Production Cost of Making a Dirtbike

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1/16/2018 4:45 PM

Does anyone have some educated info as to what it costs the OEMs to make the bikes we buy and ride? Excluding R&D. How much is done in house and how much is outsourced (i.e. bars, tires, rims, exhaust etc.)? Assuming a roughly 50% margin we're looking at ~4-5k? But what about shipping costs, is that factored in? Would the answer surprise me, more like 2500?

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Osama Bin Mixin - Head of the 2-stroke Taliban

1/16/2018 4:56 PM
Edited Date/Time: 1/16/2018 5:08 PM

Quite the loaded question, with so many variables. I'm sure someone more knowledeable than myself will chime in, but I'd imagine nearly every component is outsourced. Not talking just wheels from Excel or tires from Dunlop; but everything from motor casings to cranks. Granted, the parts are produced to the OEM's specs with strict quality control - but still cast, forged, machined, etc by component suppliers who specialize in those specific abilities.. I'd go as far to say that the only thing done "in house" is assembly..

What I'd really be interested in, is how the number you're asking for differs from say the Honda's and Yamaha's of the world, to the Beta, Sherco and TM's of the world. On one hand, the smaller OEMs have way less overhead expense; but on the other hand I'm not sure how much they lose out on economies of scale...

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Positively, absolutely 110% obsessed with anything MOTO.

1/16/2018 4:58 PM

Extremely complicated and those are numbers only the top brass know.

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1/16/2018 5:07 PM
Edited Date/Time: 1/16/2018 5:08 PM

I’m going with about $50 more than $300.

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much ty. How to spot a paid forum poster/artificial forum traffic producer (see list of actions/phrases below):

Copius pattern amounts of phrases like “Anyone have”..., “Anybody know?”.... and their variations.

Thoughts?
Any help is appreciated!
Thanks in advance!





1/16/2018 5:10 PM

Rockinar wrote:

Extremely complicated and those are numbers only the top brass know.

I wasn't expecting a PDF file wink just some curious bench racing, err, accounting. It's an interesting question.

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Osama Bin Mixin - Head of the 2-stroke Taliban

1/16/2018 5:13 PM

For what it's worth, back in 2000 I asked a very well known motocross guy who works For Yamaha USA this exact question, his answer was that the YZ250 that I used as my example would have a recommended retail price approximately 5 times the cost of the unit as it rolls off the production line, so in today's figures , let's say the bike is
$10k sitting on the dealer floor, the unit cost was probably around $2k.
That's what I was told, don't know if it's true...true back then or true now...Who really knows?

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2020 YZ450F
2006 YZ125
2013 YZ 250F special edition
2017 YZ 250
2015 YZ 250f soecial edition
2019 KTM 85 big wheel

1/16/2018 5:13 PM

This should be fairly accurate info for the big-4 - Engine cases are die cast and machined at the OEM Factory. Frames fabricated and painted. Not sure on the transmission gears. Plastic injection molded in house. Fasteners sourced. Carbs/FI/Ignition sourced. Suspension sourced. Engines assembled in house, and the bikes assembled in house on a separate assembly line. I would bet crankshafts are machined and assembled in house too. (I worked as a Manufacturing Engineer at Kawasaki Motors Manufacturing making lawn-mower and 4-wheeler engines and also got to visit KHI in Japan).

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Motocross....a once in a lifetime experience....every weekend.

1/16/2018 5:17 PM

Production cost on most retail units is ~ 1/4 of the suggested retail price.

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1/16/2018 5:29 PM
Edited Date/Time: 1/16/2018 5:30 PM

My current and previous job are/were both with manufacturers (in a totally unrelated industry), and from my experience I can tell you that spare parts are a really high profit margin business.

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Positively, absolutely 110% obsessed with anything MOTO.

