Brexit increases classic motorcycle values since its application on 01/01/2021 and now further increased them since UK customs checks were required on 01/01/2022. Whatever your opinion of Brexit, this is what the country has chosen, these are the implications and I’ll explain why. However, as well as these costs, there are now further upward forces on prices which I will go into detail about in separate articles for Inside Line members only, but will touch upon here. These issues don’t just affect classic motorcycles, they affect everything we buy such as steel, building materials, food and just about everything except UK property. This article is neutral about Brexit, it is only there to provide you with facts and is not any kind of rant, it is just about the realities that impacts the value of your classic motorcycles and explains why. There is no option but to pay the extra for our investment grade classic motorcycles, as businesses have to pass on these costs on to customers.
VAT on used motorcycles
With used motorcycles, motorcycle dealers also have to add 20% to these increased costs too. All VAT registered motorcycle traders have to pay UK VAT on the difference between what they pay for a motorcycle and what they sell it for, the margin (it’s known as the VAT special margin scheme), irrespective of what they spend on making the motorcycle ready for sale. This is why motorcycle dealers have to be very careful about how much work they do to a motorcycle prior to sale. Quite often motorcycles are bought from some dealers and once the new owner gets it home, they scratch their head wondering why work wasn’t done by the dealer. All of these extra costs being faced now have to be added to the sale price of the motorcycle and VAT has to be added to those costs as well. The cost of acquiring a classic motorcycle has always been high, but for investment grade examples the demand is much higher and therefore comes at a higher cost.
Buying classic motorcycles from Europe
Buying classic motorcycles from Europe has been going on since businesses were buying classic motorcycles from the US. UK motorcycles have usually, at some point in their lives, lived outside because most UK properties don’t have garages due to property prices. UK motorcycles, when new were often butchered and customised, so airboxes, exhausts and many other unreplaceable parts have long gone. The salt used on roads in the UK is far more corrosive than the salt used on mainland Europe and European motorcycles aren’t usually ridden in winter. You can read more about this in this article here, as the cultural differences towards motorcycling between the UK and mainland Europe are quite profound, making European classic motorcycles much better value. I have been buying and selling used motorcycles professionally for over forty years and this is my experience, not my opinion, although there are also appalling examples of these motorcycles in Europe as well.
Costs when importing a classic motorcycle from Europe
Costs when importing a classic motorcycle from Europe were nothing to pay, Pre-Brexit, unless the machine was under six months old and had less than 6,000 miles. However, since 01/01/2021 we now have to pay 5% import VAT on the motorcycle and the costs of importing it as well, if the machine is over thirty years old. Those transport and importation costs have increased substantially since January 2021 and now they have increased much more since customs checks were enforced in January 2022. I used to pay £400 per motorcycle to bring them in before 2021 and this transport cost has risen to between £1,200 and £2,200 at the moment. There are now far fewer transport companies wanting to work in the UK because we are an incredibly bureaucratic country and they find it easier and cheaper to operate in the single market area. Fuel prices have soared, transport companies now want to be paid to wait around for ages to board ferries, which can take days. Paperwork charges, which we never had before, are really quite steep and madly costly if there is the slightest error or discrepancy. Since 2022 we now have to have all of our paperwork ready prior to the motorcycle coming in, you can no longer turn up at Dover with a motorcycle on board and the paperwork cannot be done while the motorcycle is in the shop or kept at the last owner’s house. Now we have to do the paperwork, take the motorcycle to a bonded warehouse and put it in bond until UK customs have processed the paperwork. We are 85,000 customs officers short for this type of set up (this figure was given to me by three different customs officers), so this can take a few weeks or even months. While this process is going on, you have to pay to keep the motorcycle in bond, which is very expensive. The UK import duty must be paid in full when customs finally get around to your motorcycle and then the motorcycle can be collected as soon as a transport company is available. Once the motorcycle is delivered from the bonded warehouse you have to go through a much longer paperwork process than before which we have to charge for. This is not a whinge, it’s just facts and these are all charges that must be met by the customer, and these charges all attract UK VAT. For motorcycles under 30 years old you have to pay 6% duty and 20% VAT on the total purchase price of the motorcycle (for dealers it’s 6% VAT and 20% on the entire sale price of the motorcycle). You don’t have to pay the VAT part of this if you can prove that the VAT was paid in an EU country, I’ve been told but have not tried this. I know from past experiences that UK customs don’t accept original purchase invoices as proof of payment of VAT and achieving this proof of payment is almost impossible. This means that motorcycles such as the 916/996 SPS and Desmosedici series are prohibitively expensive to import which has reduced the number of these types of motorcycles available to the UK by about 90%.
Buy from Europe or there are 90% less classic motorcycles to choose from
Buy from Europe or there are 90% less classic motorcycles to choose from. Contrary to popular belief, the UK is a very small motorcycle market compared to other European countries. The UK has historically accounted for less than 10% of European motorcycle sales, I know this because I used to have to study European motorcycle sales by country to predict European buying trends when I was grey marketing new motorcycles by forward order. Therefore, if we do not pay these extra charges (transport, paperwork and bonded warehousing alone can cost as much as £2,200 + VAT alone, prior to the 5% import VAT) then we are left with only the classic motorcycles in the UK. This has reduced the available motorcycles by 90% which creates a supply problem, which creates upward price pressure. UK motorcycles are usually far worse and require far more money to be spent on them than the ones from mainland Europe as I have already explained. The point is, where ever we source our classic motorcycles from, costs and prices have increased and the buyer has to pay them. Therefore, prices are increasing especially for investment grade examples.
