Motorcycle Industry Recovery for 2010 - Back in the Black?

After a disastrous 2009, motorcyclemanufacturers anticipate a slow recovery in 2010

The motorcycle industry is hurting. Struggling dealerships are overstuffed with stagnant product, OEMs are "skipping" new models, racing programs are being cut, plant closures and layoffs have become commonplace, and popular brands like Buell are being "discontinued." According to the Motorcycle Industry Council (MIC), 2009 U.S. motorcycle sales were down just over 40 percent (roughly 360,000 units) compared to '08.

Japanese manufacturers have been hit the hardest, all down as much or more than the national average. European manufacturers haven't suffered as badly-excepting KTM, which was down 44 percent in North America. BMW posted the smallest decline in the entire motorcycle industry, losing "only" 22 percent, while Ducati saw its sales drop by 30 percent. Retail sales of Harley-Davidson motorcycles were down 25.8 percent in the U.S.-a comparatively good result considering heavyweight motorcycle sales declined 36.7 percent overall.

Continued high unemployment, limited financing opportunities and general economic uncertainty have resulted in sales paralysis, forcing OEMs to cut production and slow shipments in order to reduce inventories. Harley-Davidson, for example, shipped just 35,938 motorcycles in the fourth quarter of '09, down 53.1 percent compared to '08. The Motor Company expects to ship just over 200,000 bikes in 2010. That's a reduction of almost 10 percent from '09, and a marked decline from '06, when 349,196 bikes were shipped.

New model releases are effectively on hold as OEMs focus on clearing out existing models. Japan's 2010 sportbike offerings are essentially a rerun of '09, unchanged except for new graphics. Some OEMS are "skipping" slow-selling models this year. Kawasaki will skip four small-displacement dirtbikes (KX65, KX100, KLX140 and KLX140L), while it appears that Suzuki might skip most of its 2010 line. American Suzuki has so far announced just four 2010 models-the RM-Z450, RMX450Z and RM-Z250 dirtbikes and GZ250 mini-cruiser. Everything else is on hold, and our repeated request for updates on Suzuki's plans went ignored.

All this turmoil is changing the shape of the American motorcycle market. As Japanese giants retreat and retrench, smaller, more aggressive European manufacturers have been able to grab unprecedented market share. Ducati PR rep John Paolo Canton tells us his company's share of the 750cc-and-over sportbike market (as defined by the MIC) reached a record 8.5 percent in '09. For perspective, Canton claims that's more than half of Suzuki's market share in the same category, and not far behind Kawasaki's. Triumph is also claiming increased market share.

Multiple factors contribute to the relative robustness of the European brands. Much of this success is product-driven. Whether with middleweight enduros like the BMW F800GS, hot sportbikes like Ducati's traction-controlled 1198S or heavyweight cruisers like Triumph's Thunderbird, European OEMs have continued pumping out fresh, desirable products and expanding into new markets. With bikes like the BMW S1000RR and the Ducati Multistrada 1200 and Monster 796 on the horizon, this trend will continue through 2010.

Increased outreach efforts to keep customers invested and engaged with the brand, in the form of club activities and other special events, also bolsters lifestyle-oriented brands like Harley-Davidson, Ducati and Triumph. "The companies that are suffering are those that are just selling transportation," Canton says. "We try to offer a brand experience, and it's paying off."

There is a light at the end of this tunnel. Sales in most categories for the month of December were up 10-15 percent compared to the overall annual figures, suggesting that the industry is beginning to rebound. Data from the OEMs support this. "In Q4 of '09 we're up literally by a handful of bikes," says Canton. "It's not much, but it is up." BMW has a similar outlook: "We expect significant sales growth in 2010, on the strength of the launch of the S1000RR superbike," said BMW marketing manager Todd Andersen,

Japanese OEMs, if not as bullish, are at least cautiously optimistic. Even while warning that retail motorcycle sales could still decrease in 2010 despite improving economic conditions, American Honda press rep Jon Seidel says that the world's largest motorcycle manufacturer is charging forward with 11 new models for 2010, led by the VFR1200F. Kawasaki rep Jeff Herzog also promised more new models coming for 2011, on the footsteps of the all-new Z1000 and redesigned Concours 14 released earlier this year.

Here's hoping that, this time next year, we'll all be pleasantly surprised.

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