How Will Gas Prices Affect Us?


I hoped to be able to say this month that information indicates the weather ahead will be clearer, but that's not the case. Analysis of industry trends shows that it is unlikely that we will see a quick turnaround. While we keep hoping, it just doesn't seem to be coming. At least right now!

While I am loath too get into politics — at least in this column — I can't help but talk about the one major change that will no doubt affect our industry sooner and perhaps more seriously than any other change I see out there. Gasoline prices are going through the roof, and this one thing — which is politically motivated — can do more to wreck our economy than any other thing.

Think about it: It costs Saudi Arabia only $2 per barrel of oil to get that barrel ready to sell it to us for $125 (or whatever the price happens to be currently). This kind of variance gives you an idea of how much leverage countries with excess supplies of oil have on the U.S. It's not that the country doesn't have any answers; we do, but none of them are especially attractive.

Our industry has faced this before, in 1979. The effect then was to cause a big demand for mopeds. Something on the order of 250,000-plus units were retailed before the problem subsided.

We were relatively sure then that the problem was temporary. Today we're not. There are nations that are now willing to use their excess supplies of oil to wreck our economy; and today we are not so willing to use our military power to bring about a change.

So how will all of this affect the powersports industry? This time, as a nation, we know that we will need to change our ways. While we have supplies of oil, going after them brings with it major costs. We can already see some effects of the rising costs of gasoline on the demand of motorcycles and scooters. Demand for classic scooters has begun to increase, and while we haven't seen the end of these increases by any means, I am not yet sure just how high scooter sales might go before they ebb. You would think that these pressures might positively affect lightweight motorcycles, but what brands? What models? So far I don't see much of that occurring.

But the new scooters are slick and have plenty of zip. And these new pressures will no doubt encourage the manufacturers of electric bikes and scooters. Some of those — such as Hum Cycles — are even playing with electric sportbikes and are claiming a range of 100 miles. But electric scooters seem to make more sense. That's just my thinking, which may not be in accord with the potential for the most demand.

No matter the effect of rising gasoline prices on our economy, they will almost certainly cause major changes within the powersports industry. Keep your expenses low and work hard to make sales, and please accept my best wishes for the best possible good luck until this nonsense finds an answer!

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