Australian Motorcycle Industry News
Some big news broke last week with Peter Stevens announcing the sale of its famous Elizabeth Street premises to a Chinese backed developer for $31.5 million.
While businesses regularly change premises for various reasons, few have the history behind them that the Peter Stevens motorcycle precinct situated at the top of the Melbourne CBD enjoys. This move signifies the end of an era for motorcycle retailing in Melbourne.
Even those of us that do not hail from Victoria, but have simply visited Melbourne over the years, have marvelled at the motorcycles on the footpath outside the Elizabeth Street string of motorcycle shops. The first of those stores came under Peter Stevens stewardship some 44-years ago while the neighbouring two sites also came into the P.S. portfolio over time.
The historical angle of the sale holds just as much interest as the financial reasons behind the deal.
My own first visit to window shop and ogle shiny new motorcycles on Elizabeth Street was as a fresh faced Western Australian 16-year-old navy recruit visiting Melbourne for the first time. My first ever weekend leave from recruit school had me heading into the big smoke after catching the train into the CBD from Crib Point down near HMAS Cerberus. As a motorcycle mad kid it was only natural I would gravitate towards this shiny row of motorcycles on the footpath as I trod my way around Melbourne for the first time.
The Elizabeth Street motorcycle precinct though dates back to even before Peter Stevens, as motorcycles have been retailed on Elizabeth Street for over 100 years. Motorcycle meets were staged on Elizabeth Street from the 1890s and the Milledge Brothers opened the first motorcycle shop on the street in 1903. It would not be out of order to suggest that more than a million motorcycles have hit the streets from those stores in that time.
One would imagine a fair percentage of people working across many facets of the motorcycle industry throughout Australia would have spent at least some of their time working on Elizabeth Street.
Hundreds if not thousands of apprentices would have learned their trade as motorcycle mechanics in these stores.
A major fire in the Harley Heaven store in late 2002 caused extensive damage to the building and saw the store gutted. Major refurbishment works were required before the doors could be opened again.
The reasons for the sale are, no doubt, many, including the never ending and problematic tunnel works for new train lines and the increasing focus towards making the Melbourne CBD a much more pedestrian, tram and cyclist only space. Traffic congestion and space constraints has already seen the service departments of the Elizabeth Street stores moved out to the Peter Stevens Kensington Street complex.
Peter Stevens Group Managing Director Paul Chiodo is the second generation of the Chiodo family of brothers that originally started the Peter Stevens Motorcycles operation some 50 years ago.
The 44-year history of the Elizabeth Street stores is deeply entwined with his own family history, a lineage that started in Australia when his grandfather Anthony emigrated from Italy early last century and started one of Melbourne’s first specialist Italian grocery stores.
No matter how much sense the sale undoubtedly makes from a business angle, it still must have been a major wrench for the Chiodo family, on a personal level, to sign off on a significant part of their history.
Paul Chiodo – “There are two aspects that have driven us to sell the property, they are equal to each other really. The complexities of retailing in the CBD, we are the last ones there with Yamaha City, for good reason. There are not really any motorcycle shops in the CBD of major cities. The council does everything they can to make things difficult for us, I am not sure whether that is intentional or not intentional, but the city is changing. The huge number of apartments and the changing nature of the area, we are some of the last retail stores in that precinct which has now largely been overtaken with the service industry and cafes etc. rather than a retail environment.
“Council are soon to vote as to whether motorcycles will be prevented from being able to park on the pavements in the CBD. I am not sure whether that will go through, but it likely will. We have always parked motorcycles out the front of the stores, used bikes, so that might no longer be an option if council withdraws the option for motorcycle street parking in Melbourne.
“We retail hundreds of motorcycles out of there each month. Those bikes need to be dropped off by trucks, the distance from where they once were dropped off, to where they now must be dropped off is now quite a distance away from the stores. Staff then must push those motorcycles through the CBD in order to get them to the store. It just adds yet more complexity to doing business in Elizabeth Street.
“Then we get to the rates and land tax on those premises. Since it has been revalued we are paying near on a million dollars a year. And next year word is that it might be in excess of a million dollars. And that is before you pay any other expenses, it is truly a ridiculous amount of money. That means the viability from that perspective has become very difficult as the value of the property has gone up.”
Despite credit having never been cheaper, it seems these are very difficult times for every single area of retail in Australia. How is the current drop in motorcycle sales affecting your short and long term business planning at Peter Stevens?
Paul Chiodo – “We have been adjusting to the market in many ways over the past three years as the industry has suffered a decline. We are a dynamic business and continue to adapt and change the emphasis to different aspects of our business. Used bike sales and our workshops are growing rapidly.”
It must almost put coal-face staffing issues in an almost constant state of flux. The balance between the bottom line, and the need to retain the vital experience and knowledge of quality staff must be an almost impossible task?
Paul Chiodo – “We have got a huge number of people that are in our ten year club, and we have a ten year dinner that gets bigger and bigger every year and we have a number of people that are in our thirty-year club so there is a massive amount of retained experience in the business, and we celebrate that.”
Peter Stevens took over the distributorship of the Moto Guzzi and Aprilia brands not that long ago, what is happening in that space this year?
Paul Chiodo – “The new 660 from Aprilia has been announced and it is a significant anniversary for Moto Guzzi coming up shortly and the horizon looks bright for both of those brands.”
Triumph seems to be going great and is the success story of your suite of brands?
Paul Chiodo – “We have had some good growth in January compared to the same period 12 months ago. The new Tiger 900 lands arrives this month.
“The new Rocket III has had an incredible response and is sold out for the next few months at least. The Bajaj joint venture that was announced will see Triumph move into some new categories of the market and that is all really exciting and we recently re-signed a new long term contract with Triumph.”
There is some encouraging growth on the scooter front with that segment of the market bouncing back well after a few years of pain. To be fair it was the bottom end of the scooter market that had fell apart predominantly, while the more premium brands you retail did not suffer such a marked drop, are Piaggio and Vespa still doing quite well?
Paul Chiodo – “The delivery market has been a strong growth area with Uber style delivery bikes and Vespa continues to be a very strong brand.
“It will be interesting to the see the influence of electric bikes on the motorcycle industry in the coming years. The Harley-Davidson LiveWire arrives in September which of course we will be retailing through our Harley Heaven stores. There are also a number of new products from different suppliers that will enter the Australian market.”
Thanks for the time out of your busy schedule Paul.