Why Buying Used Makes More Sense Than Ever: Depreciation Deep Dive

 

If you’re thinking of buying a motorcycle sometime soon, you have a long list of decisions to make. Which brand are you interested in? Which model should you get? What type of bike would be best suited to the types of trips you’ll be taking? Which features do you want? Those are only a few of the points you need to think about.

On top of all that, you need to decide whether to buy new or find a nice used motorcycle for sale. Many people lean toward new models. After all, the thought of getting a brand-new bike with all the latest features that has never belonged to anyone else is definitely appealing.

Are new motorcycles really the best investment, though? Thanks to depreciation, they lose a great deal of their original value within just a few years. That could leave you paying a lot more than your bike will be worth by the time you pay it off.

What Is Depreciation?

Depreciation is basically an ongoing loss of value. It happens somewhat gradually, but its effects are extremely noticeable. Some experts are quick to point out that it’s the biggest cost of ownership people face with vehicles, and it’s one you can’t really avoid. It’s also one of the biggest arguments for choosing a used bike over a new one. Here’s why.

Leaving the Dealership

Right from the start, a new motorcycle begins to lose value. As soon as you leave the dealership with it, it can lose up to 5 percent of its original worth. What does that mean for you? Well, by the time you get the title with your name on it, and probably before you even make the first payment, you’ve already lost a percentage of what you agreed to pay for the bike.

To put that into perspective, say you pay $30,000 for a brand-new motorcycle. Thanks to typical depreciation, its value will drop by about $1,500 when you drive it off of the lot. That’s a lot to lose in just a few short minutes.

During the First Year

From there, a new bike will continue to lose value for the remainder of its first year on the road. In fact, depending on several factors, which we’ll talk more about shortly, it could lose another 10 to 20 percent of its initial value. For the bike we mentioned earlier, that could add up to another $4,500 or so on top of the $1,500 you lost driving away from the dealership. With that being the case, the bike that originally cost $30,000 will only be worth around $24,000 by the time you’ve owned it for a year.

Through the Second Year

Now, we’re coming into the second year of your new bike ownership. It’s still fairly new to you, but the valuation experts don’t exactly see it that way. According to them, it has acquired some age at this point, and you’ve put a good bit of wear and tear on it by now.

Because of that, your bike will have lost even more of its original value. By the end of year two, its value will have dropped roughly another 10 percent, or $3,000. As such, it’ll only be worth about $21,000.

 

Year Three

That brings us to the third year after you purchased a new motorcycle. During year three, it’ll lose yet another 8 percent or so of its value, which may amount to around $2,400. Subtract that from last year’s figure, and you’re left with a bike that’s worth about $18,600. That’s a significant drop in value already, but it’s not over yet

At the End of the Fourth Year

With that, you’re powering through the fourth year with your motorcycle that was worth $30,000 in the beginning. It’s continuing to get older and acquire normal wear and tear, so its value is continuing to plummet. Depreciation rates tend to level off a bit at this point, so your bike is likely to lose about another 8 percent of its value, or $2,400 more. That means it’s worth approximately $16,200 by the end of year four

 

The Fifth Year With Your “New” Motorcycle

Finally, we’re at year five, which means slightly less depreciation will take place. In their fifth year after leaving the dealership, motorcycles generally lose about 7 percent of their value. For the bike we’ve been using as an example, that’ll mean another $2,000 or so.

In light of all that, the new bike that originally cost $30,000 is now worth less than half of its initial value. You’ve lost that much of your investment in just five short years. All that’s just due to the fact that it’s aging and you’ve put wear and mileage on it.

Beyond Year Five

At five years after its manufacture date, a motorcycle isn’t old. You might even say it’s barely getting broken in. Still, its value has dropped by more than 50 percent.

Depreciation levels off after the fifth year. It doesn’t stop altogether, but it does slow down a good bit. For most bikes, annual value loss from here on out typically ranges from 3 to 6 percent. That’s a general figure, though.

What Else Affects Motorcycle Values and Depreciation?

There’s really nothing you can do to prevent a motorcycle from losing at least some of its value over time. You can’t stop time. Besides that, buying a bike only to park it in your garage and never touch it to avoid wear and tear would be a waste. It would defeat the whole purpose of owning one, wouldn’t it?

