Nov. 12, 2007 – No sign yet of an upswing

By Neil Pascale
The latest quarterly retail sales report of the industry from Motorcycle Industry Council (MIC) members mirrors previous pictures of 2007: That unless something radical occurs, this year won’t measure up to 2006 in terms of new unit sales.
And indications from some of those MIC members point to more challenging times in the next several quarters.
For the most recent quarter that ended Sept. 30, nearly every segment of the industry was down, some in double digits, according to the MIC report. Overall, industry sales are off 8.2 percent compared to the year-ago period.
That “overall” number, however, only reflects data from MIC members and does not take into account UTV sales, which industry sources indicate is now a six-figure number, or new entrant OEMs from the Far East.
Without those two columns of data, some believe a true picture of the industry’s retail sales is actually a murky one, especially for the ATV market.
“I don’t think the industry is shrinking at all,” said Rod Lopusnak, the ATV operations manager for America Suzuki Motor Corp., noting he has seen estimates of the new entrant OEM sales to be as high as 500,000 per year.
“If that was reported, people would be throwing Super Bowl parties for how strong the industry is. But now we’re complaining that we’re 5 or 8 percent off. There’s a whole other market out there.”
The market that is reported by the MIC shows ATV sales down 11 percent through September. If the reduced sales trend of 2007 continues, then ATV sales will be down for a third consecutive year.
Suzuki’s Lopusnak believes those numbers reflect more of the changes in the industry and not necessarily an accurate, overall picture.
“Some dealers who used to sell 100 quads a year are now selling 20 but are selling 250 side-by-sides,” he said. “So is their business off? Not really. It’s just in a different area.”
Still, some of the industry’s major players have publicly pointed to what they believe to be difficult quarters ahead. In its most recent quarterly report, Harley-Davidson said it expects a decline in year-end revenue vs. 2006 and referred to the upcoming 2008 retail motorcycle environment as “challenging.” Another OEM, Kawasaki Motors Corp., was even more detailed in its forecast, saying it believes the U.S. powersports industry as a whole will be down 4 percent this year vs. 2006 and again be down (2 percent) in 2008.
Ducati North America CEO Michael Lock said Kawasaki’s forecast is in line with the research his company has done on the U.S. market, believing 2008 will be either flat to down
2 percent.
“We see the sport market over the next 12 months being flat, not down,” Lock said, also noting Ducati North America’s research shows the cruiser market decreasing for a third consecutive year in 2008 by 5-7 percent and the touring market declining 3-5 percent.
The latest MIC report shows the on-highway market down 4.6 percent through September compared to the year-ago period.
For the month of September, on-road sales were down 6.1 percent. The smaller motorcycle segments also did not match 2006’s levels. Off-highway sales had a poor September (down nearly 22 percent vs. 2006) and are off more than 15 percent from last year. Scooter sales did have a strong September (up 12 percent), but remain down vs. 2006 by nearly 2 percent.
The relatively small segment of dual purpose bikes remains a noteworthy part of the industry as its sales are up 4.3 percent over 2006. It was the lone segment reported by the MIC to show an increase over 2006 retail sales.

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