First Quarter Sales Slow

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NOTE: The face of our index has changed, and the information we offer has doubled.

In addition, we've formed an advisory board of four important individuals who are successful in their own right. These members know our industry inside and out. They have joined forces to help improve the information offered and the quality of our analysis, and to advise us about how this index might be improved over time. Please welcome our new advisory board by sending us your views about the information read here each month. The board members are listed at the bottom of the facing page.

By now, most everyone has realized that this won't be one of those double-digit years that we became used to in the '90s and were used to until a couple of years ago. We'll probably see those periods again, but when we do our industry will likely look a lot different.

We have mentioned Harley-Davidson a lot these days; some are probably getting tired of that while others want more. Here's the why of our preoccupation with the so-called Mother Company. Harley-Davidson represents more than a quarter of all motorcycles sold and tracked in the United States. And while it has seen some rough times it will likely face tougher times yet before it recognizes that it won't be able to sell high-priced nostalgia as successfully as it once did.

Another issue still faces our industry: Chinese motorcycles that are not being tracked regularly by any recognized organization continue to cause problems. The effect on so-called traditional sales is unwanted, while at the same time these brands are probably introducing new bikes to more young people than otherwise would have been the case. Most of that unwanted effect is on 125cc-and-under dirtbikes and small ATVs.

Our index deals with traditional streetbikes, dirtbikes, scooters and ATVs that are tracked by the MIC for the benefit of its membership. As members of the MIC we utilize retail sales data to develop our proprietary forecasts for the exclusive benefit of readers of this index. Now, with added space allocated, we will be able to provide more sales forecasts and trend analysis than ever before. (Note: Last month there were some errors in my forecasts; I'm asking readers to please start fresh with this issue for this year.)

First-quarter industry sales overall were soft, and in many cases there was modest to significantly negative sales growth. We don't, however, expect a nosedive or anything like it this year. But our industry is in a time of change, and we expect to see demand changes for new types of bikes forced by changes in demographics that are inevitable.

During the first quarter, each of the OEMs is having its own issues to deal with. Most of these issues are similar, such as consistently bad weather, excessive pipeline inventories, and short credit forcing some consumers to buy and sell used vehicles among themselves rather than through dealers.

Roughly 6 million streetbikes (including about 2 million cruisers) in use today continue to put the brakes on new-unit sales — especially those of high-end cruisers. The used market offers too many lower-priced alternatives than ought to exist.

H-D's strike also caused a slowdown of its sales, but this had little effect on independent aftermarket sales.

As most know, Dealernews' show at Indy was successful. Dealers tell me the Indy show reeked with enthusiasm — just as if sales problems were nonexistent. Inside the show with all that merchandise to look over and, yes, with protection from the weather, too — there were no problems at all.DJB

Composite Index Advisory Board: 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

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. 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.