Motor Finance takes another look at the motorcycle finance sector, and finds a resilient industry that is managing to weather the current turbulent and uncertain economic times. Chris Farnell writes.

The motorcycle finance sector has always been a little different from that of its four-wheeled cousin.

While cars are typically viewed as an essential, motorbikes are more commonly the domain of weekend riders; they are ‘I wants’ rather than ‘I needs’, and that has a fundamental effect on the makeup of borrowers in the market.

“One of the most fundamental differences is how a bike is typically used compared to a car,” says Dave Macey, head of market and franchise development at Black Horse.

“For the majority of people, it’s actually a leisure product, probably a second vehicle being used primarily for weekend riding rather than one that’s going to be used for everyday commuting. This then impacts customer behaviour when thinking about a purchase, like how much they are prepared to spend and how they want to finance it.”

Neil Richardson, head of sales – north and the motorcycle division at Close Brothers Finance, agrees. “The main difference is that the bike sector is primarily run by bike enthusiasts and the asset is not a necessity, which largely comes across in the way the dealers promote and use finance as a product to sell bikes,” he says.

Overall, this means the motorcycle finance sector is one that remains in good shape, although there remains a need for greater consumer education.

“The market is healthy and there is still plenty of opportunity out there, with dealers continuing to embrace finance and some larger players making it central to their revenue model,” Richardson says.

“For smaller dealers there is still a major need for education and insight to promote finance as a credible option, and to get the customer their bike of choice.”

“I think there is recognition that more needs to be done in terms of promoting the different finance options available to a wider range of potential customers,” Macey agrees. “This can often be as simple as better use of promotions or media to educate buyers.”

Just because the market is strong, however, does not mean it is not changing. The growth in digital offerings and online options is becoming just as visible in the motorcycle sector as it is in car finance.

“One of the big changes we’ve seen recently is manufacturers investing far more in their digital offering. This is making for a much better online experience for customers,” Macey points out.

“For example, it’s now much more likely that you can get a live affordability quote right there on the website, the same as you would in a showroom.”

Richardson says: “There has been a big shift in the manufacturer space with the likes of Santander taking on Yamaha. The subprime market continues to grow, with providers like Billing Finance becoming more prominent.

“We have also seen an emergence of big, used supermarket style operations like Superbike Factory and We Buy Any Bike, which has significantly changed the consumer journey and experience by tapping into a more convenience-led business model.”

A PCP World

Another similarity that motorcycle finance shares with the car finance sector is the growing importance of PCP, which looks to be central to the sector’s overall growth by offering the customer lower monthly payments and making it possible to purchase the bike of their dreams. It is an area where bikes are rapidly catching up with cars.

“PCP has seen significant growth over the last three to four years. I think what we’re seeing is an increasingly savvy customer for whom choice and affordability is key,” Macey observes.

“Many bike owners will have experience of PCP when buying a car, where it’s much more established. So what we’re really seeing is the motorcycle industry catching up, reacting to customer demand for a product they expect will be available.”

Stephen Latham, head of the National Motorcycle Dealers Association, goes even further, suggesting that PCP is the thing that is holding the market up right now.

“The market is very finance-based; it is based on how much people pay rather than how much a machine costs,” Latham says. “The manufacturers of the established makes work with PCPs where they give a future value. Obviously, at the end of that period the person gets an option to either buy their bike outright or see if the value is holding up and use it to make a deposit on their next PCP.”

Richardson adds: “In terms of product, PCP has become a leading sell in dealer franchises, but it is still nowhere near as great as in the traditional car asset arena.

“Premium brands have a higher PCP take-up, with some Harley Davidson dealers at approximately 80% penetration. There is also a noticeable trend towards car-led finance options – for example, Honda’s 0%, 48-month PCP with no deposit.”

Once again, it is the different calibre of the borrowers themselves that is a huge factor.
“Although it has its down months, the market is up about 2%, but most of the finance tends to be done on the bigger bikes simply because of the credit worthiness of the individuals,” Latham points out. “They tend to be older and have securities like houses and mortgages.”

When it comes to addressing the challenges facing the motorcycle finance sector, as well as the potential opportunities, the industry offers up a wide variety of potential issues. Some point to the continuing shift from the showroom to online.

“The biggest challenge is also probably our biggest opportunity, to really transform the customer experience on that journey from online to the showroom,” Macey suggests. “Dealer activity makes a huge difference and this has been really positive in the motorcycle industry.”

Macey continues: “Digital capability is only going to become more important, as customers increasingly seek the same sort of choice and convenience they have in almost every other aspect of their lives.

