Catch us live on BlogTalkRadio every



Tuesday & Thursday at 6pm P.S.T.




Monday, January 30, 2017

What Will Be Trending In 2017

OFF THE WIRE
1- Change Of US Leadership Makes Predicting Anything Much More Complicated. Americans can’t recall a time when a change of leadership in Washington had the potential for such large and diverging effects on the U.S. economy. If you believe that the economy is going to be stimulated through new legislation and less regulation, for example by lowering individual and corporate taxes, with a tax holiday offering incentive for repatriation in the US of profits kept abroad by multinational corporations, by the rebuilding of America’s infrastructure to create a large number of construction jobs, etc… you can expect discretionary purchases to increase, and consequently the motorcycle industry to get a boost. American motorcycle manufacturers would benefit if the consumer has extra cash and borrowing costs remain quite low. Of course, if the US doesn’t get involved in a trade war which would create inflationary pressure on the imported products we all consume.
One of the biggest winners since the election has been the U.S. dollar rising sharply against all major foreign currencies. It means that in the US, Harley-Davidson and Polaris may face a tougher price competition from direct or indirect competitors like Triumph, Ducati, BMW, Royal Enfield, etc taking advantage of their lower home currency to offer much cheaper models. During the next 2 years the US motorcycle market is expected to remain somewhat stagnant or increasing only in the very low single digit. Harley-Davidson – much more than Polaris Motorcycles Division – relies on exportation to grow its unit sales. Would a slightly better demand in the US compensate for sales loss abroad due to a higher dollar? The introduction of the H-D LiveWire electric model susceptible to attract new motorcycle buyers being 2 or 3 years away, and in the absence of truly new affordable models, it could be a very challenging next 2 years for Harley’s domestic and global sales. Regarding the custom parts industry, the upcoming new administration is floating the idea of a 5% tariff on all imported goods. Most of custom motorcycle parts sold in the US being manufactured abroad, even when conceived here locally, it could spell trouble for many aftermarket part vendors and distributors, and this even if corporate taxes are lowered from 35% to 20%.
2- The Disrupted US Motorcycle Industry. Since 2013, when Polaris resurrected the Indian Motorcycle nameplate, it has been a kind of David versus Goliath competitive environment. Harley-Davidson is not a tarnished brand, is not in financial trouble and is not going to be dethroned by Polaris 2 motorcycle brands in just a few years. But at the end of 2012, Harley owned 57.2% of the heavyweight motorcycle market over 601 cc and larger. By the end of 2015 that had shrunk to 50.2%, even as that segment of the market expanded from 62% of the total U.S. motorcycle market – in terms of new units registered – to 85%. Harley-Davidson unit sales have fallen for 8 straight quarters since Indian Motorcycle was relaunched.  During that time Polaris motorcycle sales were up 67%, a very significant market gain almost essentially at the expense of its Milwaukee competitor. While the motorcycle market isn’t getting much bigger, it’s just being divided up differently. Indian started from scratch, so its growth will naturally seem exponential while Harley, as the more mature motorcycle maker, will appear to be growing much slower if any. It’s true that far more bikers still buy from Harley, but although Polaris is very secretive when it comes to publishing unit sales per brand and model, it is certain that an increasing number of riders are choosing Indian or Victory motorcycles. Polaris success is that in very short years it was able to offer all across the bike size spectrum alternate very competitive models in terms of performance and at great price points.
In addition, brands like Triumph, Ducati and Royal Enfield are aggressively pushing their bikes in the US. Triumph got strong traction with good sales of its “modern classics”, the Bonneville, the Thruxton and now the Bonneville Bobber model. Ducati perceived here during a long time as a Moto GP racer decked out in sponsor badges now offers city streets models and is also quite successful with its very affordable 6 Scrambler products . And India-based Royal Enfield recently established its North American headquarters in Milwaukee’s Third Ward and hired a former Harley-Davidson executive as North American division president. And let’s not forget that younger bikers (read below), as opposed to Boomers, are more interested by product value than image. As it’s often the case in such a disrupted market, being the leader manufacturer, Harley has more to lose when the consumer choice is much wider with quality products equal or sometime better for performance and offered at competitive prices. There are not yet definitive winners or losers in this brands battle, but for sure bikers will continue to benefit.

