Editor's note: Power Products Marketing, a Minneapolis research firm, has been tracking the U.S. scooter market for more than four years. This article discusses only on-road, gas-powered scooters. While the electric scooter niche is growing, it was excluded by the researchers.
Scooters continue to increase in popularity with consumers. In 2006, nontraditional OEMs posted sales exceeding 100,000-unit mark for the first time. It appears that the total U.S. scooter market increased to more than 157,000 units in 2006, with the nontraditional brands' share reaching 66 percent of that total.
Scooter sales were up more than 6 percent in 2006 as the popularity of more fuel-efficient modes of transportation grew. High gas prices mean scooters are no longer the domain of scooting enthusiasts — they appeal to a wider base of customers, including commuters, college students, retirees and RV owners.
OEMs and distributors competing in the U.S. scooter market can be segmented into two groups: the traditional brands (Honda, Piaggio, Suzuki and Yamaha) that report their numbers to the Motorcycle Industry Council, and the newly emerging nontraditional brands that do not report their numbers to the MIC. Of the traditional brands, Yamaha and Honda are the market leaders, followed byPiaggio's various brands. Suzuki continues to dominate the maxi-scooter (265cc and above) market with the Burgman line.
The nontraditional brands mostly involve U.S.-based distributors selling Chinese, Taiwanese and Korean products often sourced from several different OEMs. Assemblers might be a more appropriate term for the functions of these Asian producers.
European brands such as Malaguti, Derbi and Peugeot were distributed in the United States in the early part of the decade, but unfavorable exchange rates continue to make it prohibitive to import them.
Note: The figures in this article for the nontraditional brands are limited to U.S. retail sales; they do not include the significant numbers of scooters that are imported into the States and then resold into South and Central America, Mexico and the Caribbean, or the scooters that U.S.-based distributors ship direct to other markets. Reportedly as much as 65 percent of some U.S. distributors' total scooter sales are achieved in these markets, particularly Puerto Rico.
Coming On Strong
Total sales in the U.S. scooter market in 2004 were estimated at 115,000 units, rising to 148,000 in 2005. The nontraditional brands' share of this market increased to 62 percent from 58 percent during this timeframe. In 2006, sales hit 157,000 (see chart). While the reporting brands suffered a decline of around 5 percent in their 2006 sales as reported by the MIC, the distributors of Chinese and Taiwanese machines seem to have increased their sales volume as a whole by more than 13 percent. This rate of increase, however, is slowing, simply because these distributors achieved a whopping 37 percent increase in 2005.
Last year there were at least 55 offshore OEMs selling scooters in the U.S. through about a hundred distributors. KYMCO, CMSI, TGB, Schwinn and Genuine Scooter Co. maintain good reputations so far, and Roketa, Baja Motorsports, Vento, Tank and United Motors seem to be popular with consumers. As the market consolidates, smaller distributors become dealers for the larger distributors. There are still several distributors whose core business is outside the traditional powersports industry — such as auto sales.
In 2006 a number of nontraditional OEMs sold, through their distributors, a volume of units comparable with what was sold by the traditional OEMs. China's Zhejiang Qianjiang has been achieving this for a number of years now, but in 2006 it was joined by the JMStar/Jonway Group. So it's conceivable that one of these suppliers could take the premier spot in the scooter market this year from one of the more established OEMs.
Many distributors reported a large demand for products in the first half of 2006; however, the pace cooled significantly toward the end of the year. This was the reverse of the previous year, which saw steady (if measured) growth in the first half of 2005 followed by a dramatic sales spike in the second half.
While the market slowed in the final months of 2006, most distributors said they were able to regulate their inventory so that they did not have excessive carryover into 2007.
Several distributors had difficulties sourcing products quickly from across the Pacific, hindering their ability to grow their market base. And then at least one major distributor was hit with emissions compliance and customs issues that severely curtailed its sales volume. There also were reports coming out of Dealer Expo in February that a number of the leading distributors have been pressuring their dealers to take more inventory than the dealers actually wanted to carry as the market slowed.
Early reports for 2007 are that the market continues to grow at a steady pace, at least as far as the nontraditional brands are concerned. The picture is not quite as good for the MIC-reporting brands; some forecasts predict a decrease of 7 percent by the time the year ends.
The nontraditional OEMs continue to close the gap between them and the established players when it comes to overall vehicle quality and performance. Today, more franchised dealers are at least considering taking on a Chinese or Taiwanese line. Many distributors reported that better-quality dealers were eager to talk to them during this year's Dealer Expo.
This year the industry should expect to see the continued expansion of the larger-displacement scooters as more consumers appear willing to bypass or step up from the smaller machines. The 50cc-and-below class, while still the most popular category, shrunk from a market share of 64 percent in 2005 to just under 53 percent last year. The biggest gain in market share has been in the 51cc-155cc class, which encompasses more than 30 percent of the market.
The 156cc-265cc class also showed strong growth in 2006, assuming more than 10 percent of the market. This is primarily due to the increased availability of Chinese-produced 250cc machines, which did not reach U.S. distributors in any great numbers until last year. The over-265cc class also showed some market share growth to more than 6 percent of total sales, due almost totally to the success of the Suzuki Burgmans. There were also some modest gains for Piaggio's BV500 and the newly released KYMCO Xciting 500.
One of the major changes in the 2006 scooter market was caused by regulation, making it difficult for a two-stroke engine to comply with new emissions standards. Many distributors in late 2005 attempted to load their inventory pipeline with two-stroke machines to sell through 2006 as they dealt with these new regulations. Despite these efforts, the share of two-stroke machines fell to around 14 percent of 2006 scooter sales, from a market share of more than 37 percent just one year earlier.
Although there are some compliant two-strokes still available (such as the TGBs), it appears that most OEMs and distributors have decided to go the four-stroke route. Thus the two-stroke market segment is likely to decline further.
Parts and Warranties
Parts supply, servicing capabilities and warranty support have long been key issues in the long-term viability of a distributor's operations. As a result, many of the nontraditional-brand distributors started providing extended warranties. The parts situation continues to improve for the nontraditional brands, simply because some manufacturers are finally beginning to understand U.S. consumers' demand for parts.
Parts support and performance parts are also catered to by companies such as Martin Racing Performance and Parts for Scooters, as well as the distributors' own efforts. This has helped close the gap in the supply chain between the Chinese suppliers and the U.S. dealers, many of whom have been frustrated by parts availability issues in the past.
It appears that consumers are buying more on price than brand reputation alone. With distributors contending with stricter regulation and enforcement of existing rules, and with a reduction in the subsidies that China provides to its manufacturers, the prices of the nontraditional brands will have to increase — closer to those of the established quartet of MIC-reporting OEMs. But this may take some time to have an effect, so the nontraditional brands look set for another good year in 2007.
Matthew Camp is a powersports analyst with Power Products Marketing, a Minneapolis research firm. E-mail questions and comments to Camp or Power Products Marketing via firstname.lastname@example.org