By Neil Pascale
New unit sales reported by the industry’s major manufacturers decreased a second straight year and there’s little expressed optimism that 2008 will mark a rebound year.
Total 2007 new unit sales were down more than 10 percent compared to a year ago, according to data from the Motorcycle Industry Council (MIC) that tracks motorcycle, ATV and scooter retail sales.
The previous year saw a much slighter decline, when 2006 sales were only off roughly 1 percent from the previous year.
The two biggest segments of the MIC report — ATV and on-highway motorcycles — showed different levels of decline for 2007, although both areas were down dramatically in the month of December.
ATV sales, now at approximately 637,600, dipped close to 15 percent from last year and have dropped each of the past three years after totaling more than 800,000 in 2004. Those numbers, however, do not take into account non-MIC member sales, including Chinese and Taiwanese products, nor UTV sales, which sources have told Powersports Business numbered more than 120,000 in 2007.
On-highway sales fell nearly 5 percent in 2007 compared to the previous year, and nearly 20 percent for December. The year-end on-highway sales of more than 647,600, however, is slightly higher than 2005 (less than 1 percent) and 2004 (about 7 percent).
But so far there is little optimism to be found about how these two large segments will fare in the coming year.
In their year-end financial report conference call, Polaris officials said they would not be surprised to see the core ATV market again be down double digits in retail sales percentage in 2008. Harley-Davidson, the on-highway market share leader, said it expected challenging economic conditions in 2008 after seeing its U.S. sales fall more than 6 percent compared to the previous year.
Glenn Hansen, American Suzuki Motor Corp.’s motorcycle/ATV division communications manager, expressed a view that many OEMs would probably share.
“We’re going to plan for the worst and hope for the best, to use an old, tired cliché,” Hansen said of the company’s expectations for 2008.
“But it means for us we’re going to plan that sales are going to be flat, maybe up a little bit. But flat. We’re going to be ready if it turns around, but we’re playing it conservative. And I think we’re in a good position because our dealer inventory is still quite low so we’re not overly scared.”
What was scary, however, was the drop off of ATV sales in December, typically one of the strongest months for retail sales. Quad sales fell more than 28 percent from a year ago.
The new unit sales decline fell in line with what was reported outside of the industry. Consumer confidence, according to the Reuters/University of Michigan report, fell to the lowest level in more than two years in December.
Plus, last year’s retail holiday spending showed the slightest growth since 2002, according to the National Retail Federation.
The year-end industry news, however, is not all bad.
Scooter sales were essentially flat to last year at approximately 54,000 and dual purpose bike sales increased nearly 7 percent to more than 37,000. Plus, UTV sales, which are not part of the MIC data, have risen by double digits in terms of retail sales percentage, according to several of the OEMs.
Individual OEMs also saw some bright spots in terms of market share gains. Suzuki, Ducati and Victory were among the companies that reported on-highway market-share gains in 2007.
“It’s not good to be down,” Hansen said of the 2007 volume, “but the strong point for us is a continued focus on 126cc and above street bikes and there we are No. 1 outside of Harley. We’re pretty happy with that.”
By Neil Pascale