1/16/2018 5:37 PM

mxjeff575 wrote:

This should be fairly accurate info for the big-4 - Engine cases are die cast and machined at the OEM Factory. Frames fabricated and painted. Not sure on the transmission gears. Plastic injection molded in house. Fasteners sourced. Carbs/FI/Ignition sourced. Suspension sourced. Engines assembled in house, and the bikes assembled in house on a separate assembly line. I would bet crankshafts are machined and assembled in house too. (I worked as a Manufacturing Engineer at Kawasaki Motors Manufacturing making lawn-mower and 4-wheeler engines and also got to visit KHI in Japan).

My friend has a book on the history of the GSXR and that’s essentially what the book says about Suzuki.

I also watched a YouTube vid on KHI and it was talking about their parts delivery system. They dont get the parts for what they are working on until just before assembly. Thought that was pretty cool and efficient rather than having massive warehouses stocking every little item needed to complete a bike.

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1/16/2018 5:40 PM
Edited Date/Time: 1/16/2018 5:42 PM

JBecker 72 wrote:

My friend has a book on the history of the GSXR and that’s essentially what the book says about Suzuki.

I also watched a YouTube vid on KHI and it was talking about their parts delivery system. They dont get the parts for what they are working on until just before assembly. Thought that was pretty cool and efficient rather than having massive warehouses stocking every little item needed to complete a bike.

It’s called “just in time” inventory.

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much ty. How to spot a paid forum poster/artificial forum traffic producer (see list of actions/phrases below):

Copius pattern amounts of phrases like “Anyone have”..., “Anybody know?”.... and their variations.

Thoughts?
Any help is appreciated!
Thanks in advance!





1/16/2018 5:50 PM

mxjeff575 wrote:

This should be fairly accurate info for the big-4 - Engine cases are die cast and machined at the OEM Factory. Frames fabricated and painted. Not sure on the transmission gears. Plastic injection molded in house. Fasteners sourced. Carbs/FI/Ignition sourced. Suspension sourced. Engines assembled in house, and the bikes assembled in house on a separate assembly line. I would bet crankshafts are machined and assembled in house too. (I worked as a Manufacturing Engineer at Kawasaki Motors Manufacturing making lawn-mower and 4-wheeler engines and also got to visit KHI in Japan).

JBecker 72 wrote:

My friend has a book on the history of the GSXR and that’s essentially what the book says about Suzuki.

I also watched a YouTube vid on KHI and it was talking about their parts delivery system. They dont get the parts for what they are working on until just before assembly. Thought that was pretty cool and efficient rather than having massive warehouses stocking every little item needed to complete a bike.

kzizok wrote:

It’s called “just in time” inventory.

Works really well, until it doesn't. Then shit hits the fan!

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1/16/2018 6:04 PM

F150Motocrosser wrote:

Quite the loaded question, with so many variables. I'm sure someone more knowledeable than myself will chime in, but I'd imagine nearly every component is outsourced. Not talking just wheels from Excel or tires from Dunlop; but everything from motor casings to cranks. Granted, the parts are produced to the OEM's specs with strict quality control - but still cast, forged, machined, etc by component suppliers who specialize in those specific abilities.. I'd go as far to say that the only thing done "in house" is assembly..

What I'd really be interested in, is how the number you're asking for differs from say the Honda's and Yamaha's of the world, to the Beta, Sherco and TM's of the world. On one hand, the smaller OEMs have way less overhead expense; but on the other hand I'm not sure how much they lose out on economies of scale...

I say bullshit. Honda outsources it's motors? Uh huh.

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1/16/2018 6:15 PM

It's a difficult question because it has so much to do with over head and how you determine "cost." Just the cost of parts? Labor to assemble? Mortgage/rent, machines, etc.

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1/16/2018 6:16 PM

Well just look at it the way that Kawasaki employee's get half off bikes and you know they're still making money in there somewhere,

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1/16/2018 6:40 PM
Edited Date/Time: 1/16/2018 6:40 PM

IF YOU COULD GET 400% RETURN ON INVESTMENT THEN EVERYBODY WHO HAD MONEY WOULD BE MAKING MOTORCYCLES. I BET ON A 9000 RETAIL PIECE THE DEALER COST IS ABOUT 8000 AND FACTORY COST IS AROUND 7000. THATS A HEATHY 14% RETURN ON INVESTMENT, ANY COMPANY WOULD KILL FOR THOSE NUMBERS.

