Excess of Success Has Led to an Excess of Used Bikes

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In this business, one thing you keep hoping for is that you can look at the data today and have it tell you what you want to know tomorrow. If history tells us anything, it tells us that if things are going down, then sometime in the future they will almost surely come back up. This also applies to today's vehicle sales.

But when will they go back up? Why will they go back up? Based on the data it will likely be another year or so, maybe even longer.

Let's see what the data tells us short-term.

Cruiser sales generally leveled off in 2004, and the signs were telling us then that sales could start leveling off and, in certain categories, perhaps even start some decline. Cruiser sales in 2005 were an estimated 336,000 units, which was a slight increase of 0.31 percent. Then, cruiser sales last year were about 332,000 units, a modest decline of 1.26 percent. Finally, our forecast for cruisers this calendar year is 318,000 units, a decline of 4 percent.

Because cruiser sales represent about 34 percent of all two-wheel motorcycle sales, this trend certainly doesn't spell a pleasing story.

Likewise, ATV sales have declined from about 780,000 units in 2005 to a forecasted 720,000 units this year.

This litany of statistics could go on an on, but the story is the same. But just what is the story? What is causing this decline? Is this like a formula we can change and then look for a better result?

This Index has covered the elements that are causing the decline but, what we haven't covered is what can be done about it, which is not much.

You may have seen me write that nothing is more important in forecasting than demographics. The first part of that equation is the U.S. population, and the population between this year and 2018 will increase by just over 10 million people. But that won't help much unless that increase is in support of the right age groups for the right motorcycle and ATV categories.

But this steady, natural increase in the U.S. population definitely won't help the current situation. Right now we are battling a excess used bike inventory — a result of 10 years of excess new unit sales. Now we have given customers a huge inventory to buy from each other through newspapers and the Internet.

Nothing will cure this except chewing away at the excess new and used inventories. Even that won't help much until the economy improves.

This is a slow process for some, but based on our telephone calls to dealers, we still are not hearing a story of doom and gloom — except, I'm sorry to say, from some of the Harley dealers who are suffering from an excess of success.

But remember that sporty XR1200 that was given a sneak preview last year? Well, Harley-Davidson has decided to introduce that keen bike. Yep, they will introduce it for the 2008 season — in Europe! Harley is afraid to divert effort to sell existing pipeline inventories. I would bet it will be introduced for the 2009 season. I certainly hope so. It's a great-looking bike. — DJB

Interpreting This Index

Index is based on the author's analysis of the MIC Retail Sales Report, SEC filings of quarterly and annual reports, and other information provided by publicly traded companies (such as Harley-Davidson and Polaris). Readers are cautioned that these estimates are subject to error, which can result from changes in seasonal patterns due to unexpected weather conditions and fluctuations in the economy. Interruptions in the supply of popular models can also affect these forecasts. Forecasts are not intended for investment purposes. Questions concerning this index should be addressed to the author, c/o Dealernews, or the author via e-mail at djb-llc@cox.net. Copyright © 2007 DJB Associates LLC, All Rights Reserved. Composite Index Advisory Board: Lindsay Brooke, Motorcycle Historian and Analyst • Tom Hicks, Owner/President, Southern California Motorcycles • John Matherson, Owner/President, Mission Motorsports • Paul R. Puma, GE Commercial Finance • Lenny Sims, Vice President, Operations, NADA Appraisal Guides • Craig Southey, COO of Cycle Barn MotorSports Group