Has the market peaked again?As discussed in this month’s cover story, the ACEM statistics that put 2018 combined internal combustion engine and electric motorcycle registrations at 1,004,063 units for a +9.89% growth over 2017 only tell part of the story.
The cross-over from Euro 3 to Euro 4 regulations at the end of 2016, and the impact of the rush to pre-register ‘old’ inventory before the new regulations took effect, continues to cast a long shadow in statistical reporting terms.
That is not to say that 2018 was a ‘bad’ year for the industry. In fact, at an adjusted growth rate of around +3%, following an adjusted 2017 growth rate of +2.53% (as opposed to the ‘officially’ reported decline of -9.50%), makes for good reading.
Back in 2013, when the market bottomed out at 748,529 registrations, everyone in the industry would have taken a forecast of steady, sustainable growth in the years to come in the low single digits quite happily.
In fact, in the five years since then (2014-2018), the market has grown by a total of 255,534 new motorcycle and e-bike registrations per year for a total growth of 34.14%.
It is ‘all good’. However, anybody basing business decisions on an apparent 2017 decline of -9.50% or an apparent 2018 increase of +9.89% will be misinterpreting the reality of what is going on in the market. A reality that still requires caution.
With the annual Gross Domestic Product (GDP) growth rate among the 19-nation euro currency block falling to 1.2% in 2018 (in fact to 0.2% in the final quarter), the slowest growth rate for four years, the cycle of wider economic recovery that has underpinned the low single digits motorcycle market growth rate could be about to come under pressure.
Sure, the orthodoxy is that when times are hard, consumer confidence soft, the future looking uncertain, then motorcycles should do better. But that did not happen in the downturn a decade ago, and if the other twin pillar of wisdom, that if new bikes aren’t selling, pre-owned machines will (with commensurate positive impact for the service, workshop, parts and accessory sectors), then nobody told the world.
Pre-owned and new motorcycle sales failed to follow the traditional cycle, and with the industry still struggling to square the circle of demographic change and the impact of new forms of technology and entertainment on the social lives and spending habits of “New Gen” consumers, it might well be that such traditional assumptions just don’t apply anymore, and never will again.
The speed with which manufacturers are moving to embrace the future was always going to be an important factor in the market’s ability to sustain itself in the future. The three primary worries about dependency on new tech are that it remains to be seen just how successfully PTW use can be incorporated into future transport policy, especially if some of the more ‘advanced’ (extreme?) plans and ideas materialise (such as shared transport units or subscription transport services). Even if there is still an ‘open’ transport environment solution in the future in which PTWs can be ‘assimilated’, will consumers go for it?
At this stage we just don’t know. All we can say, however, is that the industry’s investment in R&D and ever better, more reliable, more economical and more user-friendly product is not wasted and may well already be part of the range of reasons why there has been some growth, some recovery from the seemingly never ending death spiral that was seen between 2017 and 2013.
Either way, the current economic picture is a major worry. Italy is already in recession (defined as two consecutive quarters of ‘negative growth’), the UK and Germany are, in all likelihood, already headed that way, and with the social upheaval and increased public spending being seen in France, anybody who buries their head in the sand and ignores the reality of what is going on economically, and the reality of what is going on with growth in motorcycle registrations, is likely to be in for a shock of some kind, one way or another, at some stage or another.
The third big concern is this. If future consumers (and existing riders) are going to be open to being influenced by technological advancements and environmental factors, how come we aren’t seeing much sign of that already?
There are those who will say the growth rate in the uptake of “New Energy” PTWs (e-bikes to you and me) points to there already being dramatically positive evidence that they will and already are headed that way.
Since 2013, as our graph on page six clearly shows, there have been considerable percentage increases in the uptake of e-bikes - from +42.28%, +15.69% and +29.51% in 2014, 2015 and 2016, to +110% in 2017 and +47% in 2018. By any measure, it is an impressive and impressively compelling graph.
However, we are still only talking small numbers. From some 7,000 machines in 2013, the market is said to have been worth just over 47,000 machines in 2018. With much of that uptake coming in what you could call the ‘non-core’ low value, low parts and accessory moped market (39,701 out of the 47,179 recorded registrations in 2018), any hope that we are going to see the kind of spend levels the ‘aftermarket’ needs, simply transition to alternative platforms is for sure deluded.
That simply is not happening and is not going to happen. Future generations of high-tech alternate energy machines will not sustain the kind of parts, accessory and apparel industry we currently see at Europe’s major shows.
Indeed, such spend as there will be will mostly be online and at points of sale that bear no relationship to the existing motorcycle dealer network, places such as your local Aldi, Lidl and premises that used to be called “gas stations” (enjoy them while they still exist!). In fact, much of what does exist of an emerging ‘e-bike’ market is centered on subscription and downtown urban rentals.
“three primary concerns”
