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:

  1. Pay the balloon payment, and own the bike outright
  2. Sell the bike to a third party
  3. 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

  • c22tch

    Do you see the Japanese brands getting in on this ?

  • I think it’s a move that will work better for premium brands than it does for commodity brands.

    This comes back to the divide that’s being created between cash and credit buyers, which I talked a bit about here: http://www.asphaltandrubber.com/premium/great-motorcycle-buyer-divide/

    That being said, it is certainly something that can still work for the Japanese. Maybe not to such a large extent, but it’s not like people are buying R1s with cash anymore…

  • TB

    A quick look into BMW’s policy about returning the bike mentions something about “provided that your motorcycle has not exceeded the contracted kilometre allowance and meets fair wear and tear conditions”. My guess would be the Ducati program would be similar (?).
    As such, I wonder if there will be extra restrictions or costs on bikes that might be tracked or off-roaded during their ownership.

  • TonyG

    This is a really astute reading of this finance method. Having bought a car this way I can support this analysis of the benefits. Another development in car land is the idea of guaranteed future value in the deals which really removes the risk of any downside. While selling the bike might be a pain with the finance on it, if you pay it out and get the title cleared you might well make a profit on the resale yourself, especially if you have been able to gear the deal in the right way (weirdos notwithstanding though). And a new bike every few years is a really sweet prospect.

  • Ducati’s program does not have a mileage restriction. But, a high-mileage rider is going to feel the burn when it comes to trade-in time, as their bike value will be less.

  • I’m trying to trademark “Motorcycling as a Service” or “MaaS” – that’s what is going on here, really.

  • Speedwayrn@yahoo.com

    No milage limit is awesome. Motus should look into something like this

  • TB

    That’s not unusual even in a conventional sale or trade in situation.
    The Ducati program sounds like a seriously attractive prospect without the milage constraint. If/when I can justify the periodic cost for the kind of bike I would like to get next, I might seriously consider it, assuming it comes to Australia.

  • Ville Äyräs

    KTM has worked with Santander to offer financing on bikes for a long time.
    At regions like Finland where nobody buys a street bike during winter they offer very good deals.

    I traded my Duke 690R (2013) to a brand new one at the end of November.
    KTM financing through Santander.
    0℅ interest on the loan.
    No billing fees or set up fees.
    During the regular riding season the same deal would come with 0.99-2,99℅ interest.

    The “free” payment plan helps dealerships unload old stock off the showroom instead of dropping the price on those “old” bikes next year.

    So the loan money cost me nothing.

    KTM or the dealership probably have to hand out something to Santander.

  • Loud_V8_noises

    In most states with sales or use taxes these are horrible deals compared to automotive leases. With balloon payment loans you’re paying sales/use tax with every bike purchase of the full amount. With auto leases in MOST states you only pay the difference between the purchase price and residual value.

    In WA state with nearly 10% taxes on vehicle purchases you’re looking at $1500+ every 3 years when you swap bikes. Screw that.

  • 0% interest isn’t anything new, and it certainly helps to be giving money for free to help entice consumers to make a purchase.

    Leasing programs, and what BMW and Ducati are doing though, try to create situations where you perpetually pay a monthly fee to have a motorcycle, with the upside being every few years, you get a new bike.

    We have seen this already in the US with cellphones, actually, where if you keep your plan for a certain timeframe, you get a free upgrade to a new phone.

    It worked really well when smartphones were evolving quite rapidly. Now that the technology has petered out though, cellphone service providers are having to come up with new ways to entice buyers.

    I wonder if the same will ever be true for motorcycle OEMs.

  • michael uhlarik

    Let’s review, from the manufacturer standpoint.

    Short term sales boost, which is super. But also razor thin margins, unsecured asset in case of default, and lots of exposure if/when the market sours. Where have I seen this before…? Harley-Davidson Financial Services, of course. Circa 2009. I smell another Ducati change of ownership coming.

  • paulus

    Short term management bonus/dividend motivated?
    I can see a depressed resale market coming. The current management and shareholders want the gains now, but is it sustainable? Second hand prices are dictated by market forces. If these programs successfully increase new bike sales, how is the uptake of used vehicles? Will it be proportional? Will dealers be forced to discount deeper to move more units? Ultimately, will this depreciate used values and demotivate end users who actually ‘own’ rather than lease?

