Here in the United States, we have a way of making ourselves sound bigger than we are. We call ourselves “the Americans” even though we’re a small part of the Americas and we hold a World Series without inviting other countries to participate. In the motorcycle world, however, it’s impossible to mistake the fact that the U.S. market is becoming smaller and less important with every passing year.
We’re in the season when the manufacturers are reporting their sales for 2019. That, and some other recent news, just makes more clear that this is not where the action is.
Overall, sales of new motorcycles were down slightly in 2019 in the United States while sales were up in Europe, Asia and South America. The U.S. market has been stagnant for years. Taking the long view, there was a spike in motorcycle sales in the early 1970s, when Baby Boomers were young and motorcycles were cool (the oil crisis didn’t hurt, either). There was an echo boom just prior to the Great Recession in 2008, when many of those same Baby Boomers were in their highest earning years, many were becoming empty-nesters and money was easy to come by thanks to the housing bubble and home-equity loans. Those two spikes were the times when sales topped one million new motorcycles per year. Since 2009, sales have wavered in a range of more or less half a million motorcycles per year.
Of course there are other factors. Sales of used motorcycles are strong, and it’s not hard to see why. I am a rare exception in this country, as motorcycles are my primary form of personal transportation. Most people ride for recreation, which is why you see “no time to ride” as the reason for selling on many used bike ads. The average U.S. motorcyclist rides less than 3,000 miles a year, so there are plenty of low-mileage used motorcycles for sale at prices well below the cost of new ones.
What’s really interesting to me, however, is not looking at the U.S. market in isolation, but in comparison to the rest of the world. Ducati and BMW recently released their sales figures for 2019, which included some interesting factoids (such as BMW selling more R 1250 GS models than Ducati sold motorcycles, of all kinds). Both companies are premium brands, and while both have expanded into more affordable market segments in recent years (BMW with its G line of singles and Ducati with its Scrambler line), just about everything they sell is priced higher than competing models from other manufacturers, regardless of the market. For that reason, the U.S. market has traditionally been important, because more riders here can afford a premium brand. But less and less important all the time.
Consider a couple of stats. Less than nine percent of BMW’s unit sales took place in the United States. Ducati sold 19 percent more motorcycles in its home country of Italy than it did in the United States, even though the U.S. population is five and a half times bigger.
This week, the two major U.S. manufacturers reported earnings. The news out of Harley-Davidson and Polaris, parent company of Indian, was more of the same: weak sales, especially in the segments those two companies have traditionally focused on, big cruisers and touring motorcycles.
A Sportster is assembled in the Harley-Davidson Kansas City plant a few years ago. Harley has since closed the factory. Harley-Davidson photo.
The water is muddy when looking at Polaris, in part because it lumps its not-a-motorcycle three-wheeled Slingshot into the motorcycle division, and Slingshot sales have been in decline ever since the initial burst of enthusiasm passed. The other factor is that the motorcycle division is a small part of Polaris, which sells many more off-road vehicles, snowmobiles and is also in the auto parts business. The company said Indian sales “increased low single digits” in 2019, which means less than five percent. Despite that, the company lost $1.6 million in its motorcycle division, which it blamed on warranty expenses and the cost of promotions.
While motorcycles are a sideline for Polaris, they’re everything to Harley-Davidson. The MoCo’s retail motorcycle sales were down 4.3 percent globally and 5.2 percent in the United States in 2019, continuing a pattern of several years of decline. Harley-Davidson CEO Matt Levatich has been loudly and publicly touting his plan to transform the company and reach new customers, but even by his own admission the changes in process won’t yield financial results until 2021, at the soonest. Harley-Davidson has released its halo electric bike, the LiveWire, though at $30,000 it is guaranteed to be just a halo product, not a big seller. The timing of the arrival of smaller, more affordable electric bikes is still unknown. Meanwhile, Harley-Davidson’s other new products aimed at attracting new customers, the Pan America adventure-tourer and Bronx naked bike, will be in dealerships the second half of this year.