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1/16/2018 6:40 PM

I heard that a coupl'a models of current 450s were made "just in time" for 2018 homolgation requirements. You think that was expensive? The metrics for 1,000 units is waaaaay more expensive than the metrics for 5,000 units.

What would really make people scratch their heads is what an OEM pays for tires, bars, rims, grips...etc. But, then you have to factor in that they're buying them by the THOUSANDS.

$80 handlebars for $16? Sure! (When you buy 5,000 at a time & they ship in a giant container...not one at a time)

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I ripped a start from Egypt and I was happy about that.

1/16/2018 6:42 PM

F150Motocrosser wrote:

Quite the loaded question, with so many variables. I'm sure someone more knowledeable than myself will chime in, but I'd imagine nearly every component is outsourced. Not talking just wheels from Excel or tires from Dunlop; but everything from motor casings to cranks. Granted, the parts are produced to the OEM's specs with strict quality control - but still cast, forged, machined, etc by component suppliers who specialize in those specific abilities.. I'd go as far to say that the only thing done "in house" is assembly..

What I'd really be interested in, is how the number you're asking for differs from say the Honda's and Yamaha's of the world, to the Beta, Sherco and TM's of the world. On one hand, the smaller OEMs have way less overhead expense; but on the other hand I'm not sure how much they lose out on economies of scale...

BobbyM wrote:

I say bullshit. Honda outsources it's motors? Uh huh.

Yo! I heard Maico bought it's motors in Taiwan! (Yes, I'm messin' with ya!)

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I ripped a start from Egypt and I was happy about that.

1/16/2018 6:51 PM

I can't speak on OEM margin but the dealer margin is roughly 10% depending on the unit. For instance, a 2018 yz125 has a dealer cost of $5900 and full retail is $6500. Then you can factor in freight which ranges anywhere from $195 (think PW50) to $895 (side x side) and your margins start to disappear fast. This can lead into another conversation entirely but I won't go there right now. I just left the industry and I'm beginning to love motorcycles and the people that ride them again, little by little. I don't want to mess that up just yet.

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1/16/2018 6:52 PM

there's no way you could ever know what it costs the Japanese. Their manufacturing (tooling, labor, materials, R&D, marketing, packaging, design, engineering, vendor partnerships, ect) is so interdependent between product lines that individual product accounting is almost impossible. They look at entire product lines.

KTM would have a good idea, as well as any of the other smaller, dirtbike-only manufacturers. One thing to note though, is that the smaller guys are going to have higher production costs, and way less marketing overhead, so they may not be comparable to Japanese bikes.

Even at GM, they have trouble evaluating costs for individual car models. Marketing is one of the hardest entities to account for, something that has very little to do with the actual manufacturing, but has a lot to do with the final price of product.

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1/16/2018 6:53 PM

Cygrace74 wrote:

Well just look at it the way that Kawasaki employee's get half off bikes and you know they're still making money in there somewhere,

I can confirm without a doubt that this is not true. Perhaps in some very rare instances, but not a normal occurance. Company policy is 25% off a new unit.

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1/16/2018 7:00 PM

oldandslow1 wrote:

IF YOU COULD GET 400% RETURN ON INVESTMENT THEN EVERYBODY WHO HAD MONEY WOULD BE MAKING MOTORCYCLES. I BET ON A 9000 RETAIL PIECE THE DEALER COST IS ABOUT 8000 AND FACTORY COST IS AROUND 7000. THATS A HEATHY 14% RETURN ON INVESTMENT, ANY COMPANY WOULD KILL FOR THOSE NUMBERS.

