Revving up
Most mornings, Konrad Dubelski dons a leather jacket and jumps on his Kawasaki motorcycle to commute from the suburb of Radosc to his office in Warsaw.
Using this more agile means of transportation, he is in work in 15 minutes. By car, the trip would take 40 minutes, he said. Once in the office, Dubelski changes into a suit and becomes a normal businessman.
But even when he's off his bike, Dubelski is still thinking of motorcycles. As the co-owner and vice-president of Carcade Invest, a leasing and motorcycle distribution firm, he's hoping that a greater number of Poles will choose his method of commuting.
So far the market for new motorcycles has been weak, if not non-existent. In 1996, only 450 new motorcycles were sold in Poland. But sales are starting to pick up speed and companies such as Carcade, which since last year has been the sole importer of Kawasaki motorcycles in Poland, are hoping the market will eventually boom.
In 1997, 1,100 new motorcycles were sold in Poland. With the spring buying season starting, dealers are hoping sales for 1998 will break through the 2,000 mark. And by 2005, Poles are likely to be buying 30,000-50,000 new bikes a year, said Pawel Iwanicki, motorcycle division manager at Suzuki Motor Poland.
Motorcycle dealers believe that eventually the market's growth will take on some of the characteristics of Poland's red-hot auto market, which has grown 80% over the past two years.
"First people must buy more essential goods like cars, houses," he added. "Then they will buy motorcycles."
And even if it takes time before consumers decide they want a motorcycle, companies feel they need to start building a presence in the market today, if they are to capitalize on the potential boom tomorrow.
"The cards are dealt right now," said Anna Pakulniewicz, who manages motorcycle sales at Carcade. "If someone tries to enter the market after three years, it will be too late."
Poland was once a big motorcycle market.
In the early 1970s, it was the largest producer of motorcycles in Europe with annual output of 200,000 units, according to Pawel Iwanicki of Suzuki Motor Poland.
Back in the good old days for the motorcycle market, bikes were commonly used as a primary means of transport, and locally made motorcycles were about 5-10% of the price of a car.
But in the late 1970s that started to change, Iwanicki said. Cars started to become more available and customers switched from two to four wheels. In turn, motorcycle production in Poland declined and the last domestically made bike was produced in 1985.
Today, imported motorcycles are nearly as expensive as a cheap car. Suzuki's cheapest model costs zl. 8,500, while the cheapest car on the market, Fiat's 126 "Maluch," costs about zl. 12,000. Upscale bikes, such as a Harley-Davidson, can run to zl. 100,000, the price of a family-sized car.
And because there is no domestic motorcycle production, prices are pushed up by import tariffs of 9% for non-European Union (EU) producers and 1.8% for EU producers.
The high price of imported motorcycles means that most consumers buy them for leisure purposes. At Suzuki, leisure buyers account for 98% of all customers, Iwanicki said. This customer profile differs from other European countries where many young buyers purchase a motorcycle as a means of transport because they can't afford a car, he added.
Suzuki estimates that about 50% of its customers in Poland have always owned a bike, either an old Polish-made or imported model. These buyers are now looking to replace their used models with new, imported bikes, Iwanicki said. The other 50% tend to be middle-class customers who owned a motorcycle when they were young and can now afford a motorcycle for leisure purposes. As an example, Iwanicki said one of his customers is a vice president of a large, state-owned bank who recently purchased his third Suzuki.
More customers needed
This price gap means that for the moment, many motorcycle buyers are looking to the second-hand market before they will even consider buying a new model.
Daniel Doktor, a cashier at a duty-free shop at Warsaw's Okecie airport, is one such customer. The 20-year-old recently bought his first motorcycle. But he bought used, not new. Doktor paid zl 8,000 for a Suzuki GSX 750 E made in 1984 and privately imported from Italy.
"I couldn't afford to buy a new motorcycle," he said.
While used bikes run between zl. 5,000-zl. 10,000, a good, new model would cost about zl. 20,000, he added.
And price-conscious consumers aren't just looking at how much they'll have to shell out to buy a bike. Maintenance and insurance aren't cheap either.
