Motorcyles: Money Savers or Money Pits?

I'm often running into posts on the personal finance blogs talking about saving lots of money by commuting on a motorcycle vs. a car - I wrote the post below in 2008 to debunk that premise. It may be out on the internet somewhere, but I can't recall just where, exactly, so I reprint it here for convenience.

So, you think you want to start riding a motorcycle to work, in order to save on gasoline expenses, now that prices are approaching $4.00 a gallon? I hate to disillusion or discourage you, but if you're hoping to save money, it's probably not your best strategy.

At first glance, it appears to make cents. Most motorcycles approach 50 mpg in fuel economy, while many of our daily driver cars are getting around 20 mpg. My insurance company defines a car as for the daily commuter rate if I put 15,000 miles per year or more on the odometer, so for the typical commuter; the math looks something like this:

In the old car:

15,000 miles per year / 20 miles per gallon * $4 per gallon = 3,000 dollars per year in fuel cost.

On the new motorcycle:

15,000 miles per year / 50 miles per gallon * $4 per gallon = 1,200 dollars per year in fuel cost.

This is a savings of $1800 per year! Sounds great, doesn't it? If we invest the difference in an index fund, in 20 years we’ll have…well, you know the drill.

However, the first task in this scenario is to acquire a motorcycle. For the purpose of this post, let's consider three of them.

1. Trade your car, straight across, for a reliable used or new motorcycle.

2. Buy a reliable used motorcycle.

3. Buy a new motorcycle.

Personally, the only one of these I've actually done is buy used, and obviously I must have come to the conclusion that it was the best way, but it's not without its pitfalls. For more on the subject of buying a reliable used motorcycle, you really need to consult the experts, and there are plenty of articles published online or in motorcycle magazines about this particular activity to help you, so I won't duplicate that effort here, as I'm really mostly examining the financial aspects of the situation.

Obviously, from an economic standpoint, scenario #1 is optimal. Give up the clunker, and get a new motorcycle for zero dollars invested. There are, however, some disadvantages to this situation that may not be immediately obvious to someone who hasn't spent a mile in a motorcyclist's moccasins. The problem here is that changing your transportation habits to suit a motorcycle is not exactly convenient. Sure, you get to squeeze into parking spots that that SUV can't deal with, but your cargo capacity is severely limited. Unless you've gotten a model equipped with some capacious saddle bags, it's very difficult to carry your briefcase or laptop along with you, and carrying anything much larger than a box of cereal at the grocery store is problematic, not to mention a trip to Home Depot. Additionally, a motorcycle is not climate controlled. It’s hot in the summer, riding without AC, and cold in the winter, with no heater. It  can be absolutely miserable in rainy weather, and completely impossible in ice or snow. Unless you live in a very temperate region, you’re going to need to keep your old clunker for those bad weather days.

The newspaper classified ads and craigslist posts are filled with motorcycles for sale by people who thought they were going to love commuting and doing errands on a motorcycle - they usually stick it out for about a month, then the bike is parked in the garage until they get tired of dusting it and put it up for sale. This, by the way, brings up scenario #2. One of the best ways to buy a late model used bike is to let someone else “eat” the depreciation on a new bike, and then help them get out from under their payments. This is exactly what I did when I bought my wife's first motorcycle, a Suzuki 650 with 102 miles on it after a year of someone else's riding.

Buying a reliable used bike is the next best option from an economical point of view. The same principals apply that have been amply discussed elsewhere in personal finance blogs regarding buying a used car versus buying a new car. It's simply far better to let someone else pay for that first year's depreciation. In the case of a motorcycle, the mileages involved in buying a bike that's last year's model from someone who bought it new are generally negligible. If you look at commuting mileage figures above, someone who rode a motorcycle daily for a month is only going to put 1,250 miles on it, on average. For modern motorcycles, that's barely even broken in.

There are hundreds of choices out there for a used motorcycle, but on the low end you're going to have to spend around $1,000, and something mid-range is going to run about $3500. If you really want to get into something deluxe, it's going to cost you, and since this post is about saving money, I'm not going to go there. Unfortunately, on the low end of the scale, you're going to be dealing with some older bikes, maybe 15 to 20 years old, and though the time to recoup your initial investment comes down to between six and seven months, your maintenance costs and headaches are definitely going to increase, unless you get very very lucky. As you can see, in the mid-range, your time to recoup goes up to nearly two years, but your maintenance costs remain lower for that period.