  • Kings of Beach

    Ride well and be lucky at the track. Switch out the melted up tires before trade-in.

  • paleochocolate

    The subtle big deal here is that weird white stripe at the back of the gas tank.

  • PierreLaPierre

    Jensen good article thank you. I believe a similar deal exists in The UK for most marques it’s known as PCP or ‘Personal Contract Purchase’. With prices as high as they are for Ducati’s there and in France these financial mechanisms are badly needed in order for most mere mortals to be able to buy a new bike.

  • KungFooBob

    In the UK we call this PCP… and over 90% of all vehicles (cars and bikes) are sold this way.

    I’m surprised it’s not the same in the US?

  • Jason

    They have in the past. My brother bought a 1995 CBR600 F3 through Honda Credit on a balloon loan that sounds identical to what is being described above. It is similar to a lease but all of the risk at the end of the term is shifted to the buyer.

    What was old is new again.

  • Patrick Houston

    PCP (Personal Contract Purchase) are huge in the UK and Europe. If you read Fast Bikes magazine which is a UK publication, they talk about the latest deals frequently. Everyone in the UK offers these (Ducati, BMW, KTM, Yamaha, etc.)

    PCP’s are better than the Ducati, BMW offer in North America because you can return the bike to the dealer/manufacturer at the end of the term and walk away rather then having to sell it to a third party. Option 1 and 3 noted above are also available.

    Wish this option was made available by all manufacturers in North America.

  • Walter

    Very well written article: focusing on what’s important to potential “buyers” other than the headline (get a new bike more affordably).

    Any idea what their credit score cutoff is for “highly qualified”- which I guess is their main risk mitigation strategy (along with the down payment of course). That would be pretty interesting.

  • I would guess 690 and above, but that’s just a very basic guess.

  • Sam Miller

    MN taxes only the difference for any vehicle that has a license plate now.

  • Sam Miller

    “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.”
    In regular practice I can’t see these numbers lining up unless it’s only premium brands and maybe 2 years old max?

  • Ayabe

    “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.”

    Lol, it’s a bad deal unless you like enjoy being a perpetual renter and just like a 3 series lease many of the takers will be complete idiots.

    I’d like to see an actual breakdown of the purchase price with balloon payment vs traditional financing, chances are the former bends you over for thousands more.

    Say no to rent collectors.

  • Loud_V8_noises

    WA is the same way. So taxes would be the difference between the new bike purchase price and the trade-in value. I should’ve clarified.

  • Dan Yuknavage

    Taking a page from the Automotive history side of things. Nissan was all about leases on their Infiniti luxury car line in North America. What bit them in the wallet the market price on a 2 year old lease return Q45 was way less than Nissan planned.
    This hit the bottom line so much Nissan got bought out and had to learn to speak French.
    If the lease payments don’t cover the depreciation in the used vehicle value the manufacturer takes the hit. Hope Ducati has made a good guess on their used bike prices.

  • Ayabe

    I’m sure they’ve done whatever math is necessary to determine this works in their favor, since real numbers aren’t available I have to assume that. Somehow Hyundai rode out the 2008 crises just fine even though they handed out loans to anyone with a pulse.They were able to turn a profit on the repo auction market whereas Suzuki got seriously burned by the 500 credit score crowd and almost collapsed.

    I guess the point I’m trying to get at is if you can’t afford $160/month for 3 years you can’t afford $90/month in perpetuity, bottom line you don’t have the disposable income to buy a new motorcycle.

    Vultures handing consumers ropes to hang themselves with is not something which engenders warm feelings.

  • keithwwalker

    Call it what it is: a lease.

  • Rob

    It’s been done before. Yamaha Canada has been doing this for a year, now.

    When a trade is made, doesn’t the remaining balloon payment get rolled into your new financing deal?

  • James Bachhuber

    Woo Hoo! Cheap low mileage used Ducatis!

  • Ryan Donahue

    I can see why they rolled out such a program. Take for example, the MTS-E. A great and sought after bike. But it’s rather expensive. In order to get more people on to the bike, a program like this makes some sense. And, on the back side, there likely could be some cheap(er) MTS-E units available on the used market in a few years… Not a bad thing.

