Ducati released a new financing program this week, maybe you saw the announcement already. If you even bothered to read one of the copy/paste jobs on this announcement, you probably got three sentences into it, and then realized you just lost a minute or two of your life, which you will never get back.
It is hard to make this topic sexy, and motorcycle journalists are lazy creatures (myself included)…which is why you probably just saw the press release reprinted on a website, with some Ducati advertising placed next to it, just for good measure.
The Ducati Premier Financing program is a big deal though, just not in a way that is immediately sexy to the casual motorcycle buyer.
In realities, Ducati Premier Financing is not that different from the BMW 3asy Ride financing program, in that it is a finance plan that is not too dissimilar from a leasing program, and it is aimed at making the monthly payment on a motorcycle incredibly affordable*.
I will get to that asterisk in a minute, but first to illustrate the magnitude of this point, consider two equally priced motorcycles: the Yamaha FZ-09 and the Ducati Scrambler Icon.
Both bikes retail for $9,000 MSRP, and with the current interest rates, the FZ-09 can be financed for roughly $160/month if you have good credit.
The same of course can be said with the Scrambler, but with the Ducati Premier Financing program, the payment on that Scrambler is going to be dropped to a measly $99/month. The choice here is going to be pretty obvious, for most buyers.
Because of this payment disparity, BMW Motorrad has been able to drive home record sales, year after year after year, in the North American market. Now, Ducati wants in on the action too.
***Ok, now here’s the asterisk: the reason that BMW and Ducati can offer such a low monthly rate is because at the end of the loan term, a balloon payment has to be made. That doesn’t have to be a bad thing, per se, so long as the buyer is aware of what they are getting themselves into at the time of signing.
As such, a buyer in the Ducati Premier Financing program will three options when their loan ends:
- Pay the balloon payment, and own the bike outright
- Sell the bike to a third party
- Or, trade-in the bike towards a new model
In BMW land, the latter option is by far the most popular, and that suits BMW Motorrad just fine – and is why Ducati is keen to emulate this program.
This is because no one wants to slam down a few thousand dollars at the end of loan, especially on a motorcycle that is now several years old. Similarly, selling a vehicle that still has a lien on the title is a pain-in-the-ass to orchestrate, especially in this day and age of Craigslist weirdos.
So, this primes the dealership for an easy trade-in, which is a win/win for them. They sell another new bike, get the OEM kickback on the financing deal, and add a fairly new machine to their used inventory lineup, all in one deal. Booyakasha.
This isn’t necessarily a bad deal for the consumer though, presuming they understand the situation they have gotten themselves into with a financing program like this.
By making these smaller payments, a buyer is obviously paying more into the interest on the loan than into premium, when compared to a standard loan structure.
Doing some gorilla math on the payment amounts Ducati is quoting, the trade-in value on bikes sold with the Ducati Premier Financing program will be worth on the used market close to the amount that is still owed on the loan, at the end of the term.
As we have seen with the BMW 3asy Ride financing formula, this motivates buyers to be easily sold on the idea of buying a new bike every few years, essentially paying for a motorcycle as if it was a service and not a product.
That is to say for a low monthly payment ($100-$250/month), a Ducati buyer can easily trade into a new machine every few years (depending on down payment amount, and actual payment amounts made over the course of the loan).
Getting a brand new motorcycle every few years, and with virtually no maintenance concerns, isn’t too bad of a deal. Especially if you are always going to be that credit buyer at the dealership, and you always want to have the latest and greatest machine from the Italian brand.
For the premium motorcycle brands, this description covers a huge portion of a buyers.
As I said before, this then helps dealers to bring in new-ish bikes on trade-in, and the real power here is that it is the early makings of a Ducati “certified pre-owned” program. Remember, you heard that prediction here first.
With Ducati’s American sales tanking in 2016, the Italian brand needs a way to move more machines in its largest relevant market. While having compelling product is certainly part of that equation, even more important is addressing the issue that not everyone can afford a new motorcycle, especially younger buyers.
BMW has shown with the 3asy Ride finance program that it can easily siphon of GSX-R1000 buying skippies, by not only offering them a superior S1000RR superbike, but doing so at a payment amount that is far less than what the Japanese brand can offer.
This makes the Premier Financing program a very shrewd move by Ducati, and worth far more than the press release copy/paste job it got this week.
Of course, what we all really want to know now is how much is that monthly payment on a Ducati 1299 Superleggera going to be? Mmm…
Source: Ducati North America