how does motorcycle spare parts industry work? are parts overpriced?

Factual Questions
1

WRT buying an entire motorcycle, I think there is some anecdotal evidence suggesting that they are overpriced in America. E.g. there is a big variation in prices between different sellers and between models that seem to have similar parameters. When faced with such a situation, naturally one starts wondering “if lots of sellers are overcharging, who is to say that the cheapest seller is not overcharging too”.

I don’t have any info on whether they are or are not overpriced abroad, and so welcome all comments on the issue. I guess the only dubious tidbit that I have gathered so far is that maybe in 3rd world countries the 50cc bikes are more common than over here because they are very cheap and because they are not under the engine volume restriction that is applied to bikes on American freeways.

Anyway, so now back to the spare parts. How does the industry making these parts work? Does every manufacturer make their own unique parts? Or are clone parts for standard models made by everybody, like spare parts for pc clone computers? If that does not happen, is that because there “branded” parts are not overpriced or because basically there is small demand and so nobody cares about these market niches?

How does the cost of a complete motorcycle compare to the cost of its components if bought in the sort of small or medium bulk quantity that a company that is not the brand manufacturer could buy? Are there Chinese shops exploiting arbitrage opportunities involving either assembling new motorcycles out of branded parts into a new unbranded clone or else in making a functionally ''almost new" motorcycle by replacing all the key components in an old one?

2

There is not just one motorcycle market. Here are some of the individual markets:

Harleys
Custom bikes
Small street bikes
Large street bikes
Touring bikes
Off road bikes
Motocross bikes
Used bikes

In each market pricing is based on supply and demand, and the factors in demand vary wildly. Many motorcycles are purchased every year, used seldomly, then never, or sold. The same applies to parts.

3

ok, so let’s pick that market which has to do with the cheapest functional motorcycles. After all, all the others ones will be “overpriced” by definition, relative to what you need if you want a commuter bike that would be allowed on American freeway.

4

selling a complete motorcycle requires adequate return for the manufacturer and all the intermediaries between it and the buyer.

the simplest way to price something is through cost-plus. the amount added to cost could be anything from a negative figure to 100% of cost. some manufacturers are willing to sell at a loss simply to undercut comeptition and provide a high entry barrier to all potential competitors. your question on whether or not something is over-priced will be best answered by someone who knows microeconomics as applied to motorcycles.

you touch on a good topic. after-sales products and services are among the hidden costs tied to buying a primary product. it really depends. in the case of industrial machines and heavy equipment, the buyer is very interested in minimizing downtime and is willing to pay a premium price for the complete product (say a bulldozer) if on its own it can guaranty reliability above other manufactueres. also, the manufacturer must guaranty efficient repair and parts change within 24 hours anywhere in the world. in this case (the caterpillar example,) after-sales parts and services do not cost more on a per-part basis than the complete basic model.

in the case of a rolls royce, the car already has a premium pricing but after-sales parts and services are even more outlandishly expensive on a per-part basis. the reason is exclusivity. rolls royce servicing is proprietary, dealing with only a few customers whose requirement for after-sales service is none too frequent.

sorry, i can’t give examples for motorcycles.

5

Hi, about over pricing of Motor Cycle parts, I have personal experience whereas I have contacted a Chinese shock absorber manufacturer and pretended to be a potential customer with my own retail outlets, I then requested quota for a particular Mono Shock Absorber and got a price of 37.50$ of the Factory Gate, the same item sells in the US for 200$!!!

6

I am not sure on new prices but when it comes to spare parts I have always found them more expensive than an equivalent type part for a car. The reason for this I have always heard is its due to the low volumes of production for motorbike parts in comparison to car parts.

A high voluming selling motor bike will in general always been far below the sales numbers for a high volume selling car. This may not hold true for some of the really cheap bikes in places like China but it certainly seemed to the case for European and Japanese sports bikes.

7

Combined with the fact that there are fewer interchangeable parts between different models.(of bikes)

8

Yeah I can see that would be a factor as well. I don’t think many of the big manufacturers have many interchangeable parts at all between models where as on cars its pretty common to share parts across different models.

9

so how many bikes of a given model should be produced to get the spare parts cost down to where further economies of scale will not matter to the price?

Ok so anecdata from Simple Mind of course suggests that there is massive overpricing at least on some parts already in the retail chain - so those Chinese might just as well sell those ones retail by mail order.