You are outlining more of a net margin scenario (after ohd, r&d, shipping, interest exp, marketing, insurance, etc...). Which are very significant costs in the big picture.
But a pure manufacturing product cost is usually 4X mark up.

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1/16/2018 7:12 PM

oldandslow1 wrote:

IF YOU COULD GET 400% RETURN ON INVESTMENT THEN EVERYBODY WHO HAD MONEY WOULD BE MAKING MOTORCYCLES. I BET ON A 9000 RETAIL PIECE THE DEALER COST IS ABOUT 8000 AND FACTORY COST IS AROUND 7000. THATS A HEATHY 14% RETURN ON INVESTMENT, ANY COMPANY WOULD KILL FOR THOSE NUMBERS.

With a 14% profit margin, you'd be out of business faster than you can blink. That wouldn't even pay for your lease on the building, much less all the additional overhead of owning a business.

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1/16/2018 7:14 PM

Super interesting convo, love it, thanks for the input.

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Osama Bin Mixin - Head of the 2-stroke Taliban

1/16/2018 7:14 PM
Edited Date/Time: 1/16/2018 7:15 PM

BobbyM wrote:

I say bullshit. Honda outsources it's motors? Uh huh.

I'm not saying they outsource an entire motor; I'm talking about components, which are made 100% to their specifications but not in a facility actually owned by the OEM. I honestly don't know what % or what kind of components are truly made "in house" versus at another facility. I'd love to know the answer, though.

For example, doesn't Pro-X supply a lot of OEMs with parts??

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Positively, absolutely 110% obsessed with anything MOTO.

1/16/2018 7:40 PM
Edited Date/Time: 1/17/2018 4:41 AM

F150Motocrosser wrote:

I'm not saying they outsource an entire motor; I'm talking about components, which are made 100% to their specifications but not in a facility actually owned by the OEM. I honestly don't know what % or what kind of components are truly made "in house" versus at another facility. I'd love to know the answer, though.

For example, doesn't Pro-X supply a lot of OEMs with parts??

With ya here...

I ordered an 07'CR125 OEM cylinder Horrible void/casting flaw.

Had I been afforded the opportunity to inspect the cylinder firsthand prior to purchase, I'd have declined. Looks like a crack. Check it out.

Here is a pic:

Photo





EDIT: Also, more and more OEM Honda "Nuts and Bolts" are labeled U.S.A., not Japan. Good or bad? Time will tell. OEM Japanese stuff was really durable.

Removed seller reference to let them have more time to sort it out.

From what I understand, Pro X sells a fair amount of OEM parts in Pro X packaging. Usually Pro X is good stuff, but like anything, check it out first.

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1/16/2018 8:00 PM

JW381 wrote:

Super interesting convo, love it, thanks for the input.

Thanks for asking an interesting question

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"I dont want to milk anything out - i'll just keep pushing"


1/16/2018 8:49 PM

I think a lot of the disconnect here is the different ways people are defining "profit". Are we talking profit based only on the cost of goods sold, like raw materials, machining time (labor and equipment depreciation), etc? Or are we defining profit after all expenses have been accounted for, even the more hidden ones like marketing, engineering, R&D, office/plant wages, possibly even building rent, the list goes on and on. After all of those costs are accounted for and subtracted from the selling price, I would bet margins are not quite as high as some have suggested. However, if we're talking just raw material and direct costs, then maybe that 400% profit figure is a little more realistic.

Just a thought, I'm far (read: very far) from an expert on this, but I do have a little bit of knowledge on this.

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Make Hillclimb Great Again

Ratbeach Racing

Instagram / YouTube: @485Josh

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1/16/2018 10:33 PM

JW381 wrote:

Super interesting convo, love it, thanks for the input.

Agreed... Good call starting the topic

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Positively, absolutely 110% obsessed with anything MOTO.

1/16/2018 10:34 PM

Here's the best educated guess I can spitball....

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Positively, absolutely 110% obsessed with anything MOTO.