The motorcycle sector has been enjoying relatively stable times, but that does not mean the industry is not ready for a bumpy road ahead. Chris Farnell writes.

In a time where it seems every financial story is full of alarmist headlines and strings of crises, motorcycle finance has been enjoying a period of relative calm. “From a motorbike finance broker’s perspective, the market has been steady over the last 12 months and mirrored previous years,” explains Dan Frodsham, sales director at, which has been enjoying a period of prosperity marked by its partnership with Billing Finance that began just over five years ago.

“We went into a partnership with them and had dedicated underwriters look after their account, which has grown from day one really,” explains Gary Hill, sales director at Billing Finance.

“It’s been good for them, and good for us. Both businesses have grown hand in hand with each other really.”

While the two businesses have been growing rapidly, there is still room for improvement, especially with regard to providing customers the same options they have in the car finance sector.

“The motorbike finance industry has been playing catch-up with regards to the offering to customers in comparison to the car finance market,” Frodsham says.

“There are fewer lenders available, and the lenders that have entered this sector over the past few years have struggled with such things as valuing motorbikes, as it is not as straightforward as car models – many of their in-house systems do not support a motorbike model lookup.”

This should not be a problem, however, as Billing Finance director Oliver Mackaness points out: “We don’t see underwriting a car as particularly different from underwriting a motorbike – it is the person that is important,” he tells Motor Finance.

Hill adds: “You’re looking at their ability to pay. You value the bike like you value a car, and those rules are the same; we don’t particularly view it very differently. Balances are shorter, terms are shorter, but the volume can be pretty good. So you get more, smaller deals and your risk is spread.”


While this is true, the market is undergoing a period of change, with lenders looking to open up their lending criteria to attract younger riders and older assets to create opportunities.

“This bodes well for the future. Being the leading motorbike finance broker in the industry, we have helped bring new lenders to market and have shared our experiences to help grow a new part of their book,” Frodsham says.

The changes are not unambiguously positive, however. As Neil Richardson, national sales manager for the motorcycle division of Close Brothers Motor Finance points out, we are entering a period that may be challenging not just for dealers, but the entire industry.

“The unsettled political and economic landscape, high inflation and its impact
on consumer spending are having a direct impact,” he explains. “In addition, dealers have to battle extra competition from digital online finance providers, which are seeing an increase in uptake because of the ease of use, particularly with the rise of mobile technology.

“We’re also seeing more of the high-street banks offering lower rates to get customers through the doors. With this, coupled with the continued manufacturer pressure on dealers to meet finance targets, the industry is facing a turbulent time.”

There are no prizes for guessing the biggest political and economic shift on everyone’s radar. Brexit talks are still continuing, and – much as was the case last year – people are still reluctant to guess what the ultimate impact might be.

Some businesses are taking precautions, but overall the attitude to the industry remains cautious but sanguine. “From my experience, speaking to bike dealers directly, they have not shown too much concern at this stage, but obviously it’s still early days,” Richardson says.

“In recent months, what we have seen is Indian and Harley Davidson moving their operations to Europe. This, coupled with the new US import taxes, which have already had an impact on bikes being imported from America, is causing some concern among the industry.” Stephen Latham, head of the National Motorcycle Dealers Association, continues: “I don’t think we have a clearer idea [on Brexit’s impact], but the motorcycle industry is not suffering as much as some other industries, and this is because we pay World Trade Organisation fees on most motorcycles.

“The downside has been the ups and downs of the value of sterling. Every time it puts Honda up in price, it reduces the price of the Triumph.”

Overall, however, bike manufacturers have been doing what they can to protect market stability. “With virtually no exception, we’ve seen modest price increases that the market could stand due to currency variations,”Latham says.

“Then, of course, there’s the news that Harley Davidson will be penalised by EU tariffs in response to US steel tariffs. That hasn’t damaged Harley at all, because they’ve been most robust about Trump’s policies and will take 18 months to create Europeanspecification cycles in their Thailand factory, subsidising the extra tax to pay their market share.”


Another issue that has remained remarkably consistent over the last 12 months is the continued dominance of personal contract purchase as a way of purchasing motorcycles.

“PCP continues to grow, and lends itself well to newer vehicles and pricier assets – although we see more hire-purchase agreements as, in the majority of cases, it’s a customer looking to purchase a used motorbike,” Frodsham says.

“The price point of used motorbikes, and the fact that most riders look for a specific age or model variant of bike, means an HP agreement, where they can become the owner of the asset, is achievable.”

Latham continues: “Manufacturers are still pushing PCPs. One of the definite advantages of PCP is it resonates better with younger riders who are looking for a price to have and use now, rather than a price to own.

“PCP has two advantages: buyers can stretch to a better machine, and, of course, it allows them to not be concerned about negative equity on the bike, which is something younger people haven’t faced.”

Richardson agrees, adding: “Customers want the benefits and flexibility that PCP agreements offer, without losing the feeling that buying a bike – whether through finance or their savings – can bring.

“The popularity of PCP has largely been down to its ability to enable customers to become more aspirational when choosing and purchasing their new bike, allowing them to secure a high-quality, high-value model at an attractive price that they can still afford.”

PCP is by no means the only game in town, however, and Frodsham points out that manufacturers are now looking to pick up brand new motorbike customers through 0% finance deals, with mixed results.

Latham tells Motor Finance: “With modest interest rate increases, at least one manufacturer is going for 0% finance. I don’t think the take-ups have been hugely successful because companies offering 0% will insist on a larger deposit, which won’t really appeal to the younger customers. Also, it commits a person to spreading the whole cost over three or maybe even five years.”

These deals also have major disadvantages for dealers, for example taking customers out of the marketplace for longer periods. “PCP is for two or three periods, and means you sell two bikes every five years; 0% means you only sell one,” Latham says.

As Richardson points out, however, this is still an area ripe for change. “The biggest changes in the last year have all been focused on costs and commissions. For example, for new dealers it is the amount of low-rate and 0% deals, which can erode profits.

“In addition, we’ve seen more manufacturers offering customers promotional deals, resulting in customers going direct. This has become a big issue for dealers who sell new, as well as good-quality used bikes.

“For example, a used bike that is two years old may not be worth stocking because the manufacturer promotion leads the customer into buying new because there is minimal difference to monthly payment.” On the whole, things are still looking stable for the motorbike finance sector as it is.

As Latham explains: “We have an issue with the high street struggling against internet sales, but motorbike dealers are there in small numbers to maintain as well as sell bikes, and we’ve not seen any overt move towards direct sales from manufacturers in the way we have in the car industry.”

“Our unique products will help and become a bigger feature,” Richardson predicts. “For example, with classic and older bikes we’re seeing more and more bikers purchase the bike of their youth, so they are investing in a more specialised model.”

While things may look stable in the short term, the key to longer-term success will, as has often been the case, be adaptability, and Richardson believes there are a number of key strategies that will be of help to the market going forward.

Specifically, he explains: “Supporting dealers through change – particularly with digitalisation and specialisation – as well as remaining consistent with lending and giving our dealers a broad range of options to meet the needs of the customer are vital in helping them to thrive in the months ahead.”