“Even though they will almost certainly end up in a physical showroom, that first point of contact is likely to be online, so the experience they have there is vital. I also think we’ll see much more focus on dealer-to-customer communications during the lifecycle of a contract, as a way of encouraging repeat business. Building stronger, ongoing relationships post-sale is the biggest opportunity to grasp when it comes to customer retention.”

Regulatory Changes

Others point to changes in the regulatory environment that could affect the motorcycle finance market. Latham observes: “Obviously there are changes in FCA regulations, including disclosure of commission. From that point of view, we don’t know how much the motorcycle industry is exposed – probably not as much as the car industry as we don’t have much brokerage as the car industry.”

And of course, there is the growth of electrification, driven by new technologies and environmental concerns.

“Opportunities are in the electric market and, while it is a small thing for now, it is rapidly growing and we need to be ready for change,” Richardson warns. “With big cities in Europe having electric-only zones and congestion charges in London, these assets seem to be an ideal solution.

“The alternative fuel and electric sector is the standout development,” he insists. “With climate change and economic stability top of the agenda for most, this asset class will really excel in the future.”

But there is one issue that has been a recurring one for the last three years, and that, of course, is Brexit – or more specifically, the uncertainty around it. At time of writing, it is still unknown when – or even if – the UK will leave the EU, or under what terms it might do so.

“I think that the issue you have is that, with the exception of Triumph, the importers are in a position where they don’t know the full outcome,” Latham says.

While a rise in the price of imported motorcycles seems obvious, not all manufacturers will respond to that in the same way. Harley Davison, for instance, has already been hit with a 25% tariff through the EU as a retaliation to US President Donald Trump’s tariff on European steel.

Rather than risk market share by passing that tariff onto the consumer, the manufacturer has decided to absorb it, while retooling its Thailand factory. The end result will be European-specification vehicles that can imported to the UK without a tariff.

In the absence of any clear path for the future, the sector is depending on a strong foundation of customer and intra-business relationships.

Richardson says: “I think that support will be critical to both our consumers and dealer partners. However, preparation appears impossible due to the ever-changing nature of Brexit. Our central aim is to, therefore, provide ongoing support and guidance to our partners.”

Overall, however, the motorcycle finance sector seems to be relying on the well-off, leisure-driven consumers that make up that core market.

“In numbers terms, the total market at the end of September is still 2% up; we’re at 89,000 bikes registered, and it was 87,000 last year,” Latham says.

“Against the car industry, bikes seem to be holding up, irrespective of Brexit. Half of all cars are bought by businesses, and businesses are being cautious about the outcome of Brexit. Because of that, they are holding back until the uncertainty or solution appears to be there.

“If you’ve a fleet and you’re due to change it, you might tell people to hold on to them for another six months, because in the worst-case scenario, you might have to make redundancies and won’t need so many cars.”

While Brexit may remain a largely unpredictable part of our futures, some challenges the market faces are inevitable – such as ageing.

“We see that the average bike owner is getting older, particularly for the larger bikes. This makes it quite a strong, resilient customer base,” Macey says. “Obviously over the longer term this may pose a different sort of challenge for the industry, but there’s also a really stable market for sub-125cc bikes and scooters among younger generations.”


“There is a growing commercial market for little bikes to deliver pizzas, but the majority of sales are in the heavier sector, and that’s where you have customers buying a bike for traditional leisure reasons. It’s a want, not a need,” Latham notes.

But while the mainstream perception of the motorcycle finance sector is one of large bikes purchased for leisure, there is a slight, but nonetheless visible, shift towards smaller bikes for work, powered by the growth of Deliveroo, Uber Eats and their brethren.

“If you look at the sub-50cc sector – the smallest bikes you can have, where you can virtually put a 16-year-old on them – that’s grown 18% over the year,” Latham says. “Even the 51-125cc sector, that’s grown by 1%, so there has been growth in the small bike market. That’s being driven more by people needing to have better last-mile deliveries.

“We always assume its pizza, but fast supermarkets, and one or two of the parcel delivery companies are trialling small motorbikes as well as pushbikes with a view to obviously getting around congestion and emission zone regulations.”

Richardson adds: “ The 125cc and scooter markets continue to be big in the UK,” says. “But, aside from scooters for commuting and professional riders – takeaways and couriers – there has been a growth in lifestyle 125s, with retro scramblers in the Steve McQueen mould making a real splash; Mutt Motorcycles would be a great example of this.”

While there are changes on the horizon, and big issues affecting the motor finance sector as a whole by which the motorbike lending sector cannot help but be affected, for the time being this is a sector that remains a reliable performer.

“I think the whole sector is weathering, quite stably, a lot of economic and political uncertainty,” says Latham. “The market is holding its own; it has a loyal base of older customers.

“I think if we have another year of uncertainty, the market could be slightly smaller. If we get over this period of uncertainty, I think there’s pent-up demand and it will increase.”