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Customers look over new motorcycles at a Harley-Davidson dealership in Bedford Heights, Ohio. The company, which reported an 84% drop in third-quarter earnings, says it's getting out of the sport bike business, shutting down the longtime Buell line and selling its MV Agusta operation. (Tony Dejak / Associated Press / October 14, 2009) |
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A year ago, it looked as if fuel-sipping motorcycles might be the option for motorists facing increasing gas prices. This year, little seems to be working for bike makers.
FOR THE RECORD:
Motorcycle sales: An article in Business on Saturday about the motorcycle industry sales slump said Honda had laid off employees this year. American Honda offered some employees a voluntary separation package, but there were no layoffs. —
Sales of motorcycles plummeted 37.3% in the third quarter from the same period a year earlier, with the biggest drops coming in cruisers and sport bikes, two of the industry's biggest product lines, according to the Motorcycle Industry Council. Sales of scooters, which were gaining a year ago, also have fallen sharply.
The council, which doesn't release revenue figures of the mostly privately held member manufacturers, said overall sales of bikes fell to 136,876 in the quarter from 218,242 in the previous year's quarter.
The only bright spot was that sales were dropping at a slower pace: The number of bikes sold in the second quarter fell 53.5% from the same period a year earlier. Historically, the second and third quarters are strongest for the industry because the weather is warm throughout the country and buyers are gearing up to ride.
Industry leaders tried to put a good face on the numbers, saying the sales climate was "challenging" or "tough." But they also called it "painful."
"Every category is down, and it keeps going down," said analyst Don Brown of Irvine. "It's not the old, 'Let's get out there and sell more' that works anymore. . . . People just don't have the money."
Despite a federal stimulus that allows new bike buyers to write off the sales tax, companies are cutting staff and other expenses.
Last week, publicly held Harley-Davidson Inc. reported an 84% drop in quarterly earnings to $26.5 million. The company said it was getting out of the sport bike business, shutting down the longtime Buell line and selling its MV Agusta operation, a high-end Italian brand it bought last year.
Already this year, the Milwaukee manufacturer joined the likes of Honda, Kawasaki, Yamaha, Suzuki and Victory in laying off employees, reducing production and lowering prices to help dealers shrink swollen inventories.
Even high-end motorcycles have been hit. Confederate Motor Co., the Alabama maker of the $92,000 Wraith, expects to sell 30 bikes this year, down from 37 last year, company founder Matt Chambers said.
His affluent clients aren't as affected by the economy, he said, but with the deep recession, "it was very fashionable to not be buying a high-end luxury product like ours."
Many manufacturers have introduced programs to add value to their products.
Twice in the last year, for instance, Harley-Davidson operated a "ride free" program, which allowed buyers of new Sportsters to get credit for the original retail price of the bikes on trade-ins for more expensive models. Yamaha Motor Co. introduced its Pro Yamaha initiative, directing dealers to be more informed about products and follow up with customers to ensure that they were happy.
Ducati North America, which has seen a 30% quarterly drop in sales, began giving its customers one year of free scheduled maintenance. And Victory Motorcycles, which suffered a 56% decline in sales in the July-to-September period, began offering a five-year warranty to show "significant confidence to buyers," said Mark Blackwell, Victory's vice president.
"We haven't laid everybody off. We haven't totally stopped advertising. We've kept up the product development because we're positioning this business for when the market stabilizes and grows," he said.
Blackwell predicted that the market wouldn't begin to stabilize until at least next spring and that growth wouldn't come until later.
Harley-Davidson and Victory Motorcycles, a division of Polaris in Minnesota, hope to stem U.S. losses, in part, by growing overseas sales. Harley is pursuing emerging markets such as India and China; Victory is going after Europe, where motorcycle sales haven't fallen as much as in the U.S.
For 14 years, through 2006, U.S. motorcycle sales had increased every year. Sales started to drop in 2007, but still topped the 1-million mark.
FOR THE RECORD:
Motorcycle sales: An article in Business on Saturday about the motorcycle industry sales slump said Honda had laid off employees this year. American Honda offered some employees a voluntary separation package, but there were no layoffs. —
Sales of motorcycles plummeted 37.3% in the third quarter from the same period a year earlier, with the biggest drops coming in cruisers and sport bikes, two of the industry's biggest product lines, according to the Motorcycle Industry Council. Sales of scooters, which were gaining a year ago, also have fallen sharply.
The council, which doesn't release revenue figures of the mostly privately held member manufacturers, said overall sales of bikes fell to 136,876 in the quarter from 218,242 in the previous year's quarter.
The only bright spot was that sales were dropping at a slower pace: The number of bikes sold in the second quarter fell 53.5% from the same period a year earlier. Historically, the second and third quarters are strongest for the industry because the weather is warm throughout the country and buyers are gearing up to ride.
Industry leaders tried to put a good face on the numbers, saying the sales climate was "challenging" or "tough." But they also called it "painful."
"Every category is down, and it keeps going down," said analyst Don Brown of Irvine. "It's not the old, 'Let's get out there and sell more' that works anymore. . . . People just don't have the money."
Despite a federal stimulus that allows new bike buyers to write off the sales tax, companies are cutting staff and other expenses.
Last week, publicly held Harley-Davidson Inc. reported an 84% drop in quarterly earnings to $26.5 million. The company said it was getting out of the sport bike business, shutting down the longtime Buell line and selling its MV Agusta operation, a high-end Italian brand it bought last year.
Already this year, the Milwaukee manufacturer joined the likes of Honda, Kawasaki, Yamaha, Suzuki and Victory in laying off employees, reducing production and lowering prices to help dealers shrink swollen inventories.
Even high-end motorcycles have been hit. Confederate Motor Co., the Alabama maker of the $92,000 Wraith, expects to sell 30 bikes this year, down from 37 last year, company founder Matt Chambers said.
His affluent clients aren't as affected by the economy, he said, but with the deep recession, "it was very fashionable to not be buying a high-end luxury product like ours."
Many manufacturers have introduced programs to add value to their products.
Twice in the last year, for instance, Harley-Davidson operated a "ride free" program, which allowed buyers of new Sportsters to get credit for the original retail price of the bikes on trade-ins for more expensive models. Yamaha Motor Co. introduced its Pro Yamaha initiative, directing dealers to be more informed about products and follow up with customers to ensure that they were happy.
Ducati North America, which has seen a 30% quarterly drop in sales, began giving its customers one year of free scheduled maintenance. And Victory Motorcycles, which suffered a 56% decline in sales in the July-to-September period, began offering a five-year warranty to show "significant confidence to buyers," said Mark Blackwell, Victory's vice president.
"We haven't laid everybody off. We haven't totally stopped advertising. We've kept up the product development because we're positioning this business for when the market stabilizes and grows," he said.
Blackwell predicted that the market wouldn't begin to stabilize until at least next spring and that growth wouldn't come until later.
Harley-Davidson and Victory Motorcycles, a division of Polaris in Minnesota, hope to stem U.S. losses, in part, by growing overseas sales. Harley is pursuing emerging markets such as India and China; Victory is going after Europe, where motorcycle sales haven't fallen as much as in the U.S.
For 14 years, through 2006, U.S. motorcycle sales had increased every year. Sales started to drop in 2007, but still topped the 1-million mark.
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