The factors affecting the persistent weakness in the U.S. motorcycle market are many and well known. While unemployment is low, wages for many U.S. workers have stagnated. That leaves little money available for what is a discretionary purchase most often seen as a recreational vehicle or a “toy,” unlike the rest of the world, where a motorcycle is often primary transportation. There’s more competition for those discretionary funds, too. Finally, as gearhead Baby Boomers age out of riding, younger generations are not as widely interested, either due to concerns about safety or for financial reasons. The rate of young people even bothering to get a driver’s license in the United States has been declining as they have other options for transportation, especially in urban areas, and they’re definitely not going to the additional trouble of getting a motorcycle license and learning to ride one.
The action in the motorcycle world is elsewhere. Just about anywhere else. That brings us to the other piece of news in the past week. Triumph and Bajaj finally reached an agreement on their partnership to build bikes in the 200 cc to 750 cc range. That’s bigger than most everything Bajaj makes and smaller than everything Triumph currently makes. The bikes will be sold as Triumphs and distributed by Triumph in countries where it already has a presence and distributed by Bajaj elsewhere.
Bajaj, in case you’re unfamiliar with the brand, is the third-largest motorcycle manufacturer in the world and the second-largest in India. The Triumph-Bajaj partnership is just the latest in a series of such links. Bajaj already owns a big stake in KTM and produces the 390 Duke. BMW has partnered with Indian manufacturer TVS to produce its G 310 line of single-cylinder bikes. Harley-Davidson has partnered with Chinese company Quianjiang and plans to produce small motorcycles for Asia, in addition to having its own plant in Thailand producing Harley-Davidsons (and thus avoiding Chinese and European tariffs on U.S.-built bikes).
Asia remains a growth area. There are pockets of strength in South America and even Europe has shown strong sales lately. The United States? Not even close to qualifying for the World Series of motorcycling.
Our problem in the US seems to be that we are too rich to need motorcycles for primary transportation, which lowers demand, while, perversely, being too poor to afford most of the new bikes the manufacturers are producing, which tempers that demand further.
Today’s motorcycle MSRP’s are out of reach of the median US income and getting more so, with each new model year. It seems, as you noted, that manufacturers see the US as nothing more than a small market for premium priced bikes, so that is pretty much what they are catering to with most of their new models. I only see the Chinese and Indians being willing to produce bikes that most Americans can actually afford to purchase, straight up, without any financing headaches.
I’ve commented elsewhere, and will make the same argument here, that in five years time, given the leaps in Chinese and Indian design and quality assurance, I do not see any European or Japanese manufacturers competing in the sub $10,000 motorcycle market in the US. With one exception that I know of , they seem to be either unwilling, or unable, to produce bikes for the same or less money as the previous years model, in order to compensate for stagnant wages in this country. That one exception is Kawasaki – to their credit, they have actually done this on the last couple of new models that they have released. They seem to be the only one though, everyone else seems to expect an extra $500-$1000 a year extra, like clockwork. If only wages grew like that for most Americans, then we wouldn’t be in the bind we are in with plummeting US motorcycle sales.
Daniel, I think you’re right that the fact that almost no U.S. motorcyclists (I’m a rare exception) use their bikes as primary transportation is a big factor. You can save money by riding a motorcycle if it takes the place of a car, but for almost everyone in this country, it’s an additional cost on top of the car (or SUV, crossover, monster truck, etc.). So that, along with the wage stagnation issues, makes it expensive.
The other factor, though, is one of critical mass. I don’t know how many times I’ve talked to accomplished women riders, particularly, who told me they got started because they had a latent curiosity about motorcycles and one day they saw another woman riding “and it just clicked — if she can do it, I can.” Same with kids growing up. If you’re exposed to motorcycles, it becomes something you consider possible. If not, it’s far easier, especially in these safety-conscious times, to say, “Too dangerous. Not for me.”
So a declining ridership leads to more declines, as fewer people are exposed to it or ever think of it as something that’s a reasonable option. Meanwhile, in Europe or Asia, where it’s just another reasonable transportation option, it remains strong.
Daniel, where do you get the idea only the Chinese and Indian companies are willing to build affordable bikes? Most of the manufacturers doing business in the US have expanded their range of less expensive bikes. Just one example, Honda has more than a dozen street bikes in its US lineup under $6000. If we go by your cutoff line of $10,000, it’s a lot more than that. Most of what Honda sells costs less than $10,000, in fact. Just not the fancy models that get all the attention. We’ll check back in five years on your prediction that the majority of Honda’s line today will be disappeared, but I doubt it.