Depreciation Definition
In finance, Depreciation is the loss of value in a tangible asset of the original value over the life of that asset. The amount of loss depends on many factors which is why some motorcycles hold their value better than others. This measurement is a generalization of a product and is not meant to determine an individual asset for retail or individual sale. It is most often used by the Internal Revenue Service to determine tax breaks when purchasing a vehicle for business purposes.
There are two ways to discover how much depreciation has taken place over a set period of time. One way is to use the metric of trade-in values. When you trade in your motorcycle at a dealership, you compare the amount you get for it with the previous new sale price. The benefit of trading it in is that you don’t have to spend the time and energy trying to find a buyer and selling it on your own, but the disadvantage is that you will not get the full value out of your bike. The dealership will need to spend money inspecting, tuning up, and cleaning the bike and will still need to make a profit on it.
The other way is to sell it yourself. This will give a better indication of the true worth of your used motorcycle, but it is more difficult to find depreciation data on individual sales. The title price does not always match the true price, and records are not as accurate. So some of the depreciation values are based on trade-in sales.
Normative Depreciation Values
Unless it’s the Kawasaki Ninja H2 used in the movie Top Gun and signed by Tom Cruise, the average bike will depreciate by about 10-15% the first year and slightly less the second year at about 6-14%. For the next 8 years, it will continue to decrease in value by about 5% until years 8–10, when it will level off. Most statistics that you will find will be based on trade-in values, not individual sales, so the depreciation numbers will be inflated, but it will still show consistency in value retention in different motorcycle brands.
The brand that tops the chart for the least depreciation over a ten-year period is Harley-Davidson. According to the LA Times, Harleys held an incredible 84% of their value over five years. BMW was a little less at 81%, then Indian at 77%, Ducati at 73%, and Triumph at 72%. Some believe that the Harley Street Glide, Road King, Softtail, Electra Glide Ultra Classic, and Ultra Limited are the top models that resist depreciation the best, but these results are somewhat subjective. So, depreciation will happen, but it slows to a crawl for the legendary motorcycle company Harley-Davidson for some very impressive reasons.
Depreciation of Harley-Davidsons
While no formula exists for slowing depreciation, it’s important to note similarities across motorcycle brands that have less depreciation than others. The following indicators are common for high-value bikes that retain value over the first several years when most of the depreciation takes place.
Mileage
The most obvious determinant of both resale value and depreciation is how many miles someone has put on their bike. However, larger engines like Harley cruisers, known for their reliability and longevity, take less of a hit with higher numbers on the odometer. It’s not unusual to see Harley’s above the 100,000-mile mark and still cruising.
Condition
The second most obvious consideration for depreciation values is the care taken for the motorcycle. Condition crosses every brand and is only concerned with whether the machine has been kept in a garage, kept away from salty and wet conditions, has been in an accident or flood, and has had regular maintenance. Sometimes it takes the keen eye of a mechanic to see the tell-tale signs of an accident or flood, so it’s important to have the bike checked out to determine its true value.
Quality
The reliability of a machine comes down to its manufactured components. While Harley-Davidson has had some sketchy years in the 1970s, recently, its technological advances in engineering combined with its high-quality manufacturing have led to a reputation for quality parts and production. Harley’s can last for years and years, with miles quickly multiplying into six figures. According to many H-D forums, the bike is best admired for its quality and longevity.
Production Volume
This is often the least noticeable but most important aspect for determining depreciation. The reason Honda, Yamaha, and Kawasaki do not rate as well as Harley-Davidson is because of their mass production. Anything rare is more valuable. From diamonds to gold to the 1985 Air Jordan 1s, a small production of a product increases its worth. Harley-Davidsons are known for not over-producing, and it shows in the depreciation department.
Cultural Identity
At its core, the value of a product is determined by its popularity to the populace. When an American-made motorcycle with a rich history and legendary status in both film and television becomes a cultural icon, you have value. Harley-Davidson has crossed that bridge into pop culture, with the logo becoming a symbol of American pride found on t-shirts, leather jackets, and tattoos. This type of popularity cannot be produced by artificial means, and its longevity goes beyond a fad. It may be the final arbiter of why the Harley-Davidson brand depreciates at a lesser rate than its competition.
