What’s the strategy behind luxury motorcycle investments?

June 23, 20235 min read
What’s the strategy behind luxury motorcycle investments?
Share on facebookShare on TwitterShare on Linkedin

Key takeaways

  • The global motorcycle market was valued at $124 billion in 2021 and is projected to grow to a $181 billion industry by 2031. In the US, luxury bike brands like Harley Davidson, Suzuki and Kawasaki are among the top 5 manufacturers by market share. 
  • The scarcity principle – an economic theory that says items high in demand but low in supply will increase in price – drives luxury markets. 
  • As with other illiquid assets, investing in luxury motorbikes may provide a hedge against inflation.

We might assume a few things about motorcycle enthusiasts – most likely thrill seekers, mavericks, and adventure lovers. But rarely do we see them as wise investors. But with the luxury motorbike industry booming, where collectible models are appreciating to unprecedented highs, two things can be true: an owner of a Harley Davidson can have a devil-may-care attitude about the future and still have an investment worth a lifetime of savings. If not more.

Investors are increasingly viewing illiquid assets like luxury motorbikes as a hedge against the inflationary pressures of today’s economy. Driven by economic theories like the scarcity principle, luxury motorbikes can also appreciate over time, with today’s new models becoming tomorrow’s classics. 

While the return on luxury investments vary, trends are looking up for this particular luxury market, with the industry’s bellwethers – Harley Davidson, Kawasaki and Suzuki– paving the way.

Market stats

The luxury motorbike market is at the crossroads of the motorcycle and luxury markets, both of which are expected to grow in the next few years.

The global motorcycle market was valued at $124 billion in 2021 with projections for it to balloon to $181 billion by 2031. In the US, luxury bike brands like Harley Davidson, Suzuki and Kawasaki are among the top 5 brands driving this growth. Globally, Suzuki and Kawasaki made the top 5 but the American made Harley Davidson is at number 6 by market share. 

Meanwhile the overall luxury industry –  where vehicles, goods and hospitality account for 80% of the total market – is expected to reach $412-435 billion by 2025, with a sustained growth of 6-8% annually, according to Bain and Company in their 2021 report.

The big three

The prominence of the big three luxury names in the industry go way back. 

One that’s almost synonymous with the word “motorcycle” in the US is Harley Davidson, the American manufacturer notorious for having  survived the Great Depression. Its bikes, which are known as Harleys, have become an iconic American symbol, featured in countless films, songs and literature over the years. First manufactured in 1903, it’s safe to say that the brand has a cult following among its riders. It inspired an entire culture around its motorcycles, resonating with thousands of people on themes of freedom, rebellion and independence. Today Harleys range in price but collectibles have sold for over $2 million. 

Kawasaki motorcycles, often sportbikes, are manufactured by the Japanese company, Kawasaki Heavy Industries. The company arrived in the US in 1969 with little marketing and almost no following but in three short years, earned the title of a trailblazer in the industry with their innovative Mach III 500cc two stroke triple, which they released in the early 70s, followed by the production of the 1973 900cc Z. These and later innovations – all groundbreaking in speed and engine technology for their time –  firmly landed Kawasaki as a leading global name, a title they’ve held on to over the years.

Suzuki followed a similar trajectory to its country mate. It also began in Japan as an industrial company before segwaying into engineering vehicles. Today its off-road bikes and roadracers have won world titles, and its street machines range from the cruiser Boulevard series to the legendary GSX-R series of sportbikes. 

Pay the price

Headline grabbing sales of specific bike models for exuberant prices can be attributed to the scarcity principle, which says items high in demand but low in supply will increase in price. Intuitively, many of us know that rare items in high demand will sell for higher prices. This underlying principle just delves further into the dynamics between supply and demand and proposes that when the two are at a disequilibrium, price compensates for the discrepancy by going up. You can read about the scarcity principle in detail here.

Hold off on the cash

Like with other luxury items, the illiquid nature of high value motorbike investments is also viewed as a plus, especially in times of volatility. Luxury motorbikes would qualify as an illiquid asset, which is defined as an asset that can’t easily be converted to cash, as there’s a barrier to the seller in immediately listing on the market – the process would have to include third party sellers, authentication processes and the right medium. Other examples of illiquid assets include real estate, private equity investments and luxury goods like cars, watches or handbags. 