Classic motorcycles from outside Europe are too expensive
Classic motorcycles from outside Europe are too expensive to import, as I reported in this article back in August 2021. There are several reasons for this, Japan was a fruitful market but now the values there are far higher than in Europe and they’re buying their old classics back from us. The same is true of the US and the cost of transport from these markets is prohibitive. Prior to the pandemic I was paying around US$800 to transport a motorcycle from New York, today I’m paying over US$3,000. Then we have duties and customs charges etc on top of all that. This has also decreased the number of classic motorcycles available to the UK, so less availability means higher prices. Also the demand is increasing daily, especially with inflation and with the demographic drive I explained in this article here I wrote in 2015.
Skills shortage
Skills shortage issues have been reported in almost every industry in the UK prior to Brexit and have increased profoundly further since Brexit. What’s underneath this issue is a home grown problem where this country fails to invest in skills for the present and the future. Our issue in the classic motorcycle industry has always been a skills shortage since about 1995 when new motorcycle sales started to recover from their lowest in 1994 of 44,000 a year. Britain was selling 225,000-315,000 new motorcycles a year (sales figures from the Motorcycle Industry Association) between 1975 and 1983. Once we hit 1983, the new two part test came in, you could no longer ride a 250cc motorcycle at 17 years of age and motorcycling became much harder to access. From 1983, for nine years our new motorcycle sales fell off a cliff and were only revived by Harley bringing out their Evolution engine and the grey market offering affordable new motorcycles to buyers who were priced out of buying new officially imported motorcycles. During those nine years motorcycle mechanics were laid off in their droves and most of them got into the IT industry and started earning proper money, never to return. Since about 1995 proper motorcycle mechanics have been in short supply, it took me nearly a year to fill my last vacancy. I also lost one of my mechanics this year to a company that produces and maintains production line machinery and they offered him 50% more than I can pay him. These transferrable skills are being hunted down by other industries seeking out labour who will pay far more than the motorcycle industry will. This means that I will have to match them on pay or risk losing my staff, as passion alone does not pay my employees’ bills. The existing training for motorcycle mechanics is three years in college financed by their employer to learn how to plug a motorcycle into a computer. This training is completely irrelevant to the classic motorcycle industry. Nearly all of my mechanics have to retrain with me for at least a year; this gets them out of the habit of getting the bike out the door as quickly as possible and into our philosophy of fix the motorcycle completely at any cost. Our in-house painter, who developed many of the new techniques we use with me, has worked with me for four years to get to the point now where we can function properly and our paint is now the most authentic and best in the business, I am proud to say. Training anyone new to add to his team will take a long time and I will have to pay them more than the rest of the industry which has a high staff churn rate. It is a fools game to churn staff in the classic motorcycle industry. The work to these machines costs a lot and this overhead is only going to go up.
Classic motorcycle demand from China
Classic motorcycle demand from China hasn’t really started, but things are changing and the dragon is waking. This has had a historically profound effect on other collectible markets and there is a focus on collectible cars and motorcycles just around the corner from this market. How do I know? I monitor the buyers at auctions all over the world and there was a buyer from China at Mecums paying insane money for very poor examples of the wrong collectible classic motorcycles in 2019 and 2020, prior to the pandemic. Much more significant than this is that I am now sourcing new and used motorcycles for the China market myself already. This is a serious marker and change is on the horizon. I’m wanting to give a heads up to all of my Inside Line members, as this long version of this article is not available to view by non-members. To give you an idea of how big the China market is, they have been selling 20,000,000 new motorcycles a year for some time. When I was manufacturing new motorcycles in China between 1999 and 2004 they were selling 10,000,000 new motorcycles a year. There is an unrivalled motorcycling culture in China and there always has been, I was grey marketing new motorcycles into that market back in the early 1990s.
Now is the time to buy investment grade classic motorcycles
Now is the time to buy investment grade classic motorcycles because they will never be these prices again. There are already plenty of upward forces on prices domestically, and I haven’t even started on the war in Ukraine, steel shortage, comparative price increases in new motorcycles, the worldwide new motorcycle shortage etc. These price increases are not yet fully baked in and, although we feel it’s painful to pay more now, prices will have to increase far more significantly in the future. In early 2019 I wrote this article about upward price pressures from classic car buyers entering the classic motorcycle market because the bikes offer such good value. This article has been proven to be true as many of my new customers are from the classic car market. They are astounded to note that many classic motorcycles are just 3-5% of the value of the equivalent classic car. An easy example is the Ducati 916/996 SP/S series, they are the Ferrari F40 of the motorcycle world. An investment grade Ferrari F40 (unless the LM model which is three times the price) will cost over £1,000,000 today as you can see in this article. When you consider an investment grade Ducati 916 SP is only £32,000 and upwards, they clearly have a long way to go. The 916 SP is also rarer than a Ferrari F4, as you can see in this article I wrote about eighteen months ago. It is believed that classic motorcycles will go to 30-60% of the equivalent classic car value and it is clearly inevitable.
Investment grade classic motorcycles from The Motorcycle Broker
Investment grade classic motorcycles from The Motorcycle Broker come with all the work done for you and are ready to ride and enjoy. You can see what we have to do here to a 4,000 mile from new 1995 Ducati 916 SP, due to age, which any dealer or auction house would have put out straight for sale. You can be sure that only the top investment grade examples which have had all the work done to them will make the staggering figures when they’re sold at the much higher values they’ll go for in the future. The rest will live on eBay, in auction houses and will never appreciate like a properly prepared machine that has been selected because it has the correct original parts that set it apart. If you want an investment grade classic motorcycle, call The Motorcycle Broker.
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