10

First question - there are two forms of spare parts industry so to speak. One is making new parts for older motorcycles and one is finding existing stockpiles of parts and making them available. One example of the second is Bill’s Custom Bikes in Bloomsburg PA. He buys new and used parts by the trailer-load sometimes and then sorts and orders them and offers them for sale. A new-old stock part like a shift-lever for an old KH would be a lot cheaper from him than one new manufactured.

Question two - not always. There are some parts that can be interchanged; tanks are often easy. In the final scene of On Any Sunday that is NOT a Harley Mert is riding. I forget just what he had at the time for kicking dirt but it wasn’t a Harley. He just swapped off a few parts here and there to make it look like one so he didn’t piss of his “owners” (the company he raced for).

Three - I could probably build you a Sportster without using a single Harley part. Not quite as easily as I could make you a Model T Ford (once upon a time you could make one of those out of a JC Whitney Catalog) but I’m pretty sure I could swing it. Clone parts are not always cheaper then the “real thing”; you have to study a bit to know which is the better deal and/or better part.

11

do those stocks of parts in the second industry originate from production of parts to make new motorcycles? Or where do they come from?

When you say “making new parts for older motorcycles” do you mean for motorcycles that are no longer produced and so need clone parts? Or do you mean that the legit manufacturer of those bikes will not sell us the parts they are using for cheap, and so the industry 1 is producing the clone for repairs without branded parts?

12

incidentally, I note that this field of mechanical spare parts to me sounds a bit like the field of drugs and generic drugs. Just like drugs occur in equivalence classes but with different prices and availabilities, so it seems to be with spare parts, except there are a lot more parameters to take into account and so the problem is that much more complex.

Well, with the generics there are computer apps for finding equivalents, although the quality and the adoption of these apps might be not that great. Perhaps we ought to have spare parts comparison and search database that could be plugged into the inventory control and purchase planning system of a repair shop? Do such already exist?

13

First we need to define what “overpricing” is. Just because Simple Mind got a quote for $37.50 doesn’t mean that anything over that to the end user is “overpricing”. Can I get that price on a single unit basis? Delivered to my address or to my dealer for installation? Do I have to know the correct part number to order? At $37.50 will the factory provide application assistance? Will they provide customization at that price as well?

If you buy a 1000 parts at $37.50 each, but only resell 500, you better have sold them for at least $75 each to cover your investment. If the part ends up not having the expected failure or replacement rate and you only resell 250, you need $150 to cover costs. This assumes you don’t need to be paid for your time (or your employees time), you have no advertising or office costs, and you have no debt load from purchasing the parts. Oh, and let’s not forget liability insurance costs. Very quickly the cost of replacement parts skyrocket over original production cost.

14

Not at all. You can buy a generic equivalent drug today, tomorrow, 5 years from now and it will still work the same and be the same formulation as the current production drug today. Drug companies don’t keep tweaking the “recipe” of drugs every few years to make them just a little bit better so that you want this years aspirin and not last years aspirin.

Motorcycle spare parts are not that simple. Not all 50cc pistons are interchangeable. To further complicate things, the manufacturer likely changes the design every 3, 5, or 10 years depending on sales volume and marketing factors. Even when parts aren’t model exclusive, there is a typically a limited time window of production and use. Models produced outside that time window need a different replacement part.

15

Sometimes yes, sometimes no. But it doesn’t make replacement parts any less expensive in comparison to the original part. Even if made alongside the original parts. The economies of scale recognized in the larger batch size simply means the basis cost of both the original parts and the parts destined for spare parts is lower. The parts destined for spare parts sales are still subject to all the other cost factors that apply to them and not to parts going to the assembly line. So they will still be significantly more expensive than the cost of the part that went in at the assembly line.

16

so like I said, the problem is more complex :slight_smile:

I note that the humans who have jobs like “mechanics” or “inventory control in the shop” seem to manage the underlying equivalence relationships, parameters clusters etc in their minds. Further, the human decision making involved is not inherently hard to break down into small, easy to explain steps, which can then transform into sets of rules that can be evaluated automatically. So at the very least some fairly primitive search systems could be built and improved gradually; this is very different from the situation with let’s say face recognition where humans cannot even give a decent explanation of just which features they use in decision making.

Of course the obvious benefit here is that automated search may be dumb and “shallow” but it is “broad”. It can evaluate a whole lot of disparate parts, suppliers, prices etc, looking for arbitrage opportunities in what at present might be a not-so-efficient market.

17

Problem is, a primitive search system might get you a 50cc piston that is the correct diameter for your bore, with the correct wrist pin location and the correct number and location of ring grooves. But if it fails to include information about valve reliefs or wall thickness for example you could easily have a catastrophic result from mixing and matching rather than using OEM parts.

