Nov. 12, 2007 – Finding the silver lining in a down U.S. market

By Neil Pascale
Editor
Is it coincidence that reported off-road motorcycle sales in the United States began to fall around the same time as ATV sales did, roughly two to three years ago?
Probably not as the impact of lower-priced Asian imports have undoubtedly been felt by both powersports segments. And in fact the sale of smaller-displacement, Chinese-imported motorcycles is one reason some OEM officials point to for the slide in off-road motorcycle sales reported by the Motorcycle Industry Council (MIC).
This year figures to be the third consecutive year retail sales of dirt bikes diminish. The MIC report shows off-road motorcycle sales down more than 15 percent for the first nine months of the year. And that follows a September where sales fell off nearly 22 percent compared to the same month last year.
The downturn in annual U.S. sales began in 2004, when overall sales fell slightly, but for the first time in at least four years. The previous four-year period was a boon for the off-road business, as annual sales grew in some cases by double digits.
So what has happened in the market that has resulted in consecutive off years, not to mention a likely third straight year of sales declines? American Honda Motor Corp., who many in the industry point to as the leader in the dirt bike market in terms of annual sales volume, declined to comment on the subject. Others in the industry pointed to the lower price point vehicles from China and U.S. economic conditions as culprits for the sales downturn.
“I would say the downturn in sale of (off-road) bikes is more related to the economy and to the real estate (market) than it has anything to do” with the product, said Tim Olson, the off-road media relations manager for Yamaha Motor Corp. USA.
And the current economic challenges consumers face could be hitting the dirt bike segment harder than other powersports arenas as off-road riders are known for buying new bikes at a fairly rapid rate.
“The way the economy is, people are having to make choices on whether they’re keeping their bikes for a couple of years or whether they’re buying new ones every year,” Olson said.
One silver lining to the off-road market: although MIC-member sales are down, consumer interest appears to be holding steady and perhaps even rising in some sectors.
Glenn Hansen, the American Suzuki Motor Corp. communications manager for its motorcycle/ATV division, said participation in amateur motocross racing is holding steady overall, with some growth in the younger bike classes (50-70cc). There are some declines in adult motocross participation, but increases for the same age group in cross-country racing.
Plus, officials from aftermarket companies serving the off-road market say sales are healthy, and in some cases up, although some of the bigger ticket items are not selling in the same volumes as previous years.
With steady participation levels and a healthy aftermarket in mind are MIC-member companies expecting sales to rebound to the levels seen in 2003 when more than 290,000 dirt bikes were sold? (In comparison, approximately 179,000 bikes had been sold through September of this year.)
“We don’t see any sign for a big change one way or the other,” Hansen said, “but everybody is trying some new things.” For Suzuki, that means trying to “grow the market from the ground up” with changes to its youth lineup.
“We have a brand new DR-Z70 four-stroke kids bike, and we’re hoping that will be a hit,” Hansen said. “And so far, I think it’s doing pretty well in dealerships. What’s new about it for us is it’s a clean-burning, four-stroke motor with decent power and electric start in a small package for entry level riders.”
On the other end of the market, Suzuki introduced a four-stroke, fuel-injected motocross bike, the only one available to the market, Hansen said. “It’s new technology for a market that has been stagnant. So that will help.”
Yamaha also has introduced a new offering for its youth bike segment with its TT-R110E, a four-stroke with a four-speed, auto-clutch transmission. Olson said Yamaha also is expecting big things from its motocross YZ450F, which received chassis and engine refinements for the 2008 model and is billed as “ready to race.”
Kawasaki also addressed its off-road offerings at its latest dealer meeting, unveiling new business for its dealer network with the KLX140 and sister bike, KLX140L. The new dirt bikes offer a bigger engine and price point than Kawasaki’s traditional 110.
KTM, one of the few OEMs that have actually increased its annual unit sales in the U.S., made a host of changes to its off-road lineup, including adding a new enduro offering — the 690 — and a number of upgrades to its cross-country bikes. Besides the new models, KTM officials have pointed to their continued involvement in the two-stroke business as a reason why their U.S. off-road sales have continued to grow.
In fact, the switch from two-stroke to four-stroke engines among many of the OEMs has some in the industry wondering whether that conversion led to the current downturn in sales. In other words, could the switch from two- to four-stroke have created an artificially high sales volume for a couple of years?
Both Yamaha’s Olson and Suzuki’s Hansen don’t see that as likely.
“I think the motocross buyer keeps stuff for a short period of time,” Hansen said. “It’s not like a bunch of guys were holding on to two-strokes for a while and not buying anything and then bought four-strokes all at once. There’s always a lot of turnover (in off-road motorcycles).
“Four strokes have definitely changed the marketplace and continue to as customers learn about the ownership and use of a totally different motor. But I don’t think it would have really changed sales numbers drastically.”