Two thousand and ten was another tough year for the motorcycle industry. Motorcycle sales were down and times were worse than a Celine Dion soundtrack – okay maybe not quite that bad, but you can probably feel their pain.
But that was 2010. This is a new year, and aside from a slow recovery out of a bank-induced global recession, it’s a good time to take a look at what factors are at play and how they may affect the year ahead.
If there’s any one overriding thing that will shape this riding season, we figure it’s going to be the cost of fuel. Thanks to Mideast unrest and a whole load of speculators, the price of crude is currently fluctuating around the $100 per barrel mark and likely to go up.
Granted, over the last few days it’s seen a pause as Japan’s mighty economy pauses to recover from the earthquake, but once it fires up into reconstruction mode we’re expecting even more pressure on the price of oil, and thus prices at the pump.
Although we may still be some way off from the historical $145 mark set back in July 2008, which saw prices in Toronto hit $1.35 per litre at the pumps, it’s conceivable that we will get there, and soon.
Okay, so high gas prices suck, right? Well not if you’re in the business of selling motorcycles and scooters.
In fact scooter sales do well when gas is expensive; so interlinked are they that the last time we saw a scooter importer smile was when gas prices spiked back in 2008 (scooter sales have flatlined since).
And it makes sense – in many provinces you don’t need to take a special test for a licence to ride scooters, they’re ridiculously easy on fuel, they’re easy to park, easy to ride and depending on engine displacement, they aren’t even expensive to purchase or insure.
With gas prices on the rise, we figure we’re going to see a rise in scooter sales too, just like last time fuel went all pricey. In fact, they’re already noticing this boost in sales in places like Texas , San Diego or New Zealand, where the riding season is already underway.
Most of the Canadian scooter importers tend to agree — albeit somewhat cautiously — that 2011 is looking good. Tony Kanjirappally of Chironex scooters says that their dealers are getting huge interest from potential customers, especially in Quebec where most scooters are sold.
Don McKellar of Go 4 It Sales (E-Ton, Keeway, TGB scooters) is a little more cautious, pointing out that the economy is still in recovery and scooters are still seen as a bit of a luxury item. Despite this, he is still guardedly optimistic that scooter sales will rebound in 2011, and is even introducing Benelli scooters to Canada this year.
Sabina Heilman of KYMCO Canada shares the same sentiment, hoping that a spike in gas prices in 2011 will replicate the scooter sales boom of the last spike, but is cautious as to how a weakened economy will adversely affect the trend. But, she adds that it would be hard to imagine a year as bad as 2010.
According to Ian McKinstray at Piaggio Canada the critical point of gas pricing for people (in Toronto) to start thinking of car alternatives is $1.20 a litre – which is pretty much where we’re at now.
McKinstray has also seen a marked improvement in consumer interest at the recent motorcycle shows, though he worries about the neutralizing effect of high insurance premiums and the remains of all those heavily discounted non-current models still in the system, that have little to no profit margin and adversely affect new bke sales.
SMALL IS BEAUTFUL
But scooters aren’t the only cost-efficient machines aiming for a comeback – 2011 could also see the return of the small bike with a vengeance.
Honda’s new CBR250R is already selling like mad in Asia and has even sold out from Honda Canada’s warehouse. This bike, along with their CBR125R, offers beginners a fuel-efficient and sporty-looking ride for a much lower entry price (and insurance cost) than their supersport counterparts.
Kawasaki still has their trusty Ninja 250R, but also brought the Ninja 400R to Canada last year. It’s not much, but it’s a start in a direction that North American importers have not recognized in years.
Remember, too, that Asian manufacturers are already making all kinds of small-displacement bikes and pumping them into the developing world as fast as they can produce them, so it may only be a matter of time before some of those cheaper machines make it over here as the market demand increases.
If gas continues to climb, a 250cc sport bike getting 70 mpg may be a lot more attractive than a 600cc supersport getting around 35 mpg.
However, high gas prices may not be all sunshine and roses for the industry, and we’re wondering if we may see a decline in motorcycle touring and sales of touring machines.
While small motorcycles and scooters are more fuel efficient than cars, that doesn’t necessarily apply when you get into larger machines.
It will also cost more to take your sport-tourer or bagger for a long tour – something that will at the least influence the length of a tour for many riders this summer. Even attendance at this year’s Daytona Bike Week was reportedly down by 20 per cent.
While some touring bikes get respectable gas mileage, the rule of thumb is that the larger your engine, the more gas you will burn — and you’re not likely to see many folks touring on smaller motorcycles.
Big V-twins seem to get between 35 and 40 mpg – not much gas savings compared to a small car on the highway, although much greater than most pickup trucks or SUVs.
