Bike Buyers Monday Tip: How much is your bike really worth?
Bike Buyers is in the business of purchasing motorcycles which then find themselves on the showroom floor of the famous Fire It Up dealership in Fourways, and the number of motorcycles on the Fire It Up floor suggests they are damn good at what they do. Collectively, they have many decades of bike buying experience and will be sharing their knowledge with The Bike Show Website every Monday offering tips, advice, guidance and warnings regarding your bike buying or selling experience. For this week’s tip, we look into how much your bike is really worth.
How much is something worth? Can we put a default price on anything? The answer is, not without difficulty. How much anything is worth is based simply on how much someone is willing to pay for it. Take a glass of water – if you were in a restaurant and you asked for a normal glass of water, you wouldn’t expect to pay for that. Whereas if you were stuck in the Sahara Desert, would you not give all your fortunes to possess one glass?
Thankfully, the variables in determining the value of a motorcycle fall in smaller parameters than that, but it still gets tricky, and the important resource needed to determine this value is information. Most dealers work off the hallowed Book Value for any motorcycle, and indeed there is a book that they will consult to assume a motorcycle’s value. While this is hugely convenient for the sales person and the dealer, there are some problems with this.
This Book is reliant on information, and this information is provided by the sales staff in each dealer. Every time they sell a motorcycle, they are supposed to submit the book value they paid for this motorcycle and the amount they managed to sell it for. If enough dealers do this, the Book will indeed be an accurate source. However, staff are often either too busy, too uncoordinated or are just too damn lazy to complete this task after each transaction, and therefore not enough information is provided to the Book.
This leads to big problems for people wanting to trade in or sell their motorcycles. Sometimes, it’s good news for them, and the book lists their bike for more than the market will pay for it, in which case they will sell it to a dealer for a good price, however the dealer will have a hard time getting it out the doors. A good example of this is when an importer has a special sale on a motorcycle, such as when KTM had a clearance sale old of 390 models last year. This caused some havoc with the entire 300 market. Normally, these types of bikes sell for around R75,000 new, and a decent used model should go for around R55,000. However, KTM were clearing brand new bikes for R49,000. This means that a new bike could be bought for less than a good second hand bike, meaning bikes that should sell for R55,000 were suddenly worth R35,000.
The same thing happened when Honda had a clearance sale of NC750s for R89,000. This caused waves in the used prices of not just Honda NC750s, but the likes of Triumph Tiger 800s, BMW F800s and similar models.
More often, though, the price is under the actual market value. An example of this is the Triumph Tiger 800 from roughly 2011. They are popular, hardy bikes meaning someone will happily pay R79,000 for a clean one. The problem is that the Book states that the retail price for this model is R45,000. The most extreme example is the ever-present Suzuki VZR1800 Boulevard. These barrels of attitude are usually low mileage, are usually very clean and their robust nature means that they last forever. Also, South Africans love their Boulevards. For this reason, a model from 2007 can easily be sold for R120,000. However, the Book states that their value is just R72,000.
The real problem here is that roughly 70% of people want to finance their motorcycles, and the banks strictly work on this Book Value. So, if you try and finance a Boulevard for R120,000, the bank is going to tell you that it isn’t worth that price and they will very likely refuse the loan. This is good news for the buyer, who could pick up their dream cruiser for R45,000 less, however it’s bad news for sellers, because they are not going to get their full value.
There is good news because you do have an ally who can help you around this, because the dealer wants to sell each motorcycle for the highest price possible and will push for the best price they can get. Smaller, less experienced dealers will simply look at the Book, but a busier, more experienced dealer will look beyond that and know that they can get more. Also, they are desperately looking for stock to sell, and they tend to have more intimate relationships with banks and so can better negotiate a deal.
So, the answer to what your bike is worth is actually dependant on what a dealer feels it is worth. If one dealer gives you the Book Value, it is worthwhile phoning around and seeing if another dealer has your model in demand. Also, dealers that are willing to pay for your bike upfront are better than those who don’t. Keep that in mind.