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Overview


History Te early 2000s were a golden period for the industry, as


sales in the US increased year aſter year. Retailers sold over one million new motorcycles each year from 2003 to 2006, ac- cording to the Motorcycle Industry Council (MIC), a national trade association that tracks monthly retail sales of motorcy- cles. Te surge was caused by a combination of factors, includ- ing per-capita income growth, unprecedented access to credit and demographic changes. Ridership also soared during this period, as the number of vehicle miles traveled nearly doubled from 2001 to 2010.


Motorcycle Sales Type Dual


Off-Hwy On-Hwy Scooter Total


Harley-Davidson: All-American Market Leader Te domestic Motorcycle Manufacturing industry is highly


2008 2009 2010 2011 2012 45,250 27,210 23,351 26,483 28,452 146,779 105,524 80,962 70,046 71,535 611,133 357,691 306,702 312,520 318,105 76,748 31,451 28,483 31,850 34,294 879,910 521,876 439,498 440,899 452,386


As the economy ground to a halt in 2009, demand for new


motorcycles fell dramatically. In late 2009, unemployment rose as high as 10%, the worst rate in at least two decades. Even con- sumers who had jobs couldn’t make large purchases; per-capita disposable income declined by 3.6% during the year. For these reasons, spending on opulent items, including motorcycles, dried up. Te MIC reported that sales of motorcycles dropped by more than 40% in 2009 as a result of these trends. Although motorcycle sales declined during the reces-


sion, it remained high by historical standards, indicating that consumers who already owned bikes were riding as much as ever. Many of those looking to purchase bikes opted for used vehicles through second-hand markets. Furthermore, many motorcycle owners under recession-induced financial pressure sold their bikes to raise cash. According to the MIC, major aſtermarket distributors recorded both strong demand and in- creased sales of used motorcycles over the past five years while sales of new motorcycles were declining. Te strong growth in motorcycle tire sales in the years since the recession is another indication of this trend. Te increased trade on the motorcycle aſtermarket has had


a pronounced impact on new motorcycle sales over the past five years. Motorcycle sales were down 5.2% over the first six months of 2013 compared to the same period in 2012, sug- gesting this trend is still a factor. One explanation for decline in sales could be relatively flat disposable income growth, which is expected to rise just 0.8% in 2013. As disposable income picks up over the next five years, a shiſt towards new motorcycle sales, rather than used purchases, is expected to occur, reversing a trend that has held for at least five years.


20 Motorized Vehicle Manufacturing


concentrated, with the top four players estimated to account for about 80.0% of industry revenue in 2013. Harley-Davidson (Milwaukee), which specializes in heavyweight on-highway cruisers, dominates the industry and accounts for about one in every two sales of on-highway motorcycles in the US. Honda (Torrance, CA) had been the second largest domestic produc- er, but the company ended US manufacturing in 2009 because of dwindling sales and rising costs. Te company previously made up to 70,000 motorcycles annually in its Ohio plant but opted to import bikes from Japan instead. Currently, Harley-Davidson’s main competitor is Polaris Industries (Medina, MN), which manufactures motorcycles under its Victory and In- dian (which it acquired in 2011) brands. As the largest domestic manufactur-


er, Harley-Davidson has been symbolic of the industry’s performance over the past five years. Harley motorcycles range in value from $8000 for a basic Sportster


model to $40,000 for a custom touring bike. Harley’s world- wide sales peaked in 2006 at about 350,000 units before slowly declining over the subsequent years, including a massive 26.5% fall in 2009. As a result, the company has been forced to sell a number of loss- making assets and reorganize its business. In an effort to become more responsive to volatile year-to-year bike demand, Harley has revamped its manufacturing operations in Wisconsin, Missouri and Pennsylvania in recent years to cut labor costs. Te strategy appears to be working: Harley’s profit margin has expanded in each of the past three years and is set for a sizeable increase in 2013 based on interim figures. With US sales flat, Harley is increasingly relying on exports as a substitute for domestic sales. International shipments accounted for about 35.0% of Harley’s motorcycle shipments in 2012, up from 16.0% in 2005. Harley-Davidson also faces competition from a range of


Year


Motorcycle Registrations


2001 4,903,056 2002 5,004,156 2003 5,370,035 2004 5,780,870 2005 6,227,146 2006 6,678,958 2007 7,138,476 2008 7,752,926 2009 7,929,724 2010 8,009,503 2011 8,437,502


small, niche manufacturers of specialized or custom motorcy- cles. Specialized bikes appeal to a broad range of riders who want edgy, customized vehicles that cannot be found on the mass- market. During the motorcycling boom of the 1990s and early


Source: Motorcycle Industry Council


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