Motorcycles: End of the Road — Again?

<< Back to Robb Report, The 20th Annual Ultimate Gift Guide

Richard Keck, president and owner of Indian Motorcycle Evansville, had two things planned for his five-day September stay in Las Vegas: to enjoy a Jimmy Buffett show at the MGM Grand Amphitheatre, and to place his orders for 2004 Indians. He did neither. In fact, he never made it to Las Vegas.

On September 19, Keck received a call informing him that the Indian dealer meeting in Las Vegas had been canceled. Indian Motorcycle Corp., which relaunched the brand in 1998 after half a century of dormancy, had unexpectedly halted motorcycle production and laid off its employees when the Audax Group, a private equity firm, withdrew its funding. “From the beginning,” says Mark Mederski, executive director of the Motorcycle Hall of Fame Museum, “when I heard the marque would be revived, it struck me that this would be a tough market for anyone to crack.”


Indeed, it has been difficult for Indian to regain a foothold, but dealers such as Keck are remaining optimistic. As of October, Indian had not declared bankruptcy, and Keck, who is a member of Indian’s dealer council, says he expects the company will find a new investor to provide the necessary capital. Meanwhile, Indian’s announcement has resulted in buying opportunities. Keck, for instance, has reduced prices on his remaining 2003 Indians, which are no longer covered under factory warranty. “We’re pricing the bikes, with no warranty, like they were used 2003s,” Keck says. “It’s a little loss for me, but it’s a great deal for customers. They’re getting a bike with no miles at a used-bike price.”

At the same time, the uncertainty surrounding future production could lead to an increase in the value of existing Indians, especially those featuring the company’s proprietary Powerplus engine. (The bike was originally launched with an 88 cu in S&S block.) Some Indian owners, fearing that parts and service would no longer be available, have already sold or traded in their bikes—at steep discounts—for used Harley-Davidsons.

So far, this fear is unfounded: Dealers continue to stock parts and offer service, urging owners to hold on to their motorcycles. “If you own one of these machines, this is the worst time to sell it,” says Mederski, who predicts an increase in the motorcycle’s value, after an initial decline, by 2 percent to 3 per-cent annually. “Nobody knows what’s going on, so you would do best to keep your machine. It is one of just 5,000 bikes made, so it’s assured a place in history again.” Mederski recommends that owners acquire manuals and brochures to complement their motorcycle and add to its total value. He also recommends that owners purchase a surplus of rapid-wear parts such as brake pads, cables, grips, and foot pegs.

The 2002 models suffered from starter, swingarm, and windshield problems but received high customer-satisfaction ratings overall. However, honoring the four-year warranties on the S&S-powered pre-2002 bikes cut into Indian’s profits, and the $18,995 price for the base-model Scout hurt sales. Ironically, Indian was on the verge of reducing prices and offering a brand-new engine when it halted production. The company was scheduled to debut the new Scout, Spirit, and Chief models to its dealers when the announcement was made. The $15,995 Scout and the $17,795 Spirit Springfield would have been equipped with the Powerplus 92, which boasts a 25 percent increase in power and a 26 percent increase in torque over the previous-generation engine. Now it remains to be seen when those 2004 models will be released—assuming they ever are.

More Cars