Doktor estimates that during the summer he'll have to spend up to zl. 500 a month for fuel and oil. And with insurance costs running as much as 20% of a motorcycle's purchase price, he needs another zl. 500 for a six-month insurance package.
With buyers such as Doktor turning to the used-bike market, sales of privately imported, second-hand motorcycles probably far exceed sales of new models, Iwanicki said.
But there is hope. Even if Doktor can't afford a new bike today, he has his sights set on one sometime in the future.
"I really would like to buy brand new as it's guaranteed quality and service," he said. "Maybe I'll buy one in five years."
That's the attitude the industry is counting on to help sales catch up to Western European levels in coming years.
In Italy, Europe's largest motorcycle market, 578,500 units (including scooters) were sold in 1995, according to Knibb, Gormezano & Partners, a U.K.-based consulting firm. Next in line was France with 285,000 units sold. In Germany, whose climate is more similar to Poland's, 212,800 motorcycles, were sold for more than DM 2 billion in 1994.
The German example is especially important for Poland as the selling season is limited because of the harsh winter. Motorcycle sales usually occur between late March and August and are practically dead in winter.
"There is no reason Poland should develop in a different way than other countries with a similar climate," said Carcade's Anna Pakulniewicz.
And dealers point to an industry rule of thumb to highlight the market's potential. Worldwide this rule holds that for every 10 new cars sold, there is one new motorcycle sold, said Jerzy Dabrowski, sales director with Motopol, which distributes Honda motorcycles in Poland.
Last year nearly 480,000 new cars were sold in Poland. So if the market develops along the lines of more mature markets, about 50,000 motorcycles should be selling each year, he added.
Down the road
This potential has insured that most of the big-name motorcycle makers have some presence in the market. Germany's BMW, the U.S.'s Harley-Davidson and some Italian and British are present. But Japanese companies, namely Suzuki, Honda, Yamaha and Kawasaki, dominate the market.
Suzuki is the only producer that distributes its own bikes. Other brands are distributed by independent firms: Honda by Motopol, a firm established by French entrepreneurs; Yamaha by Japanese trading firm Mitsui; and Kawasaki by Carcade. These distributors sell their motorbikes through independent dealers across Poland.
The Japanese companies see great potential in Poland, despite the minuscule new model sales, largely because of the number of their motorcycles that are already on the road in Poland.
Kawasaki said that as of last year there were about 40,000 of its bikes in the country. These bikes, of various ages, were almost all imported privately by individuals.
Eventually these customers will look to trade up. And in the meantime, older bikes means a need for parts, which could generate another opportunity for motorcycle companies. Profit margins on the sales of spare parts and accessories typically have margins of 20-30%, said Dabrowski of Motopol.
"The parts market is not that big yet, but it is growing," said Iwanicki of Suzuki.
Although margins on motorcycles themselves are not as robust as for parts, they still outpace those of car dealers, providing further incentive for firms to get a foothold in the market here.
The average motorcycle dealer's margin is about 10%, Iwanicki said, while for car dealers margins rarely exceed 7%.
But the higher margins won't mean much until the market picks up. Last year, Carcade managed to eke out a small profit selling just 41 units, Pakulniewicz said.
"In reality, one won't make big money from motorcycle sales until two or three years from now," she added.
The question is whether that big money will be made by small firms such as Carcade or the motorcycle producers themselves. To benefit from a boom, distributors will have to be well-capitalized.
Carcade, which recently imported 60 motorcycles each valued at about zl. 30,000, had to pay Kawasaki in advance. It won't recoup that money until independent retail dealers throughout the company sell the bikes.
Import duties alone for the motorcycles amounted to about zl. 400,000, Pakulniewicz added.
With such high up-front costs, small businesses may find it tough to meet capital requirements when hundreds of bikes are being imported every year. And that could leave the door open for producers themselves to either set up shop here or form partnerships with distributors.
Such a scenario isn't likely to take place for at least five years, Pakulniewicz said. But because that's when the motorcycle business is likely to get really exciting, Carcade is hoping the latter option will prove to be the case.
