War , prices , labour shortages , lockdowns , energy , logistics , materials - pick your crisis !
Doesanyone We are surrounded by multiple international crises . From the potential death of democracy as we know it to a global financial system that doesn ' t know whether to go backwards , sideways , up or down in its efforts to bring inflation under control and head off pending global recession , we are surrounded by doubt and uncertainty . Even though the well documented supply chain meltdown we have been enduring is showing signs of abating , the talk remains of recession . Generally speaking , some combination of five things happens in a recession . First and most fundamentally of all , people stop being able to buy our products . Then the factories , vendors and service providers we depend on to get materials , components and finished products to where they are needed can ' t supply . This happens because they have had to lay off their people due to softening demand , or worse still , they have had to close down completely . Either way , the collapse in the trade cycle creates a swollen labour pool as people are laid off . Without work , they can ' t then afford to buy our products . Which is why our vendors have to lay more people off or close down and which is why people can ' t afford to buy our products . Which is why businesses close and lay more people off , etc . etc . Round we go , down we go . This self-perpetuating decline cycle results in price reductions because of reduced disposable income . Recession becomes weaponised as a primary tool with which to fight inflation . In the United States , the ' Fed ' has openly talked about it needing to see ( albeit short and shallow ) recession in order to break that cycle that interest rates alone are no longer able to do . Next , because businesses are not making enough ( or any ) money , they are not generating the investment capital they need . So , as debts mount , cutbacks to the two things that are closest to survival magic bullets that they have - new product R & D and brand building - get switched off . The problem with that is that an almost infinite amount of research ( going back to the ' Long Depression ' of the 1880s in the United States ) shows conclusively that of all business spending cutbacks , and that along with lack of capital , they are the two cutbacks that are the most closely linked to business failures . Here ' s the irony . While some businesses in some markets are for sure having a hard time already , closing down even , our problem isn ' t declining output , triggered by declining demand , but declining output despite the high level of demand . We can ' t make enough of our products - motorcycles and scooters - to meet the robust demand that exists . And ours isn ' t the only market where this is happening . Certainly not the only specialty leisure market . Okay , we are a ' cross-over ' in that some of our product lines are aimed at urban mobility - and that is less of a " discretionary " than pure leisure riding . But nonetheless , demand in the motorcycle industry is pretty strong , pretty consistent , robust and growing even - in most if not all segments of the broader PTW market . There is demand out there . Regardless of what the registration statistics suggest , there is potential growth to be had , but the feet on our hosepipes , such as supply chain issues , are way above our pay grade . Although there are signs of those
round we go , down we go
particularly complex issues abating , there are plenty of others ready , willing and able to take their place . While war , pricing , labour shortages , pandemic lockdowns , energy , logistics , materials , capital availability and the other issues we are faced with are demandside problems for vendors , demand for our finished goods is not yet diminished . We appear ( almost certainly ) to be headed for a recession in 2023 ( the UK and some other markets are already , effectively speaking , in worsening recessions ), yet employment remains high ( record highs in some countries ), levels of available unemployed labour are low ( record lows in some markets and for some skills ), prices are still rising across the board and factories are pretty much selling everything they can ship . Typically , high levels of employment and low levels of unemployment would be the hallmarks of robust , well performing markets and we ' d all be enjoying ' the good times '. Instead , this time round , these appear to be the hallmarks of a fragile market that is eyeing uncertainty . So , is this a crisis , yes or no ? If it is , then what kind of crisis is it , when will it play out and how ? Nobody can answer these questions at this stage - all any of us can do is hope for the best , but prepare for the worst . Which of itself is a kind of crisis - a crisis of confidence . We all understand that if something can go wrong , it likely will , but there ' s a danger that preparing for it to happen can become a self-fulfilling prophecy . The latest survey of new motorcycle and wider PTW ( Powered Two-Wheeler ) market registration statistics that we have been able to put together for this edition does not help to draw any conclusions . The reports present a mixed picture . There definitely is somewhat of a downward trend , but it is growth that is softening as the year plays out . The reported sales levels in at least three of the " Big Five " markets are still close to record levels for the time of year ( the first eight months ). The latest ACEM data ( January to June 2022 ) puts the ' majors ' ( which account for over 80 percent of new model registrations ) doing okay at mid-year , essentially flat at just -0.5 % year-on-year . In aftermarket terms , there continues to be market consolidation , with Mergers and Acquisitions ( M & A ) activity ( on both sides of the Atlantic ) running at record levels in the past 24 to 36 months . Finally , and sad to report , there is continued atrophy on the industry expo landscape . As I write , the market is just a few days away from witnessing the dramatic contraction of the once all-conquering INTERMOT Expo at Cologne , Germany . Not something that augers well as the high mileage , large displacement riders of northern Europe are the true ringers of the market ' s cash registers .
Robin Bradley Publisher robin @ dealer-world . com
4 INTERNATIONAL DEALER NEWS - OCTOBER / NOVEMBER 2022 www . idnmag . com