Summer Market Report: Strengths, Weaknesses and New Riders

As you tuck away your flip flops and sunscreen and replace them with pumpkin spiced lattes and cozy sweaters, you might be noticing some market trends that could affect your sales.

As you tuck away your flip flops and sunscreen and replace them with pumpkin spiced lattes and cozy sweaters, you might be noticing some market trends that could affect your sales.

This summer, market predictions for the season were accurate, identifying that off-road vehicle sales and demand would continue to increase. Holding a little over 20% of the market, off-road vehicle sales for ATVs, side-by-sides, off-road motorcycles and snowmobiles are expected to continue to grow throughout the next few years. 

According to the Motorcycle Industry Council, sales from January to June increased 0.5% for motorcycles in 2019 and increased 2.3% during that same period for ATVs. In comparison to 2018, scooter sales in 2019 were down nearly 10%, on-highway vehicles down 3.3% and dual-sport and off-highway vehicles increased 5.3% and 15%, respectively. While many dealers and OEMs may be disappointed by these numbers year-after-year, it seems the market has reached a new normal range.

Insights from an independent market intelligence firm, Fact.MR, show that fuel efficiency, reduced carbon emissions, electric powered alternatives and subordinate maintenance costs of off-road vehicles and more access to recreational lands will strengthen the off-road product demand over the next few years. 

Model year 2020 for OEMs have focused on those factors and added technologically advanced features and innovative solutions to meet the diverse needs of customers, while also leaving room for dealers to capitalize on the ever-popular aftermarket add-on service offerings for both used and new vehicles, especially side-by-sides. 

“Nobody will buy a side-by-side and just take it the way it is,” said Eric Malmsten, general manager of Cycle City Inc. in Escanaba, MI. “Customers want a windshield, a roof, a winch and everything it takes to personalize their vehicle.” 

Polaris Industries reported that North American side-by-side retail sales increased slightly for the quarter compared to last year. Indian Motorcycle retail sales were down slightly, but they are gaining share in an extremely challenging market. 

“Our second quarter results reflect the leadership and disciplined execution of our Polaris team,” said Scott Wine, chairman and CEO of Polaris Industries Inc. “We worked diligently to overcome the impacts of tariffs, a very wet spring and an aggressive promotional environment, delivering financial results slightly favorable to expectations, but trailing our long-term performance goals. The strength of our industry-leading brands and vehicles enabled us to gain share in Indian Motorcycles and drive growth in side-by-sides.”

Internationally, companies like Harley-Davidson are taking heat from the back and forth trade war between the U.S., China and Europe, taxing imported aluminum, steel, certain motorcycles with specific engine cylinder capacities, parts and accessories. 

The EU tariffs are costing Harley about $100 million a year, CEO Matt Levatich said in a discussion with CNBC in May. Harley has since moved its production of EU motorcycles to Thailand to receive a more favorable tariff treatment as opposed to shipping the motorcycles from the U.S. 

On a positive note, National Powersport Auctions reported that June was one of the higher volume months the company has had so far in 2019. Their volume, coupled with stable price-to-book ratios (average wholesale price vs. NADA clean wholesale) across nearly all categories, identified that the 2019 pre-owned powersports marketplace continues to show strength. With increased volume on pre-owned vehicles, dealers were stocked up for the summer, so buyers were selective on purchases. This resulted in a seasonal decline that NPA sees and predicts every year, with a slight increase in overall demand for pre-owned products. 

As far as selling PG&A, dealers are facing pushback from customer demand online. With everything imaginable accessible at your fingertips through smartphones with expedited shipping right to a customer’s door, it comes as no surprise that dealers are struggling to sell inventory in their stores. Not following the trend may be hurting some dealers who are not using technology to its fullest potential for sales and service, including on social media platforms. 

The common trend across all brands in the industry is attracting new and younger riders. 

On July 31, the Motorcycle Industry Council announced a broad and long-term initiative to bring more people into the world of motorcycling. 

“It’s clear the industry needs to reach and inspire new customers. While many of us, with our individual businesses, have taken steps to grow ridership, we also should be working together, and the MIC wants to help make that happen,” said Paul Vitrano, MIC board chair and senior assistant general counsel at Indian Motorcycle and Polaris Inc. 

Announced at AIMExpo 2019, the MIC partnered with consulting firm Centauric, who lead the first phase of the initiative to gather research and formulate a strategic plan.

“This is not designed to be a quick fix, nor is it just about sales,” said Chuck Boderman, MIC vice chair, and vice president, motorcycle division, American Honda Motor Co., Inc. “It’s about showing people how motorcycles can fit into and enrich their lives, no matter where they live, what they do, what their hobbies are or how old or young they are. This will take time, so we are committed to building a campaign that takes the long view.” 

Similarly, OEMs like Harley-Davidson are seeing in the midst of their long-term plan for attracting new riders. 

First announced in the summer of 2018, which will extend through 2022, the “More Roads to Harley-Davidson” plan, as CEO Matt Levatich explained, is to inspire even more people around the world to experience the exhilaration of riding a motorcycle.

The plan, which is three-fold, focuses on new products, broader access and stronger dealers with a “customer-first” perspective. Some steps Harley has taken to meet their goals include the creation of the electric LiveWire motorcycle and helping enable a strong global charging network and expanding access in Asia with a small displacement motorcycle.

“There are more riders on Harleys in the U.S. than at any point in our history, and the number of young riders continues to grow. The strength of the Harley-Davidson brand, and bare-knuckle grit of this company and our global dealers, will continue to be leveraged and sharpened to make riding matter to more people,” Levatich said.

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