Liquid assets on the other hand are usually the securities traded at major exchanges, such as stocks, ETFs, mutual funds, bonds, and listed commodities, which can easily  be converted to cash without incurring significant expense on the side of the investor. 

Financial advisors usually recommended both types of assets to properly diversify a portfolio. At times when markets are down however, illiquid assets can  provide a better hedge against the volatility. Because they can’t easily be sold off (liquidated) immediately, luxury motorbikes for example, wouldn’t be the first investments put to immediate action in times of stress. As they’re also usually high in value during time of purchase, they come with the potential to appreciate over time. Investors often buy into illiquid assets because they see a prospect of getting reliable returns at a relatively low level of risk. 

Yieldstreet and luxury Motorbikes

Yieldstreet is offering its third Motorcycle Loan Portfolio, backed by brands such as Harley Davidson, Suzuki and Kawasaki. Each of the loans in the portfolio have been performing in line with expectations for at least 12 months.

We believe our 10 alternative asset classes, track record across 470+ investments, third party reviews, and history of innovation makes Yieldstreet “The leading platform for private market investing,” as compared to other private market investment platforms.

1 Past performance is no guarantee of future results. Any historical returns, expected returns, or probability projections may not reflect actual future performance. All securities involve risk and may result in significant losses.

3 "Annual interest," "Annualized Return" or "Target Returns" represents a projected annual target rate of interest or annualized target return, and not returns or interest actually obtained by fund investors. “Term" represents the estimated term of the investment; the term of the fund is generally at the discretion of the fund’s manager, and may exceed the estimated term by a significant amount of time. Unless otherwise specified on the fund's offering page, target interest or returns are based on an analysis performed by Yieldstreet of the potential inflows and outflows related to the transactions in which the strategy or fund has engaged and/or is anticipated to engage in over the estimated term of the fund. There is no guarantee that targeted interest or returns will be realized or achieved or that an investment will be successful. Actual performance may deviate from these expectations materially, including due to market or economic factors, portfolio management decisions, modelling error, or other reasons.

4 Reflects the annualized distribution rate that is calculated by taking the most recent quarterly distribution approved by the Fund's Board of Directors and dividing it by prior quarter-end NAV and annualizing it. The Fund’s distribution may exceed its earnings. Therefore, a portion of the Fund’s distribution may be a return of the money you originally invested and represent a return of capital to you for tax purposes.

5 Represents the sum of the interest accrued in the statement period plus the interest paid in the statement period.

6 The internal rate of return ("IRR") represents an average net realized IRR with respect to all matured investments, excluding our Short Term Notes program, weighted by the investment size of each individual investment, made by private investment vehicles managed by YieldStreet Management, LLC from July 1, 2015 through and including July 18th, 2022, after deduction of management fees and all other expenses charged to investments.

7 Investors should carefully consider the investment objectives, risks, charges and expenses of the Yieldstreet Alternative Income Fund before investing. The prospectus for the Yieldstreet Alternative Income Fund contains this and other information about the Fund and can be obtained by emailing [email protected] or by referring to www.yieldstreetalternativeincomefund.com. The prospectus should be read carefully before investing in the Fund. Investments in the Fund are not bank deposits (and thus not insured by the FDIC or by any other federal governmental agency) and are not guaranteed by Yieldstreet or any other party.

8 This tool is for informational purposes only. You should not construe any information provided here as investment advice or a recommendation, endorsement or solicitation to buy any securities offered on Yieldstreet. Yieldstreet is not a fiduciary by virtue of any person's use of or access to this tool. The information provided here is of a general nature and does not address the circumstances of any particular individual or entity. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of this information before making any decisions based on such information.

9 Statistics as of the most recent month end.

300 Park Avenue 15th Floor, New York, NY 10022

844-943-5378

No communication by YieldStreet Inc. or any of its affiliates (collectively, “Yieldstreet™”), through this website or any other medium, should be construed or is intended to be a recommendation to purchase, sell or hold any security or otherwise to be investment, tax, financial, accounting, legal, regulatory or compliance advice, except for specific investment advice that may be provided by YieldStreet Management, LLC pursuant to a written advisory agreement between such entity and the recipient. Nothing on this website is intended as an offer to extend credit, an offer to purchase or sell securities or a solicitation of any securities transaction.

