Better than just a "good start"?Regular readers of this column will recall that the last edition (April/May) saw me unveil an IDN new motorcycle registrations guesstimated forecast of +3 percent (+/-2 percent) for the full year 2019.
This was based on an analysis of the 2016, 2017 and 2018 market data that said that the real growth rate for motorcycles in 2018 was probably lower than suggested by the ACEM data, at something like +3.12 percent (rather than the +9.89 percent officially reported).
Our thesis was that the 2016 growth was in reality more like +6.5 percent (rather than the official +13.27 percent), and for 2017 the 50,000 - 65,000 (IDN estimate) of 2016 Euro 3 pre-registered motorcycles actually sold "as new" by dealers in 2017 mean the market was likely in the region of +2.53 percent, rather than the officially reported -9.50 percent.
In percentage terms that was a radically different interpretation of market performance, and as I said at the time, while "the units are still the units" (the motorcycles concerned were sold and are on the road), the 2013 through 2018 five-year picture of +34.14 percent growth (255,534 additional new units sold) suggested a "much smaller but perfectly healthy and, importantly, sustainable annual rate of growth".
That trend led us to predict that 2019 growth would likely be a more realistic +3 percent growth for the year - which would still be an entirely acceptable outcome for 2019, especially in the face of the growing economic headwinds in markets such as Germany, Italy and the UK.
I went on to say that "while I don't recommend anybody yet start thinking that this year may see upper single digits of growth by year-end, let alone low double digits", the excellent start to 2019 is "units in the bag" for now and may, just may, point to another uptick in the rate of growth ahead.
"lost profits"
Well, as reported in this edition of IDN, that early showing of good sales did continue. March was somewhere between acceptable and strong in most markets, despite some poor weather in some parts of Europe, and although May looks like it saw somewhat of a softening in some markets, April was strong in most markets, and set against the turbulence of the past decade, May wasn't too bad either despite some market jitters.
So, with more growth "in the bag" and a good chunk of the primary selling period bagged in several of the main markets, the 19 percent plus growth seen across the board in the first quarter (Internal Combustion Engine/ICE and electric motorcycles combined, all EU markets) may well by now be starting to transition from "good start" to sustainable upper single digit growth for the year as a whole as a worst case scenario.
Indeed, I think it can be said with some degree of confidence that the +9.89 percent growth reported for 2018 by ACEM may not just have reached, realised and matched this year, but that it may already be looking like a worst case scenario.
Although we don't have all the data in for May yet (or even April in some cases), with 5 of the 12 months already gone, typically representing nearly 50 percent of annual sales, high single digits of growth (8 or 9 percent?) may well be on the cards for the full year 2019.
I am always a conservative forecaster, in my own businesses as well as where market registration data is concerned. However, this is one of those occasions where I am so glad to be wrong.
I don't think it undermines my analysis of the real market performance seen in percentage terms in 2016, 2017 and 2018, because, as I said before, "the units are still the units", and my proposition was based simply in which column you put them in.
No, if anything like this trend continues, there really can only be one viable explanation. Namely that we are witnessing a genuine return to pretty significant growth in the popularity of motorcycles as a transport and leisure option of choice. Hurrah!
However, none of us should be trying to decide "how we are going to spend it" yet. As I often point out, before he left the motorcycle industry, Stephan Schaller, the former head of BMW Motorrad and of ACEM, once said that when we saw the registration numbers stabilise at approximately the same level as those seen before the financial crisis, then at that point we would still only have "half a recovery" as the lost sales from the 2008/2009 level to the point at which they levelled out (in the second half of 2014) still need to be made back.
The motorcycle market - the aftermarket parts, accessories and G&A vendor community - is notoriously short of investment capital, still. Which is why there has been so much consolidation and so many private equity buy-outs (see the news about Nolan and Shark on page 48 of this edition for example).
The lost profits will take years to get back into circulation, decades even, at what appears to be going to emerge as the 2019 level of growth. Whilst the majority of brands have survived, one way or another, most have done so through good housekeeping, and most are still underfunded in self-generated investment capital terms.
And don't let anyone run away with the assumption that it is E-bikes and the 'New Gen' riders who are proving to be our salvation. They are not. Not yet anyway. As the ACEM Q1 registration statistics show, given the hype and the level of investment going into the electric mobility sector, the levels of market take-up are still, actually, "shockingly" low. While recent research suggests that 47% of consumers would consider switching to some form of Electric Mobility for commuting in the future ('Pedelecs' mostly - 39% in Spain, 33% in Italy, 21% in Germany, 15% in France etc), such survey findings are still decades away from getting showroom doors swinging.