Using this more agile means of transportation, he is in work in 15 minutes. By car, the trip would take 40 minutes, he said. Once in the office, Dubelski changes into a suit and becomes a normal businessman.
But even when he's off his bike, Dubelski is still thinking of motorcycles. As the co-owner and vice-president of Carcade Invest, a leasing and motorcycle distribution firm, he's hoping that a greater number of Poles will choose his method of commuting.
So far the market for new motorcycles has been weak, if not non-existent. In 1996, only 450 new motorcycles were sold in Poland. But sales are starting to pick up speed and companies such as Carcade, which since last year has been the sole importer of Kawasaki motorcycles in Poland, are hoping the market will eventually boom.
In 1997, 1,100 new motorcycles were sold in Poland. With the spring buying season starting, dealers are hoping sales for 1998 will break through the 2,000 mark. And by 2005, Poles are likely to be buying 30,000-50,000 new bikes a year, said Pawel Iwanicki, motorcycle division manager at Suzuki Motor Poland.
Motorcycle dealers believe that eventually the market's growth will take on some of the characteristics of Poland's red-hot auto market, which has grown 80% over the past two years.
"First people must buy more essential goods like cars, houses," he added. "Then they will buy motorcycles."
And even if it takes time before consumers decide they want a motorcycle, companies feel they need to start building a presence in the market today, if they are to capitalize on the potential boom tomorrow.
"The cards are dealt right now," said Anna Pakulniewicz, who manages motorcycle sales at Carcade. "If someone tries to enter the market after three years, it will be too late."
Poland was once a big motorcycle market.
In the early 1970s, it was the largest producer of motorcycles in Europe with annual output of 200,000 units, according to Pawel Iwanicki of Suzuki Motor Poland.
Back in the good old days for the motorcycle market, bikes were commonly used as a primary means of transport, and locally made motorcycles were about 5-10% of the price of a car.
But in the late 1970s that started to change, Iwanicki said. Cars started to become more available and customers switched from two to four wheels. In turn, motorcycle production in Poland declined and the last domestically made bike was produced in 1985.
Today, imported motorcycles are nearly as expensive as a cheap car. Suzuki's cheapest model costs zl. 8,500, while the cheapest car on the market, Fiat's 126 "Maluch," costs about zl. 12,000. Upscale bikes, such as a Harley-Davidson, can run to zl. 100,000, the price of a family-sized car.
And because there is no domestic motorcycle production, prices are pushed up by import tariffs of 9% for non-European Union (EU) producers and 1.8% for EU producers.
The high price of imported motorcycles means that most consumers buy them for leisure purposes. At Suzuki, leisure buyers account for 98% of all customers, Iwanicki said. This customer profile differs from other European countries where many young buyers purchase a motorcycle as a means of transport because they can't afford a car, he added.
Suzuki estimates that about 50% of its customers in Poland have always owned a bike, either an old Polish-made or imported model. These buyers are now looking to replace their used models with new, imported bikes, Iwanicki said. The other 50% tend to be middle-class customers who owned a motorcycle when they were young and can now afford a motorcycle for leisure purposes. As an example, Iwanicki said one of his customers is a vice president of a large, state-owned bank who recently purchased his third Suzuki.
More customers needed
This price gap means that for the moment, many motorcycle buyers are looking to the second-hand market before they will even consider buying a new model.
Daniel Doktor, a cashier at a duty-free shop at Warsaw's Okecie airport, is one such customer. The 20-year-old recently bought his first motorcycle. But he bought used, not new. Doktor paid zl 8,000 for a Suzuki GSX 750 E made in 1984 and privately imported from Italy.
"I couldn't afford to buy a new motorcycle," he said.
While used bikes run between zl. 5,000-zl. 10,000, a good, new model would cost about zl. 20,000, he added.
And price-conscious consumers aren't just looking at how much they'll have to shell out to buy a bike. Maintenance and insurance aren't cheap either.