Any financial projections or returns shown on the website are estimated predictions of performance only, are hypothetical, are not based on actual investment results and are not guarantees of future results. Estimated projections do not represent or guarantee the actual results of any transaction, and no representation is made that any transaction will, or is likely to, achieve results or profits similar to those shown. In addition, other financial metrics and calculations shown on the website (including amounts of principal and interest repaid) have not been independently verified or audited and may differ from the actual financial metrics and calculations for any investment, which are contained in the investors’ portfolios. Any investment information contained herein has been secured from sources that Yieldstreet believes are reliable, but we make no representations or warranties as to the accuracy of such information and accept no liability therefore.

Private placement investments are NOT bank deposits (and thus NOT insured by the FDIC or by any other federal governmental agency), are NOT guaranteed by Yieldstreet or any other party, and MAY lose value. Neither the Securities and Exchange Commission nor any federal or state securities commission or regulatory authority has recommended or approved any investment or the accuracy or completeness of any of the information or materials provided by or through the website. Investors must be able to afford the loss of their entire investment.

Investments in private placements are speculative and involve a high degree of risk and those investors who cannot afford to lose their entire investment should not invest. Additionally, investors may receive illiquid and/or restricted securities that may be subject to holding period requirements and/or liquidity concerns. Investments in private placements are highly illiquid and those investors who cannot hold an investment for the long term (at least 5-7 years) should not invest.

Alternative investments should only be part of your overall investment portfolio. Further, the alternative investment portion of your portfolio should include a balanced portfolio of different alternative investments.

Articles or information from third-party media outside of this domain may discuss Yieldstreet or relate to information contained herein, but Yieldstreet does not approve and is not responsible for such content. Hyperlinks to third-party sites, or reproduction of third-party articles, do not constitute an approval or endorsement by Yieldstreet of the linked or reproduced content.

Investing in securities (the "Securities") listed on Yieldstreet™ pose risks, including but not limited to credit risk, interest rate risk, and the risk of losing some or all of the money you invest. Before investing you should: (1) conduct your own investigation and analysis; (2) carefully consider the investment and all related charges, expenses, uncertainties and risks, including all uncertainties and risks described in offering materials; and (3) consult with your own investment, tax, financial and legal advisors. Such Securities are only suitable for accredited investors who understand and are willing and able to accept the high risks associated with private investments.

Investing in private placements requires long-term commitments, the ability to afford to lose the entire investment, and low liquidity needs. This website provides preliminary and general information about the Securities and is intended for initial reference purposes only. It does not summarize or compile all the applicable information. This website does not constitute an offer to sell or buy any securities. No offer or sale of any Securities will occur without the delivery of confidential offering materials and related documents. This information contained herein is qualified by and subject to more detailed information in the applicable offering materials. Yieldstreet™ is not registered as a broker-dealer. Yieldstreet™ does not make any representation or warranty to any prospective investor regarding the legality of an investment in any Yieldstreet Securities.

YieldStreet Inc. is the direct owner of Yieldstreet Management, LLC, which is an SEC-registered investment adviser that manages the Yieldstreet funds and provides investment advice to the Yieldstreet funds, and in certain cases, to retail investors. RealCadre LLC is also indirectly owned by Yieldstreet Inc. RealCadre LLC is a broker-dealer registered with the Securities and Exchange Commission (“SEC”) and a member of the Financial Industry Regulatory Authority (“FINRA”) and the Securities Investor Protection Corporation (“SIPC”). Information on all FINRA registered broker-dealers can be found on FINRA’s BrokerCheck. Despite its affiliation with Yieldstreet Management, LLC, RealCadre LLC has no role in the investment advisory services received by YieldStreet clients or the management or distribution of the Yieldstreet funds or other securities offered on our through Yieldstreet and its personnel. RealCadre LLC does not solicit, sell, recommend, or place interests in the Yieldstreet funds.

Yieldstreet is not a bank. Certain services are offered through Plaid, Orum.io and Footprint and none of such entities is affiliated with Yieldstreet. By using the services offered by any of these entities you acknowledge and accept their respective disclosures and agreements, as applicable.

Investment advisory services are only provided to clients of YieldStreet Management, LLC, an investment advisor registered with the Securities and Exchange Commission, pursuant to a written advisory agreement.

Our site uses a third party service to match browser cookies to your mailing address. We then use another company to send special offers through the mail on our behalf. Our company never receives or stores any of this information and our third parties do not provide or sell this information to any other company or service.

Read full disclosure