Editor’s note: This is Part 1 in a series about megatrends Gary Gustafson sees for the industry for 2014. To read Part 2, click here.
There are major political, demographic and economic forces shaping the outlook for our industry in 2014. Here is an overview of how those forces will affect manufacturers.
1. The world is flat, fickle and restless. There is unease all over the globe. Tensions in the Far East are rising. A recovery throughout the EU hasn’t happened. Some top analysts are forecasting slower growth for the American economy in 2014. Old political alliances that once maintained global stability are dissolving at a breathtaking rate. Nevertheless, people will still be buying motorcycles and other powersports products — the only question is which companies will benefit. Most major brands recognize that their biggest unit volume growth opportunities are now in the so-called BRIC nations (Brazil, Russia, India and China) and other emerging economies. Here in the United States the market is fragmenting substantially, but consumers still crave innovation. The current scenario is perplexing, but it is also a tremendous opportunity for those who can move quickly and adeptly within all of the levels of what I call Innovation3 to understand and meet customer needs. If you weathered the storms of the Great Recession you deserve a sincere congratulations, but your work isn’t over. Genuine strategic insight and decisive action are as vital as they have ever been.
2. A tipping point is coming for electric and hybrid powersports vehicles, regardless of what happens with cars. When I first undertook project management of a production-intent fully-electric vehicle, my assumption was that it would be boring. I was wrong. Electric motorcycles can be scary fast. Electric UTVs are super torquey. Hybrid off-road vehicles let private landowners travel their property in serene silence or enjoy public trails at higher speeds. Those “key buying partners” accompanying their male half into a dealership suddenly become very enthusiastic when they are demoed a bike or UTV that looks trendy and is quiet and clean enough to enhance their social experience. Notice that I said nothing about saving the earth, government funding, nor even used the word “green” in the preceding sentences. EVs are not all things to all people, but their value proposition is real. Our industry hasn’t hit the bull’s-eye yet in this space. As competent manufacturers launch purpose-built EV and hybrid platforms that are safe and affordable and dealers learn how to sell them to the right customers, the market is going to take off. This prediction is coming from a guy who still loves things that go fast and loud.
3. The North American market is becoming hourglass-shaped. There are multiple good reasons that the Honda Grom is selling so well and that Harley is taking another run at the entry-level market. Many people are learning to live with less. There is a distinct “have-less” lifestyle developing in the United States today, and it will probably grow. On the other hand, the “haves” in our society are still looking for things that can give them exceptional experiences, improve productivity, or convey status like the Polaris RZR Jagged X Special Edition. Products in this category need to have all the bells, whistles and horsepower to sell. It is becoming more difficult to identify a broad “middle class” in between these upper and lower lifestyle brackets. Now, let’s look at what manufacturers are offering these customer segments. The new motorcycle market has product offerings in both halves of the hourglass. The new snowmobile market in North America only has product in the top half with the used market occupying the lower half. The new PWC market only sold into the top half as well until the release of the Sea-Doo Spark. The new ATV market has diminished in part because they can’t compete with new UTV products in the top half of the hourglass. The only bright side for ATVs is that used unit attrition could start opening up a little room in the bottom half of the glass for fresh new models that offer a great value.
Powersports consultant Gary Gustafson designs, develops and delivers innovative business growth strategies for powersports suppliers from start-ups to Fortune 500 companies. Find more information about G-Force Consulting on the web at www.gforceconsulting.com.