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Jul. 21, 2008 – Fueling industry sales

July 21, 2008
Filed under Features

Turns out, there’s a silver lining to paying higher fuel prices.
Sales of lower-cost, lower-displacement motorcycles are surging just as fast as prices at the pump, according to manufacturers and dealers in interviews with Powersports Business.
On the same week U.S. gas prices reached a record average high of close to $4.20 per gallon, industry officials were reporting dramatic sales increases of both low-displacement cruisers and sport bikes. Kawasaki Motors Corp., U.S.A reported sales of its newly upgraded, low-displacement sport bike, the Ninja 250R, were up 100 percent over the previous year, and at the time of the report, represented the second-best selling sport bike in the nation.
Yamaha’s 650cc V Star also has seemingly benefited from consumers’ reaction to rising fuel prices. The cruisers did not have any significant upgrades this year, but sports a low seat height for women and beginning riders. Its sales are up 36 percent over the prior year period.
“Not only is it just scooters,” said Bill Savino, manager of motorcycle press for American Honda Motor Co., “but the small-displacement and the entry level motorcycles are doing really well. The main factor is fuel price.”
Fuel prices — up more than 38.5 percent compared to a year ago, according to AAA — are causing a multitude of changes in the industry, with rising low-displacement sales just one example. Dealers are reporting a higher number of re-entry riders than in the recent past. Plus, more riders are transforming their motorcycle riding from strictly weekend pursuits to their main source of transportation. As a result, some dealers are reporting higher PG&A sales.
“These are customers that really did not even consider buying a motorcycle a year ago,” Robert Hintz, general manager of The Engelhart Center, Madison, Wis., said of his low-displacement bike buyers, many of who are referrals. “Their friend has (a motorcycle) that they’re driving to work, bragging about how much money they saved last month in gas.”
Consumer surveys certainly back that notion up. A recent study by Consumer Reports shows more than one quarter of consumers have considered going to a two-wheel vehicle. Among them, the study says, 18 percent have considered a motorcycle and 14 percent have mulled over a scooter.
“Through the roof” is how Motorcycle Mall General Manager Sean Gatesy describes the Belleville, N.J., store’s low-displacement sales. Although he didn’t have exact figures, Gatesy estimates sales for such bikes are up at least 50 percent over last year and possibly as high as 75 percent beyond 2007.
“The bikes that always just kind of hung around, the Rebel 250, the Nighthawk 250, I have people coming in and looking for those, which in the past has never even happened,” he said.
Motorcycle Mall also is one of the dealerships that have prospered with the Kawasaki 250 Ninja, with Gatesy noting he “could have sold twice as many as I had.”
He isn’t alone. Retail sales have been so good that U.S. inventory for such low-displacement bikes could be an issue later this summer.
Jared Burt, co-owner of Rexburg Motorsports, Rexburg, Idaho, notes his low-displacement bike sales — up by at least double over the past year — have been restricted by inventory availability. Burt has supplemented his inventory with preowned bikes from National Powersport Auctions.
Jim Faeilla of Peacock Ltd. in Michigan notes the popularity of low-displacement bikes has reached the wholesale level, with used V Stars selling for more than dealer cost at a recent auction.
“I think the inventory is pretty much dried up everywhere,” Faeilla said.
That’s likely to be the case at The Engelhart Center in Madison, Wis.
“I’m going to be out of inventory probably at the end of July and I’m scrambling trying to figure out what I’m going to sell in August,” Hintz said. “Usually my carryover is about 30 percent of my inventory and I’m going to be out.
“It seems like when I’m calling the warehouses, the manufacturers are clean too.”
Manufacturers are reporting increased sales for select low-displacement models.
Besides its Ninja 250 sales, Kawasaki said sales of its Vulcan 900 line are up around 20 percent over a year ago and sales of its KLR650 dual-purpose bike are up even more, at almost 50 percent. Both models happen to be listed on the company’s new Web site, Kawasaki.com/mpg, that features fuel mileage information.
Yamaha and Suzuki also report elevated lower displacement dual-purpose retail sales. Yamaha’s dual-purpose segment, which includes two all-new models, is up 48 percent over a year ago and Suzuki’s V-Strom 650 is up 20 percent. Honda also is reporting improved sales for its lower-displacement offerings.
Equally notable, interest in these lower-displacement bikes is reaching beyond the typical entry-level rider. Michigan dealer Faeilla points to a recent customer — his mother-in-law who has never ventured into the two-wheel market — as one such example.
“This year,” Faeilla said of low-displacement sales, “totally different scene.”

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