  • Vladimir Pushkin

    I had done a bit of research as Ducati calls it Tier 1. Tier 1 is essentially 700+

  • sburns2421

    I read about it when it appeared on the DucatiUSA website. Seems exactly like BMW’s system, and very similar to the PCP program in the UK that seems to be for every brand over there.
    Perhaps I am of an unusual mindset, but I never buy a bike thinking about the day I will sell it. Sure I have sold most I have purchased over the years, but there is just something odd about buying a new bike and effectively paying the depreciation plus interest and giving it back in four years (I think their sample payments are based on 48 months).
    But that aside, what are the future values of the bikes? I didn’t find those available on their site. Until you know what the balloon amount will be at the end, it is tough to determine if this is a “good” deal for the buyer or not.
    One more thing, I don’t see why they are doing it for the cheaper models except to stop the drop in sales short term. If you can finance an FZ-09 for $160 or rent a Scrambler $99 for four years, perhaps you shouldn’t be buying a new bike at all if that $61 is critical in the decision process.

  • Joe D

    I am old enough to remember when people could afford to pay cash for an item with a year’s worth of savings. My first streetbike was 1100 USD. I was earning 8 per hour. 1975. I could pay for housing and food with two weeks pay.

  • RedDragon99

    re: change of ownership let’s hope so. Current upper management desperately needs to be gutted.

  • Who tanked?

    I’m confused why the article says Ducati’s U.S. sales “tanked” last year while BMW has been setting record sales year after year. Didn’t BMW sales drop more than 16% last year, compared to Ducati’s 9%?

  • Paul McM

    I’m really not so convinced that many BMW buyers are actually acquiring machines with this kind of bait and switch balloon payment system. In SoCal, most of the BMW riders I see are older guys who pay cash or trade in a very valuable bike.

    I certainly don’t see GSXR riders stepping up to S1000RRs. Honestly, I think that’s just make-believe. Show me proof…

    The smart buyers (which include most of my friends) simply buy the $18000 BMW/Ducati/Yamahondazuki for $12000 (or less) after two years.

    Shop smart — there are incredible deals to be had in the previously owned market. I got a fully optioned VFR 1200 with 4K miles on it for $10500. New (with bags, options etc. it was close to $18K). Very nice machine — I like it better than anything in Honda’s current livery (I was tempted by Africa Twin… ’til I rode it and was quite underwhelmed).

  • Paul McM

    California “sales tax” on motos is a minimum of 7.5% and can be closer to 9% in some municipalities.

  • Well-written response. Honestly, it’s perplexing that most posts here are extolling the virtues of this finance plan. It doesn’t take much business sense to know that this approach benefits everyone except the consumer.

    It’s not hard to argue that machines have gotten expensive, but tricks like this aren’t the long term solution. If we’re being honest with ourselves, a $15k-$20k motorcycle requires quite a bit more income and fiscal responsibility than many would expect. The answer is simple: spend less money and buy what you can afford. Of course, the same can be said for most things.

  • AHA

    PCP deals are big business in the UK and have been for years, as earlier commentators have said. Couple of additional points: You need to maintain the bike very well (dealer service stamps etc) and check if mileage limits apply or not. The financial penalties are severe otherwise. After-market mods are a bit of a grey area here. Beware. Secondly, you’ll be encountering the joys of ‘GAP insurance’. If the bike is stolen or written off during the term, the insurance company may give you less than the outstanding finance as the ‘market value’ takes into account real market depreciation (i.e. more at the beginning) and the PCP scheme does not (it’s almost linear.) GAP insurance variously covers you against the difference or gap between the insurance pay out and what you owe on the finance OR, in an ‘improved’ version, the full purchase price new (less any non-factory options.) Both flavours aim to recompense you from a shortfall – but at a cost. Factor these premiums into your monthly outgoings if you choose to take this cover.

  • AHA

    Also, dealerships make more money on the finance deal than they do on the sale of the bike. It’s the end of cash buying. I offered 100% cash for a new car (in January FFS!) and they showed me the door.

  • ned

    the Superleggera payment is why I read the entire article.