Medium-to-large displacement sport-tourers are anywhere in the 35-50 mpg range, and adventure-touring motorcycles are usually in the 45-60 mpg range, so these segments may not take as much of a hit.
BMW Canada’s Norm Wells isn’t concerned too much though, as he reckons BMW’s push to have a diverse portfolio of bikes including the G650GS single and a whole bevy of 800cc twins, will help them appeal to fuel conscious buyers.
Besides, BMW is one of the few companies to have actually increased sales recently, while most others have struggled. Positive feedback from BMW dealers regarding 2011 seems to indicate that they should continue to do well too.
Suzuki Canada’s Tylor Donnelly is a little less optimistic, citing the MMIC‘s prediction of flat sales for 2011, though he’s hoping that Suzuki will do a little better despite that. Higher gas prices will help he says, but it may only cause the consumer to consider a bike; buying one is a different story.
Kim Moore of Honda Canada sits somewhere in between and is unsure as to whether high gas prices will either hurt large motorcycle sales or help smaller ones.
She points out that the typical buyer of a Gold Wing tends to have money and so is less affected by the price at the pump, and ponders whether people looking to save money on gas will actually consider smaller motorcycles along with scooters.
Scooters have a safer image than motorcycles, and that’s a big factor for someone who’s thinking of selling that second car in favour of two wheels.
Yamaha Canada’s John Bayliss says that they’ve seen an upturn in sales in the last five months but is quick to add that a chunk of that can be credited to some aggressive promotions to clear out non-currents, which he expects to be sold off by the middle of 2011.
But that raises another issue; that of effectively higher sticker prices once all the discounts are done which may prove a counter to eager buyers.
However, he has also seen an improvement in western Canada thanks to the hike in oil prices rejuvenating the oil sector in Alberta.
“Disposable income means people buy motorcycles, and Albertans are spending a chunk of that on new motorcycles,” said Bayliss, “and higher gas prices will also boost scooter sales”.
Alex Carroni of Deeley Harley-Davidson Canada also views 2011 with some confidence, predicting that Harley will see strong gradual growth with sales figures already up 5 per cent in the last couple of months.
This comes after a couple of really tough years for the brand, but Carroni thinks that this has spawned a much leaner company with a better mindset to tackle the issues ahead.
Combine that with new programs like their H-D1 customization program, the new XR1200 race series, a line of Sportsters available for under $10K, and renewed consumer interest, and she sees no reason why they shouldn’t see continued growth throughout the year.
As for gas prices she doesn’t think that they will affect the H-D buyer one way or another. “Harley-Davidson customers aren’t looking for the most convenient or cheapest way from A to B,” she said, “H-D’s strength is with the brand.”
SIX OF ONE …
With the combined disasters of an earthquake, tsunami and nuclear meltdowns whacking Japan, it must be considered how this will affect us over here.
The good news is that it looks like 2011 will be relatively free of any adverse affect; Canadian importers are fairly safe with over 90 per cent of 2011 models already on the ground in Canada.
The real issue will be 2012, as production for those models usually fires up in June and July, which may be an issue depending just how bad things get in Japan.
However, don’t expect these problems to be the sole domain of bikes made in Japan. According to Norm Wells, many manufacturers use components sourced from Japan and that could cause production delays for everyone (link).
Of course, gas isn’t the only expense for motorcyclists. As we mentioned earlier, insurance prices are becoming a greater factor in motorcycle purchasing, as sport bikes in particular get more costly to insure.
As much as high fuel prices make two-wheeled transport attractive, many newcomers will be put off by the idea of spending any gas savings in the form of another insurance bill.
Then there’s registration costs too. Although in most provinces it’s a relatively small part of the price of getting onto two wheels, Quebec continues to hit motorcyclists hard when it comes to paying to register their machines and we predict that this will prove a hindrance to sales in La Belle Province.
The final word remains with Mother Nature though. Poor spring weather has always put a damper on motorcycle and scooter sales before they get a chance to really take off, and that time is now. Pretty well all of the importers we asked said that their main sales season is March to May, though the forecast is mixed.
According to the Weather Network most of Canada will see normal temperatures except for the west which will be cooler with more rain predicted for southern B.C.. Unfortunately there’s also higher than normal rain levels expected for Ontario and Quebec – the big buyers of motorcycles!
Still, as long as gas remains high we’re betting that 2011 will prove to be a good year for scooter sellers, and for anyone who is fortunate enough to have affordable, small-capacity motorcycles in their line-up.
But as one importer pointed out, during the recession of the late 1980s, sales were less than half of what they are now and the decline went on for eight years (the industry’s current woes have lasted a little over two years to date) – so there could still be some distance for the industry to fall.
High gas prices may help to stop the rot, but we might not see that much-needed turnaround just yet.