Doktor estimates that during the summer he'll have to spend up to zl. 500 a month for fuel and oil. And with insurance costs running as much as 20% of a motorcycle's purchase price, he needs another zl. 500 for a six-month insurance package.
With buyers such as Doktor turning to the used-bike market, sales of privately imported, second-hand motorcycles probably far exceed sales of new models, Iwanicki said.
But there is hope. Even if Doktor can't afford a new bike today, he has his sights set on one sometime in the future.
"I really would like to buy brand new as it's guaranteed quality and service," he said. "Maybe I'll buy one in five years."
That's the attitude the industry is counting on to help sales catch up to Western European levels in coming years.
In Italy, Europe's largest motorcycle market, 578,500 units (including scooters) were sold in 1995, according to Knibb, Gormezano & Partners, a U.K.-based consulting firm. Next in line was France with 285,000 units sold. In Germany, whose climate is more similar to Poland's, 212,800 motorcycles, were sold for more than DM 2 billion in 1994.
The German example is especially important for Poland as the selling season is limited because of the harsh winter. Motorcycle sales usually occur between late March and August and are practically dead in winter.
"There is no reason Poland should develop in a different way than other countries with a similar climate," said Carcade's Anna Pakulniewicz.
And dealers point to an industry rule of thumb to highlight the market's potential. Worldwide this rule holds that for every 10 new cars sold, there is one new motorcycle sold, said Jerzy Dabrowski, sales director with Motopol, which distributes Honda motorcycles in Poland.
Last year nearly 480,000 new cars were sold in Poland. So if the market develops along the lines of more mature markets, about 50,000 motorcycles should be selling each year, he added.
Down the road
This potential has insured that most of the big-name motorcycle makers have some presence in the market. Germany's BMW, the U.S.'s Harley-Davidson and some Italian and British are present. But Japanese companies, namely Suzuki, Honda, Yamaha and Kawasaki, dominate the market.
Suzuki is the only producer that distributes its own bikes. Other brands are distributed by independent firms: Honda by Motopol, a firm established by French entrepreneurs; Yamaha by Japanese trading firm Mitsui; and Kawasaki by Carcade. These distributors sell their motorbikes through independent dealers across Poland.
The Japanese companies see great potential in Poland, despite the minuscule new model sales, largely because of the number of their motorcycles that are already on the road in Poland.
Kawasaki said that as of last year there were about 40,000 of its bikes in the country. These bikes, of various ages, were almost all imported privately by individuals.
Eventually these customers will look to trade up. And in the meantime, older bikes means a need for parts, which could generate another opportunity for motorcycle companies. Profit margins on the sales of spare parts and accessories typically have margins of 20-30%, said Dabrowski of Motopol.
"The parts market is not that big yet, but it is growing," said Iwanicki of Suzuki.
Although margins on motorcycles themselves are not as robust as for parts, they still outpace those of car dealers, providing further incentive for firms to get a foothold in the market here.
The average motorcycle dealer's margin is about 10%, Iwanicki said, while for car dealers margins rarely exceed 7%.
But the higher margins won't mean much until the market picks up. Last year, Carcade managed to eke out a small profit selling just 41 units, Pakulniewicz said.
"In reality, one won't make big money from motorcycle sales until two or three years from now," she added.
The question is whether that big money will be made by small firms such as Carcade or the motorcycle producers themselves. To benefit from a boom, distributors will have to be well-capitalized.
Carcade, which recently imported 60 motorcycles each valued at about zl. 30,000, had to pay Kawasaki in advance. It won't recoup that money until independent retail dealers throughout the company sell the bikes.
Import duties alone for the motorcycles amounted to about zl. 400,000, Pakulniewicz added.
With such high up-front costs, small businesses may find it tough to meet capital requirements when hundreds of bikes are being imported every year. And that could leave the door open for producers themselves to either set up shop here or form partnerships with distributors.
Such a scenario isn't likely to take place for at least five years, Pakulniewicz said. But because that's when the motorcycle business is likely to get really exciting, Carcade is hoping the latter option will prove to be the case.
