Motorcycle Prices Set to Rise

Because of rising costs and an unfavorable exchange rate for the dollar, new-bike prices are likely to climb when 2005 motorcycle models are announced starting in June, and some manufacturers may be forced to raise prices before then. **By

Prices of new motorcycles appear likely to climb for the 2005 model year, and one manufacturer, faced with steep cost increases, have recently boosted their prices on 2004 models.

Motorcycle manufacturers are seeing sharply increased costs for steel, transportation, energy, and other commodities, which they are likely to be forced to pass along on their 2005 models. In addition, the devalued dollar means that it isn't worth as much overseas, so the price to produce a motorcycle, in dollars, has climbed even before the higher costs of components are considered. The profits at home on motorcycles imported to the U.S. have reportedly eroded this year since importers have not raised prices for the American market, instead sticking with the prices announced last year. This has been cited as one of the factors in Aprilia's current financial problems, and other manufacturers' U.S. units are reportedly sending less money home.

The diminished buying power of the dollar isn't hitting only import brands either, since even domestic brands import some parts for their bikes. On the positive side, though, it means that prices for Harleys and other U.S. built motorcycles (such as some Hondas) in other markets can be lower or more profitable in dollars.

Polaris, parent company of Victory Motorcycles, has just announced a $50 "surcharge" on all "full size products," including snowmobiles, ATVs, watercraft, and motorcycles. A company spokesman characterized the reaction of its dealers and customers as "for the most part, very understanding." We don't know if any other manufacturers will follow Victory's move, but the pressure is certainly on.

We expect new-model events starting in June, and anticipate that the prices announced for carry-over models at that time will be higher than 2004.

We can't pin down anyone other that Victoryas to what sort of increases to expect, but one knowledgeable source told us that increases "could be as high as 10 percent." Each manufacturer's situation will be somewhat different, and the first announcements will probably set the pace for the others. That might be incentive for potential buyers to buy 2004 models, which appear to be selling well already, while they are available.

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