Bring on the Middleweights
The latest slew of motorcycle and PTW registrations data from Europe’s trade associations are less convincing in market growth terms than the January and February results suggested they were going to be.
As previously reported, in the context of the growth seen in the three years prior to the data distortion of the 2016/2017 Euro 3 pre-registration issue especially (prior to transition into Euro 4 production), the results for the 12 months of 2017 were better than they appeared to be according to the officially collated registration statistics.
In turn, January and February of this year appeared to be proof of concept in that they reinforced the suggestion that the underlying health of the market was better than it appeared, and that 2018 was going to be another year of growth.
Maybe not of the kind seen (in percentage terms) in 2015 and 2016, but growth nonetheless.
However, whether or not the latest data is affected by short-term factors such as poor weather and holiday timings remains to be seen – at this stage caution is advisable, for as far as we all know, it could be the first indicators of an unwelcome trend - a reality wake-up call, rather than seasonal blip. We just don’t know yet – or do we?
There are suggestions emerging on the international stage that the economic optimism that greeted early 2018 indicators may have been misplaced. The current thinking is that global growth is set to slow, importantly in Europe as well as China, and one of the first victims of such uncertainty is always consumer confidence.
‘list prices have exploded’
As confidence evaporates, so does spending. We’ve seen how that cycle unfolded at least three times in the past 10 years. But surely not again? Surely not all dawns can be false? Just for once, can’t stability be the new black?
Drill down into the statistics released so far for March and April 2018, and it becomes apparent that larger displacement machines are still selling well, with, ironically, the loss in numbers being in the lower displacement power bands and especially among mopeds and 50cc scooters.
The irony is that these are the lower cost machines, and the real worry is therefore that we appear, again, to be seeing the entry level to be the choke point – meaning we could be storing up real problems for the future as the number of riders available to migrate up the price and power tree diminishes.
That said, there has been a major trend to later entry for the past 20 years anyway. However, the trend in new motorcycle prices has been up for the past decade…seriously up. List prices and the real prices achieved for current production models have grown, indeed exploded, far ahead of inflation, as manufacturers seek to recoup losses and fund more expensive technologies and product standards and requirements.
Worse, the relative cost of entry-level machines (mopeds and scooters) has actually increased even more than for larger displacement models, hitting the market’s future hard.
These phenomena aren’t isolated to Europe. The same has been happening in the United States. It is a factor of the “developed” markets, and one clearly seen in the quarterly and annual financial reports of many of the manufacturers, especially the Japanese manufacturers and those with major stakes in the “entry level”.
The evolution of the “emerging” markets is well documented, and regardless of short-term bumps in the road, many are saying that they have seen the future, and that the future is Asian – both in terms of where sales are to be found, and where, shorn of northern hemisphere overheads, the low-cost “entry level” and increasingly popular middleweights are going to be coming from.
The members of ACEM have been pointing to the importance of export sales from Europe to Asia, Africa and South and Central America for years, and for years they have been lobbying the EU (among others) to support their ability to make cheap in Europe and sell well elsewhere. And they have been right to do so.
Projects such as the British/US/European derived and tuned but Asian made Royal Enfields, Zongshen Nortons, Baja Triumphs and Mahindra built BSAs and Jawas are set to shake up the price-points and speak connivingly to the Millennial and Centennial attitudes towards the (largely urban) ownership and riding experiences in a way that current pricing and production values are not yet managing to achieve.
Add into the equation the opportunity for “cost-effective, energy efficient and comfortable ELVs” to take ownership of the urban riding landscape, then maybe the apparent instability in the new registration statistics seen for the past 18 months has as much to do with the end-game play of the change of direction for the market that appeared to have been kick-started by the financial crisis of 2008.
Maybe there is more to what is happening than “simply” the impacts of regulations and consumer confidence. Maybe demographics, technology, pricing, consumer confidence, environmental issues, entry level pathways and lifestyle changes represent a combo perfect storm that is set to sweep all before it?
Either way, there has to be an end to the cycle of economic uncertainty that defines our times and to the ever-increasing list prices that manufacturers are seeking to sell at in order for the PTW market, any kind of PTW market, to prosper. Bring on the middleweights I say!