Still, several factors can affect just how quickly your bike depreciates and how much value it loses along the way. Some matter more than others. Let’s take a look at the most important aspects here.

Brand

Brand is certainly one of the most important influencing factors for a variety of reasons. For example, some BMWs depreciate quickly and significantly. They’re expensive, high-end bikes. In a sense, you can expect them to lose more value because they cost more upfront. Additionally, though BMW is known for quality and performance, some of its motorcycles tend to need a great deal of maintenance when they start to age, and they can be costly to keep up.

Triumph motorcycles also depreciate more than some brands. Like BMWs, they have high purchase prices. Some of their models are known to have reliability issues as well. On top of that, parts can be difficult to come by, and repairs and maintenance are expensive. All of that has a way of hampering their resale value.

Those factors also apply to Indian motorcycles. They have their following, but it’s limited, and their drawbacks cause them to lose value faster than some other brands. Furthermore, they’re up against stiff competition, and they don’t have the same consistent branding as, say, Harley-Davidson that builds a loyal and ever-growing fanbase.

In contrast, Harley-Davidson has a massive global following along with a reputation for quality and reliability. They also have several iconic models with cult followings all their own. Owners don’t have to worry about service or parts availability, either. Though some of their new bikes come at a premium price, they also tend to hold their value better

Model

The model also plays a role in how well a bike holds its value. Some brands that lose value the most overall have models that are exceptions to the rule. On the other hand, certain brands that

are known for maintaining more of their initial value have models that just don’t follow the typical pattern.

Certain models are in higher demand than others, which means they’re likely to hold their value better. A prime example here is the Kawasaki Vulcan S. Though the brand itself isn’t famous for maintaining high resale values, the newer Vulcan S models seem to be holding their own. Suzuki’s SV650 and GSX-R1100 have plenty of fans as well, which makes them worth more in the used market.

Harley-Davidsons usually maintain their value exceptionally well. Fat Boys, Street Glides, Road Kings, and certain Low Riders are some of the best in this category. A few haven’t performed quite so well, though, like the LiveWire. It strays from Harley’s usual lineup, so people aren’t as enthused with it as the company’s other models. It’s also an EV. Many critics and consumers alike say that dooms a lot of vehicles right from the start

Mileage

Another factor that affects a bike’s long-term value is mileage. The more miles it has on it, the less it’s likely to be worth. Depreciation is built into standard depreciation rates to an extent, but if you put more miles on your motorcycle than what’s considered normal, that’ll cause it to lose more value.

Between 3,000 and 5,000 miles per year is generally considered normal for a motorcycle. Of course, mileage doesn’t necessarily have the same impact for all types of bikes. A five-year-old touring bike with 50,000 miles on it may be considered a high-mileage model, but those bikes are built for long hauls, so they can handle it. For a sport bike of the same age with the same mileage, though, that’s a different story. They take on more abuse, and they tend to wear out faster.

Condition and Maintenance History

A bike’s condition and maintenance history affect its value too. If it has scratches, dents, and rust, it won’t be worth as much as one that’s in near-perfect condition. Without ongoing maintenance, a bike will depreciate much faster than one that has been kept up. Keeping up with routine maintenance and making repairs promptly will help counteract some of the effects of wear and tear. That, in turn, will help a bike maintain some of its initial value.

Modifications

Finally, there are modifications to consider. Granted, some changes can actually boost a bike’s value and help offset natural depreciation. Those include upgrades that improve performance and efficiency or make it safer or more comfortable to ride.

Other alterations can have the opposite effect, though. Modifications that significantly change the look of a bike or interfere with its performance can definitely hurt its value. It’s best to keep changes and customizations to a minimum and focus on those that truly make a positive difference.

Is It Smart to Buy a Used Motorcycle?

Many people start shopping for a motorcycle wondering whether they should buy new or used. They may argue that new models have all the latest tech and features and none of the wear and tear of used bikes. Are those factors really worth the added cost, though?

In truth, you could buy a premium bike at a fraction of the cost of a new one by choosing a model that’s just a few years old. If you find the right used bike from the right source, you’ll get just as much value as you would with a new one. On top of that, you won’t have to suffer through the major losses of those first five year of depreciation. A good used bike is a smart investment that’s sure to pay off.