By Neil Pascale
The new unit slowdown that appeared last fall has apparently stretched into its third quarter as sales numbers from Motorcycle Industry Council (MIC) members are largely down for the first half of 2007.Total industry new unit sales decreased slightly more than 8 percent compared to the year-ago period, with both of the market’s largest segments — ATVs and on-highway motorcycles — off from the first six months of 2006, according to the MIC data.
Still, there are hints of better things to come in the near future, both within the industry’s first-half numbers and some national economic pulse readings. Consumer confidence rose in July to its highest level in nearly six years, according to the Conference Board’s Consumer Confidence Index. Bolstering that confidence is a perceived improved job market.
“This rebound in confidence suggests economic activity may gather a little momentum in the coming months,” Lynn Franco, director of The Conference Board Consumer Research Center, said in a press release.
The industry can only hope that June’s on-highway numbers are just the start of that building momentum. June’s street bike sales were
2.5 percent higher than for the same month in 2006.
Plus, scooter sales surged in June, up more than 23 percent compared to the year-ago period.
“You need perspective because it’s not like the sky is falling,” Mark Blackwell, vice president of Victory and international operations for Polaris Industries, said of the first-half numbers. “The market is down a little bit, but it’s been growing for 15 years.”
In fact, the on-highway market is down
5 percent for the first half, with segment heavyweights Harley-Davidson Motor Co. and Honda Motor Co. each reporting decreased North American sales.
Of course, as Blackwell suggested, that comparison puts this year’s first-half numbers up against 2006, which wound up with record sales numbers.
On the other hand, compare the all-important on-highway numbers from this year to the first half of 2005 and the industry is up 4.5 percent. Compare it to three years ago and street sales are up even higher, at 8.8 percent.
“My view is the market is slower, and the market is a down a little bit and it’s tough, but it’s still one of the best years in the history of the industry,” Blackwell said. “So we’re advising our folks internally and our dealers to remain aggressive and grab all the sales we can.”
Perhaps more distressing than the on-highway motorcycles sales could be the reduced ATV sales, which declined 10.4 percent through the first half. In fact, the first-half sales total of 319,111 units is the fewest the industry has sold in its first six months since 2000.
Of course, the reduced quad sales could represent a shift of interest by consumers since the data does not take into effect either UTV or new entrant OEM sales.
“More than anything, it’s just becoming more and more competitive,” Rod Lopusnak, American Suzuki Motor Corp.’s ATV operations manager, said of the ATV market. “If you talk motorcycles, basically you have three other competitors. For ATV, now you have seven to eight major ones and all the others, and the problem is all the others’ (sales) aren’t getting recorded.
“I think the market is just as big,” Lopusnak said. “I think it’s still as lucrative. I think that it’s just more and more competitive and more and more specialized.”
Even with overall segment sales down, Lopusnak does have reason to be optimistic.
“Utility wise, we’re down the least,” he said. “To me, that’s a good sign because generally the utility market is a big driving factor on where the ATV market is as a whole because it’s more than 500,000 units a year. That has dropped the least so that gives me a good understanding the market overall is strong.”
Unfortunately, there’s no way to tell how consumers will react in the year’s final half.
Consumer confidence is elevated, but spending was up only 0.1 percent in June, the smallest gain of 2007, according to the Commerce Department.
According to many OEM executives in the powersports industry, consumer spending began to wane last fall and has been hard to predict ever since.
“The macro economic data is a little bit mixed,” Blackwell said of the national consumer data. “So it’s a little bit hard to say things are getting better. But June (for on-highway sales) was up.”
And at least publicly, major OEMs remain optimistic looking forward, with Harley-Davidson executives telling stock market analysts during their second quarter financial report they remain confident that retail activity for H-D dealers will pick up.
August 13, 2007 – Putting things in perspective
By Neil Pascale