Economic, Industry Recovery Will Take A While

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LAST MONTH I STARTED THIS COLUMN with a message from an aftermarket friend who previously suggested that the winds were changing — suggesting, I suppose, that he has some sort of special insight into our business that nobody else has. Since he is one of the best salesmen the powersports industry has, maybe his business is always good, so he can suggest anything he wants to.

Then the other day we had a meeting of our Index Board, and as a usual thing, I asked the board, "How's business?" "Great," one of our dealer members in attendance answered. His answer made me wonder if our aftermarket friend had somehow plugged into our meeting.

We need to remember that retail sales aren't the only measurement of success. Actually, the industry could waltz along with almost no increase in retail sales of motorcycles, scooters, ATVs — or even UTVs. I don't suggest this is something that would work for any lengthy period, since any industry thrives only if there is predictable expansion of its core businesses. Our industry thrives only if there is a steady increase of its new unit retail sales. If the retail dealers in our industry were unable to perform uniformly, then it wouldn't be too long before the sales numbers would begin to look weak, and those used bikes that were previously sold new would begin to pile up.

Now, what I just said has already happened and continues at an unwelcome rate. And so now we are waiting for things to perk up. In review of our forecast, we'll first break down our calendar year forecasts. Looking at street, dual and dirtbike sales overall, our forecast for this calendar year is 857,777 units, a minor decrease of just over 4 percent.

Breaking down this forecast, streetbikes are expected to reach 644,000 units, a decrease of just over a half percent; then a smaller segment is dual: 46,066 units — an increase of 22 percent.

Dirtbike sales, which are the first serious disappointment, have slipped considerably. Dirtbikes comprise a category that used to be the one the industry counted on to measure future sales. But our forecast for dirtbikes this year is just 168,000 units, down 20 percent. Still, if the Chinese companies were to join our index, then who knows just how high these sales would climb. As it is, we utilize information that relates primarily to what we call the classic brands.

The interesting thing is that when the Chinese brands were first being imported into the U.S. market, they were well below technical standards. Now they seem to be much improved and are probably still improving.

So does this situation remind anyone of a particular prior period? Does anyone remember "We just can't permit those brands to compete with our brand in the same facility"? What will be the policies of the major OEMs when the Chinese begin to design proprietary brands of higher capacity and higher horsepower, and at prices so sweet as to tempt even the most advanced aficionado?

Historically, when dealers began to handle more than just one major brand in one facility, this caused considerable disagreement. Then state laws relating to such policies were enacted. Since then, a dealer's financial stability has tended to decide how many brands can be handled by one dealer. Yet policies related to such issues seem to be in mitigation — or some dealers seem to have seen the advisability of separating brands and facilities. But whatever the policies or practices there are today, there will always be another industry change pending just ahead.All that waits now is an improved economic condition. — DJB

Editor's note: U.S. economic conditions are affecting the powersports industry, as they are affecting many other industries. When you see a serious sales decline forecasted for a brand, remember the glut of used bikes that are bringing down prices of both new and used. Wholesale numbers are also climbing as import distributors are forced to take on inventory commitments. Our forecasts are made with the best of efforts and techniques, but given these economic pressures, we must advise the greatest care in evaluating these forecasts. — DJB