the Year’ award winner), speaks of demand shock – a significantly lower and sustained lack of demand. No matter what the supply-side economists currently in power believe, a lack of demand is big trouble.
James writes: “When 70% of GNP is made up of consumer spending, you have the makings of an economic depression whenever demand tanks. Think of the debt-heavy companies now in trouble; many will fail and their workers will be unemployed with ever-shrinking employment opportunities, thus a self-feeding drop in demand. Supply side neo-liberal policies have brought us here over the last 40 years.”
“The chance that prices will drop seems much more likely than any kind of upward movement,” James continues. “The bike business was having trouble before COVID 19, and with the economic numbers looking very bad, and the chance of a V-shaped recovery doubtful to all but the economically uneducated among us, I would wait to buy. I expect used prices to drop and continue dropping for many months, and new prices to be steeply discounted. Back in 2009 I bought a brand new CBR1000RR for $7500 out the door. We have more debt now, in all forms, than in 2008, by a very significant amount, and this downturn might be a lot worse and last a lot longer.”
Just like nobody knows for certain how the pandemic will play out, nobody knows either how long it will suppress the economy – and a lot of smart people are of the opinion it could drag on far longer than the US’ official projections. Lawrence Alan Kudlow is Director of the United States National Economic Council and President Trump’s chief economic adviser. Kudlow held a similar position in the Bush II administration in December, 2007, when he said,
“The recession debate is over. It’s not gonna happen. Time to move on. At a bare minimum, we are looking at Goldilocks 2.0. (And that’s a minimum). The Bush boom is alive and well. It’s finishing up its sixth splendid year with many more years to come.” (Bloomberg)
As you may recall, that’s not precisely how it played out. This time, the economy’s already taken a bigger hit than at any time since the Great Depression. When the stock market tanked in 1929, it kept tanking, in fits and starts, until 1932, and the country – the world in fact – didn’t recover until WW2. (Happy V-E Day, by the way!)
This morning, we read in Politico: “The U.S. economy is sitting in its deepest hole since the Great Depression, with more than 33 million Americans losing their jobs in just seven weeks and an unemployment rate now at 14.7 percent — and likely to rise to around 20 percent — under the weight of the coronavirus pandemic…. And it’s likely to take years, perhaps even much of the next decade, to dig out.”
Pick which side you’re on, the pollyannas or the doom-and-gloomers, but it really doesn’t much matter either way. The fact is it seems like you can get a great deal right now on a new motorcycle, depending on what model you’re after and what mood your dealer is in, though it’s equally true that by waiting a bit longer you might get an even better deal. But that’s kind of betting against the home team, and it could mean another summer without the bike of your dreams.
You can’t put a price on love, can you? If the world economy is going to collapse or the pandemic is going to take you home to Jesus, at least you’ll get a summer of great riding in. And if you swing one of those no-payments ’til November deals, how can you lose? If it all goes to hell, the joke will be on the bank.
“But this long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task, if in tempestuous seasons they can only tell us, that when the storm is long past, the ocean is flat again.” —John Maynard Keynes
I’m still a big fan of buying used vehicles, but that’s always been mostly out of necessity in my income bracket, and has become ingrained. As a guy who’s been fortunate enough to ride all the new stuff for the last bunch of years, though, I have to say these last few have been truly golden, and I wouldn’t hesitate to buy new today – especially at 1.9% – if I didn’t always get to borrow new motorcycles. Electronics have transformed the game: lean-sensitive ABS, traction control, cruise control – it’s all magic, and very likely will save your bacon at some point, as well as enhance every ride.
In closing, our friend Steve Natt offers this piece of unassailable wisdom: “You still need to go places. Until there is a vaccine or treatment for this fucking virus, public transportation and Uber are no good: This marks the first time in the history of mankind that riding a motorcycle is actually safer than the alternatives. You might as well go with the new motorcycle.”