Pistons are probably one area that has the most “generic” production. Wiseco catalogs pistons for hundreds if not thousands of applications. But now multiply this by hundreds of potential service parts and then realize that new part designs with new requirements are being released every year if not more often. If you can’t get the manufacturers to input all the data, the act of gathering all of it and cross referencing is too huge to ever be of any marketable value in my estimation.

And I don’t think you are going to get the manufacturers on board. Service and service parts are a counted upon revenue source. They are not going to give up all the data they spent money engineering and developing so that anybody with access to cheap labor can undercut their price.

Again, let’s start with an explanation of what you mean by overpriced?

18

who said anything about primitive? Who said anything about just searching by a set of parameters? The gist of my search related post upthread is this "if the smart Hbns has inside his head a big collection of rules and facts about the world of bikes that allow him to evaluate suitability of various advertised parts for what he is trying to do, perhaps MIT AI lab can get him tell them some of these rules and facts and then build a system that reasons like him; or, let’s say at best like him after a serious hangover :wink: "

I agree about the problem of not getting data from manufacturers. But data is also available in human minds. If you know that part A101 and B202 are basically same part, you can write it down. If a thousand people write down ten rules each, that’s going to be already a lot of rules. Probably rules will be a lot more complex and interesting than trivial equivalence, but they will be rules nevertheless. As the industry changes, rules will be thrown out and new ones added. Just like it happens inside of the human expert’s mind.

RE overpriced, I don’t feel like holding a big definitions discussion. Let people interpret it as they wish and share their thoughts. In general, I find claims like “markup is 100% because of a pile of warranties, service agreements and other makes-my-brain-shut-down complexities” to be about as suspect as the claims of Goldman Sachs as to why they are making so much money for whatever it is that they are doing. When things are simple, it’s clear which price makes sense and which does not; but when things are made overly complex, either intentionally to shake down people for money or due to the world’s natural snafu-directed evolution, maybe it’s time for a simplification overhaul.

19

Ah, now I see what you are getting at. In theory it is plausible and would likely produce some good results for the most popular makes and models. To some extent it already happens in forums devoted to popular models. A forum such as FZRonline contains a lot of information about interchangeable parts from other models and/or parts that can be used in replacement with some modification and what that modification is.

In practice I think anything at the fringes would be suspect. The consequences of acting on bad “data” are too great (damaged motorcycle or worse, damaged human). So any areas that don’t get a lot of contribution would be suspect. Kind of like wikipedia or answers.com.

Cost + 100% is probably a bargain. More likely it is in the neighborhood of 3x manufacturing cost, or more.

You might find all the reasoning to be smoke and mirrors, but all you have to do is look at the financials. Motorcycle manufacturers have not had any grotesque spikes in the profit margin like Goldman Sachs.

20

The following is based on my own personal experience in 70s and 80s. To understand the motorcycle parts business, it helps to know a little about how the aftermarket auto parts business worked.

At one time, before there was internet shopping, there was virtually no auto parts mail order business except for high performance parts. The auto parts stores that most people went to were local mom&pop type places. Sure, you could get general stuff at Sears and Western Auto, but a real dedicated auto parts store was different.

Auto parts prices had different tiers, some parts more than others.
A warehouse that sold parts to the many auto parts stores in town got parts at WD, warehouse distributor prices, and sold most parts to parts stores at blue sheet, or Jobber prices. Sometimes there were other price levels, like for selling exhaust pipes and mufflers to muffler shops and so on. The local auto parts stores used a green(?) sheet for most suggested retail pricing. White sheets were for full retail, but no one paid full retail unless the shop wanted to stick it to them.

When all the big retailers came around; Auto Shack (Auto Zone), Chief, etc,. the pricing got a little more competitive, and you could call around and get a better price sometimes. Now most of the little mom&pop local stores are gone and the big boys cut each others throats on pricing and many parts are now made outside the USA. Low price became king and quality suffered.

In the motorcycle industry, there were never many dealers in each town, and most of them used to be dedicated to one or two major makes of bikes. In-store inventories weren’t that large and there wasn’t the same kind of pricing levels as with cars, so the bike shops usually charged full list price for everything, or close to it. The competition and dealer supply structure wasn’t there for bike parts, so prices were quite high.

Plus, a lot of motorcycle models only last a few years,. It is not unusual for a model to only be made a couple of years (such as by beloved 1982 Honda FT500 Ascot), then be dropped, so there is never a big demand for the parts, the volume isn’t there, and the shop doesn’t carry many model-specific parts in stock. This all adds up to higher pricing.