I CAN'T REMEMBER the precise year that motorcycle sales in the U.S. began to tumble the last time, but 1982 sounds about right. Searching the Internet you can find industry sales dating back to about 1970 — the year in which 1,125,000 motorcycles were sold. The data comes in five-year increments until 1990. Then it's reported annually.
Taking 1980 as a base year, with sales of 1,070,000 units, let's look at the last industry slide and see how it compares to what's going on now.
By 1985 sales had dropped 360,000 units to 710,000, and by 1990, sales had fallen further to a bit more than 300,000 units annually. The market continued to spiral down, albeit in smaller circles, until 1994, when it began the upward trend that most existing dealers have enjoyed until recently.
There are a number of questions that need to be addressed. What caused the market to fall? What caused it to revive? Does the past give us any insight into the future?
A lot was going on in the '80s: inflation, unemployment, mortgage rates as high as 18 percent — maybe higher — a fuel crisis, the savings-and-loan debacle, and the buying and breaking up of companies that cost a lot of jobs and security. Hmm, sounds familiar. Add to this the fact that demographically, a lot of new bike buyers in the '80s were in their late teens and early 20s, about to launch careers and families. So in addition to the uncertain economic climate, there were some pretty good lifestyle reasons to give up or postpone that motorcycle purchase.
GAS, BRAKES, GAS
On the OEM side, Yamaha had declared war on Honda for the No. 1 market slot, and both manufacturers were flooding the market with motorcycles. Kawasaki and Suzuki, though not on nearly the same level, were doing their best to take advantage of the battle.
Models proliferated, and just between the Japanese brands, there were more than 200 different motorcycles. Then almost overnight, the party was over. Forty-eight-page enthusiast magazines shrunk to 24 or 12 pages. At Kawasaki, the advertising budget was cut by 75 percent, and the money was shifted to dealer support. The long list of model offerings was abruptly shortened, and after a championship season in Superbike racing, the team was given its walking papers.
Everybody tried hard to put the brakes on, but a 5,000-mile supply line that required 12 to 24 months to start or stop made it difficult to prevent a huge buildup of inventory.
When I left Kawasaki at the end of 1990, our sales were one-third of what they'd been nine years before. And in the intervening time, we'd added ATVs and UTVs to the product mix. I stood on the sidelines of the motorcycle market for most of the '90s but kept in contact with folks at Kawasaki and at some of the magazines. In '93, the market began to turn upward. It slowly gathered momentum almost at about the same pace that it had fallen. What had changed?
For one thing, the economy had improved. Interest rates, unemployment and fuel prices all had stabilized, and the "dot-com bubble" that offered the promise of making everyone a millionaire had begun to grow. Boomers were beginning to enjoy their peak earning years. Mortgages were under control. All the appliances and furniture had been bought. The kids' braces were paid for, and better yet, the kids were out of the house. It was time for Mom and Dad to have some fun, and for many, that fun meant a motorcycle — more often than not, a Harley-Davidson motorcycle.
Harley was the tip of the wave that the industry rode to 2007. Then things began to slow down, but not like the early '80s. September 2008 happened, and rather than slide, we fell into a hole. All predictions about where the market was going were turned upside down, and it's now anyone's guess where the future will take us.
MAJOR CHANGES AHEAD
On the upside of things, I see lots of people riding their motorcycles. I've attended events in Daytona, Sturgis and Phoenix, and in California's Long Beach and Oceanside. As far as I can tell, there's still a lot of enthusiasm for motorcycles and motorcycling. Vintage events are sprouting up all over the country. In the group that I ride with, the Moto Euro Breakfast Club, barely a week goes by that someone doesn't buy a new motorcycle.
But when talking to dealers across the country, no one paints a very pretty picture. Sales are down. Profits are down. Everyone's scrambling to reduce inventory and overhead and is battening down the hatches to survive the storm.
Obviously, the storm won't end until people start going back to work, and those who are working have confidence that they'll have a job tomorrow.
The one element that we've relied on since the '70s is the baby boomers. The oldest boomers are now 64. Granted, there are still many in their '40s, but they're a diminishing asset. When we emerge from this recession, what primary demographic group will we be selling to? What kind of products and what price points will they demand?
There will be a future motorcycle market, but I suspect it will be very different from the one we've enjoyed for so long. The trick will be to read the tea leaves correctly and be ready to meet the challenge.
This article is from the October 2009 issue of Dealernews.