The global motorcycle business right now is two stories in one: If you're selling big, expensive motorcycles in developed economies, you're riding into some stiff headwinds. If you're selling less expensive motorcycles in countries where they are mainly used as basic transportation, things may not be so bad.

BY: Lance Oliver  COURTESY: Revzilla

The global motorcycle business right now is two stories in one: If you're selling big, expensive motorcycles in developed economies, you're riding into some stiff headwinds. If you're selling less expensive motorcycles in countries where they are mainly used as basic transportation, things may not be so bad.

Several recent reports highlight these trends.

In Europe and North America (excluding Mexico, which is typically grouped with Latin America for business purposes), the average selling price of a new motorcycle is over $12,000. By contrast, in Asian and Latin American markets, average prices are typically under $3,000, and in some countries, far less.

Based on recent financial reports from manufacturers, sales in the United States have slowed as the year has gone on. Sales are also falling in Japan and the picture is mixed in Western Europe, with sales particularly weak in Germany, which is in recession.

Where are unit sales up? Countries such as India, the world's largest motorcycle market, Brazil, and other countries in Latin America. The picture in Asia is mixed, but overall, companies that build inexpensive motorcycles, or a full range of motorcycles, are having an easier time than those who focus on high-priced models. Three recent financial reports illustrate that.

Orange, black, and staying in the black

There has been a lot of chatter about financial problems at Pierer Mobility, parent company of KTM, Husqvarna, and GASGAS, and majority owner of MV Agusta. While a lot of that has to do with the bicycle business, the overall problems reflect the same headwinds other manufacturers face. In a recent press release, Pierer said it would not meet its previous financial guidance for 2024 and would not provide updated expectations until later this year. The company specifically blamed weakness in the key markets of the United States and Germany and noted that sales weakened noticeably in September, raising more uncertainty about the trend for the rest of the year.

Harley-Davidson CEO Jochen Zeitz noted the same phenomenon during the company's conference call about its quarterly results.

"As you've seen this week, it's a tough time for the business, as it is for any discretionary business," Zeitz said. "Q3 started out with a strong July and we ended weaker than expected, especially late September."

Indian parent company Polaris reported last week that its motorcycle retail sales were "down low-double digits," meaning between 10% and 15%, a bigger drop than the overall North American motorcycle market. Indian's market share declined, as a result. Polaris groups Indian along with its Slingshot three-wheelers in its On-Road division, in terms of financial results, and weak sales of Slingshots are more evidence of consumers' hesitance on big-ticket discretionary purchases.

As part of its quarterly financial report last week, Harley-Davidson noted that third-quarter retail motorcycle sales were down 10% in North America and 13% globally. Harley-Davidson lowered its projections for the year. It previously expected retail sales to be about the same as 2023, but now predicts they will be 6% to 8% lower than last year. 

Meanwhile, Harley-Davidson's electric motorcycle spinoff, LiveWire, reported selling 99 motorcycles in the third quarter of 2024. You can look on the positive side and note that's nearly double the 50 motorcycles sold in Q3 of 2023, but the full picture is that LiveWire didn't have the two new, more affordable S2 models last year. Those were supposed to boost sales. As recently as the last quarterly report, LiveWire was still projecting sales of 1,000 to 1,500 units this year. The company has now lowered that to 600 to 1,000 units, which still sounds optimistic to me. And nobody's talking about LiveWire's original estimates, when the company predicted it would sell more than 15,000 motorcycles in 2024.

As cost-cutting measures, LiveWire is reducing staffing by 30% by 2025 and has moved operations from California to Harley-Davidson facilities in Wisconsin.

Dealers are naturally being pinched, as well, and all three manufacturers above are taking steps to try to help. Dealers who were hurt a few years ago by insufficient inventory following the pandemic are now burdened with carrying costs for more inventory than they can sell quickly. At Harley-Davidson, for example, worldwide dealer inventory was 35,000 units at the end of the third quarter in 2022 and was 60,000 units at the end of Q3 2024. Multiple manufacturers have stated they are shipping fewer units and taking other measures to help dealers get out from under the overhang. That's why while Harley-Davidson retail sales were down 13% in the third quarter, shipments to dealers were down a much larger 39%, compared to last year.

In contrast to those manufacturers of large, expensive motorcycles, look at the recent results reported by India-based Bajaj, which mostly sells sub-200 cc models in its home country and in Latin America. Bajaj recently reported a 17% year-over-year increase in motorcycle sales. And while LiveWire is struggling to sell its $16,000 S2 models in volume, Bajaj's fastest-growing segment was its Chetak line of electric scooters, which sell for the equivalent of under $2,000 U.S.

The sharp slowdown at the end of the third quarter could turn out to be a temporary aberration, or it could be a longer lasting shift in consumers' willingness to make big discretionary purchases. The fact that KTM, for example, isn't even providing financial guidance for the rest of the year suggests that even motorcycle company executives aren't confident they know for sure.

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