3- Cracking The Millennials Code With New Marketing And New Motorcycle Models. We are in a graying/whitening market with a large number of Boomers riding off into the sunset after each motorcycle rally. In the US, population aged 50+ is currently north of 100 million, and will reach 173 million by 2060. According to MIC (Motorcycle Industry Council) the median age of the typical motorcycle owner in 1990 was 32, and was a married male who had a high school diploma. Today, the typical owner got at least some college education. But the median age has climbed significantly to 49 years old. Only 17% of riders today are under 30, compared to 41% 25 years ago. Regarding age, these numbers are certainly worse if you address specifically the heavyweight motorcycle market in which Harley and Polaris are competing.  In 2020 Millennials are going to comprise 49% of the work force and will replace Boomers as the biggest spenders and borrowers. The oldest Millennials (born in 1980) are 36 years old. Although they have more education loan debts than Boomers, the oldest already earn more than their parents did at the same age.  Individual earnings always peaking between the age of 34 and 52, they are the human force that will decide the success of most corporations, in and out of the motorcycle industry, for at least the next 20 years.
In a heavily disrupted market you don’t need to do something wrong to be wrong. Just don’t change and for sure you will fail. Get with the times, revisit your marketing, evolve your products, or get left in the dust. So all manufacturers and many in the custom motorcycle segment are reaching out (or pretending…) to attract this demographic. At the same time Harley is trying to maintain its preeminent position by serving the group of older bikers that created its success, the company is also courting, with some success, new young riders with the Street, the Sportster and all its Dark Customs lineup. Polaris had big success with the Scout and Scout Sixty, 2 bikes selling disproportionally versus all the other Indian and Victory models. But for both manufacturers, a couple of new low priced models will probably not be enough to attract a very large number of Millennials, fast enough to ensure their future.
The reason is the huge generational gap between them and the Boomers. They are much more than a “facial hair and flannels lover group”. Marketing and advertising of motorcycles need to be reinvented. Millennials are wired differently, less in financial success and much more into the right balance between home and work. They are more likely to make a purchase based on the value they get. They don’t buy things for status, image or brand loyalty, criteria on which Harley founded its success. They hate the flashy and gaudy and feel strong affinity with everything vintage if offering modern convenience. They appreciate simplicity, quality, authenticity. Regarding motorcycles, transportation is not their priority. the social aspect is. They love fun entertainment, but in small groups, not in massive gatherings like Daytona or Sturgis. Events like “Born Free”,  the “Mama Tried Show” sponsored by Harley-Davidson or the “Hooligan Races” sponsored by Indian Motorcycle are in the line of events helping both brands change their image, away from the stereotype of old overweight white guys riding touring bikes. In 2017, expect motorcycle manufacturers and independent show organizers to try brand new such events and parties all over the country and marketing them online, the place where the Millennials watch television, read the news, network, compare and shop products…and find their entertainment. 15 years ago internet was already pivotal in the way to talk to existing riders and has been the only way  to address Millennials via blogs and social media. A cultural game changer, many in the ultra conservative motorcycle industry still don’t know how to use it, even if they use it by ,just filling up digital space but without adequate marketing. Millennials will not reward manufacturers and brands only for their products, as stripped down and value priced their motorcycles may be. They will respond to those making a strong grassroots effort to create a “proximity” with them. Or for an authentic and fun experience Millennials will continue to look somewhere else than motorcycling.
4- Flat Track Becoming The Hottest Thing In Motorcycle Racing. I have attended a few American Flat Track races during these last 2 years. I have witnessed a growing attendance of youngsters driving their cars to the track and joining the traditional older v-twin crowd arriving on their Baggers. The return of Indian Motorcycle to the flat track circuit to challenge Harley-Davidson’s dominance is going to widen the interest of all the biker’s community and attract new riding and non-riding new spectators. Discovered by the youngest or re-discovered by their parents, this sport is perceived again as the most authentic and pure form of motorcycle racing, one with strong old school heritage capturing the essence of  what competing on 2 wheels is all about. Just naked machines, dirt and the sliding skills of brave young racers. For 2017, AMA has modernized each event format with a simpler class structure and rules easier to understand for new fans and has named friend of the industry seven-time Grand National Champion Chris Carr as Chief Competition Officer. All good. In addition, waiting for a race to happen in your region, it is now possible to watch each event live on internet on Fans Choice TV. Just where Millennials look for new authentic experiences…I have no doubt that Flat Track racing just entered the dawning of a very bright new era. And for those going to Daytona Bike Week, make a note that the 2017 flat track racing season will begin on March 16 at the International Speedway, with the race taking place inside the historic arena, a first in the sport’s history.

Have all a healthy, happy and prosperous 2017 year. See you on the Tour, here and abroad.