Jul. 21, 2008 – An industry dynamic that is sure to change

“Oh wow … No kidding?”
That was the reaction from an executive of a major U.S. distributor to what might be the one industry statistic that will change the most during the next six months. That statistic: The percentage of dealers who carry a scooter line.
Currently, close to 40 percent of powersports dealers do not carry a scooter line, according to a national dealer survey conducted for Powersports Business. The survey, which was done by Irwin Broh & Associates, was conducted in May and questioned Powersports Business subscribers and questioned 500 dealerships. The bulk of the data from that survey will be presented in our annual Market Data Book, which will be published in September.
The survey looked closely at dealer revenue, spending and inventory levels during the past year and details in-depth industry information. But the most surprising, and probably most fluid, statistic might be that ratio of dealers who currently carry scooter lines.
After all, that market has taken off by quantum leaps since spring. Consumer demand has gone up quicker than the price at the pump, leaving many established scooter manufacturers and distributors scrambling to fill dealer orders. Both KYMCO and LS Motorsports officials report empty warehouses and prodigious efforts to get more product flowing to the States. We hear good news from some metric manufacturers, including Yamaha, which has seen its scooter sales rise by more than 90 percent compared to the year-ago period.
Still, the question lingering from this scooter craze, at least in the mind of the dealer who does not carry such a line, has to be the long-term outlook of this segment. Is this recent sales surge just another short spike, ala Hurricane Katrina? You’ll remember in September of 2005 gas prices in the United States increased to more than $3 per gallon. The resulting scooter sales, at least those reported by the Motorcycle Industry Council (MIC), were shockingly large. More than 9,400 scooters were sold in September alone, or about three times the amount compared to the previous year period.
Now that national gas prices have climbed to and exceeded another milestone — the $4 mark — similar sales sparks are flying. Scooter manufacturers are reporting sales increases of 60-80-100 percent over the comparable time a year ago.
But will it last? Can this market be more than just an occasional flare-up both in the minds of consumers, not to mention our cash registers?
The question is a valid one because of recent history. Following the 2005 sales spike the scooter market — again, the part that is reported by the MIC — returned to a mostly flat, niche level. There was a noticeable jump in June 2006 sales but things were relatively quiet again by September 2006, even after gas prices again crept up over the $3 mark.
The reason dealers should feel more confident about the market segment this time around comes down to simple mathematics. The more scooters start appearing on roadways, the more they’re seen and discussed and the further entrenched they become in the American fabric of life. And it’s really that simple.
No, the scooter market might not quadruple over where it is today. That’s something even executives at scooter manufacturers aren’t planning or banking on. But they do see plenty of comfortable growth there, some even suggesting double-digit percentage growth is not out of the question.
We’re not so sure double-digit growth is sustainable over the long term as American appetites for the “must-have product” changes more frequently than the calendar and our collective gasp at gas prices will surely diminish over time. But certainly, healthy growth in that segment seems a reasonable expectation as oil prices continue to escalate.
Further, the time to get into the market, in terms of selecting a scooter distributor or manufacturer, couldn’t be much better. Escalating manufacturing costs, including the price of raw materials, has caused some fly-by-night operations to leave the segment, leaving behind companies that are making business decisions based on sound, long-term objectives.
All of which figures to make what might be the industry’s most surprising statistic — that roughly 40 percent of dealers don’t carry a scooter line — change at an exceedingly fast rate. PSB
Neil Pascale is editor-in-chief of Powersports Business. He can be reached at npascale@affinitygroup.com.