As far as scenario #3 is concerned, can we just agree that this is going to be a bad deal, all the way around? The only benefit is a spiffy sparkling new toy for a few weeks, and a full warranty against mechanical defects from the dealer.

The only better thing than these three scenarios is to win a bike in a sweepstakes (except you probably have to pay taxes on it), or be given a bike by a generous relative. Actually, my best deal on a motorcycle, ever, was when a friend of mine was moving to another city to take a job and didn't want to take his motorcycle along. So, he sold it to me for $1, with the provision that, if he ever moved back home, I'd sell it back to him for $1. This worked out well for both of us, as I got a commuter bike cheaply (though as mentioned above an older bike can be a maintenance nightmare) and he got paid for me to store the bike for a year for him. And, yes, I did sell it back to him a couple of years later when he returned, as agreed, for $1.

So, strictly from the standpoint of the initial investment, the payoff only begins from six months to two years later. This is not an uncommon situation for  an investment in energy and dollar saving technology, however, and we're all long term planners, right? Think about buying a new heating and cooling system for your home, or installing insulation, vinyl siding and windows. It's the same principal.

But wait, there's more! We haven't discussed sales tax, which you'll definitely have to pay when you go to transfer the title and register your motorcycle. Add another 6% on average to the startup costs. Oops! We do have to license our motorcycles for the streets, so depending where you live, that could tack on another $25-$100 in initial cost, plus an annual fee. Some states also require an additional "M" endorsement on your driver’s license, so you may be required to take and pass a class and/or a test to get it. There's another $25. Also, at the very least, you're going to be required by law to carry liability insurance coverage on your motorcycle, so there goes another $100-200 each year. If you want collision or comprehensive coverage, it's going to be even more.

And then there are all the special costs associated with motorcycle commuting that you don't need when you're driving a car. First and foremost, let’s look at safety equipment. Some states have helmet laws, but even if they don't you really do want to protect that brain of yours from damage when, not if, you take a tumble. A low end helmet - low end not referring to a safety standpoint, but more of an aesthetics and features standpoint - is around $75-$100, but the top end models get up around $500-$750. There's also a ton of other safety gear to consider, starting with gloves and moving onwards to body armor equipped jackets and riding pants, and protective footwear. If you want to protect all of your body parts, the initial investment could run from around $500 at a minimum, all the way into the thousands of dollars. If this seems a bit steep, consider the cost of the skin grafts resulting from sliding 100 yards down the highway. Even a minor gravel rash on the palms of your hands from a low speed tipover can be painful and inhibit your typing skills, if you use a computer while earning your salary.

I also mentioned cargo capacity a bit earlier. If the bike you buy doesn't come equipped with saddlebags, a top bag or a tank bag, you're probably going to need to invest in some or all of the above, depending on how much stuff you've got to bring to work each day, and how many groceries you want to be able to carry in a single trip. This is another expense. On the low end, saddle bags can be found for around $100 and they just go up from there, depending on make and model of the motorcycle and materials involved in their composition. It's not uncommon to spend $700 on a good set of bags, which often have locking mechanisms to discourage casual theft.

As far as maintenance costs are concerned, they're similar to those for a car, in general. If you're reasonably mechanically inclined, you can do a lot of the routine work yourself and keep costs low, but it may require an investment in some specialty hand tools. One thing that is a bit different, while automobile tires tend to last from 40,000 to 60,000 miles, motorcycle tires are considered to have gotten good mileage at 6,000 to 8,000. They generally cost a bit more than car tires, as well. If you do the math, you can see that you're going to have to replace them around twice a year, if you're getting 15,000 annual miles on them - and in order to see the fuel savings we talked about in the beginning, you've got to - so you can tack on about another $500 per year just to keep rubber between you and the road.

Although I am an avid motorcyclist and as close to a daily commuter as it's possible to be in a rather non-temperate local climate, I'd have to discourage you from buying a motorcycle to save money. Though it was my intent when I bought my first motorcycle to save a ton on fuel (my diesel truck gets 15 mpg), the savings over the long term have been minimal. A motorcycle is a fun toy and a great commuting tool for some people, but I can't recommend it based on sheer economics.