New motorcycle registrations estimated at + 5.5 % for January to June; au revoir free trade

Well, a few months ago I warned that there was no room for complacency where the health of the motorcycle market in Europe is concerned- that although sales were headed in the right direction still( despite the 2016 / 2017 Euro 4 bump in the road), that at any moment any one of a number of industry or wider economic issues could come along and change all that. At the time I was mostly thinking in terms of global economic growth, inflation, employment levels, interest rates, the stock markets, exchange rates and currency stability, consumer confidence and enthusiasm for riding- those routine disclaimers that populate the disclaimers of fragility that characterise life in the international motorcycle industry. Then, just as everything appeared to be going well, along comes a trade war- and now, working as we are in a market that is almost entirely predicated on the import and exports of metal components and finished goods( apparel and some accessories excepted of course), we find ourselves looking at the possibility for any number of largely unexpected and unprecedented, unintended consequences to stop the music. The ACEM data for the first quarter of 2018 shows that while mopeds now have their turn to suffer the impact of their Euro 3 to Euro 4 churn, motorcycle registrations in the EU were + 4.7 percent, and that while many of the smaller markets were still showing declines, the‘ Big Five’ that account for some 80 percent of sales between them were all up( France + 9.1 %, Italy + 1.4 &, Spain + 16.7 %, Germany + 1.9 % and the UK + 7.4 %). The stats for the second quarter of the year( to 30 June 2018) were due for release the week after this edition of International Dealer News went to print and will have been published in the following edition of IDN’ s MotoWEEK newsletter.

Spain( at + 17.14 %, 79,217 units) leads the way in 2018, with Italy picking up strength again at + 9.76, having had a relatively soft first quarter(+ 1.4 % Jan- March / ACEM); France is probably third, but no trade association data had been published for 2018 yet at the time of writing this piece( ACEM data showed the French market + 9.1 % for Jan-March); the German and UK markets have also both strengthened following uncertain starts to the year at + 6.87 % and + 3.48 % respectively. Based on this, and taking into account the ACEM figure of + 4.7 % for Q1, a forecast for new motorcycle registration growth for April to June and for the YTD of between 4 % and 7 % would appear to be robust. My hunch would suggest that forecasts for Q2 of around + 6.5 %, with the YTD at around + 5.5 %, should be robust, indeed conservative. Of course, by the time the print version of this edition“ hits desks”, the ACEM data will have been published. So, also in this edition( pages 22 and 23 respectively- American Report) are the first industry statistics that show some impact of the first stage of tariffs- the increase to 10 % and 24 % percent respectively of U. S. import tariffs on aluminium and steel. Two days before I wrote this piece, the White House meeting between President Trump and EU Commission President Jean-Claude Juncker had resulted in a declared shared aim of working towards zero tariffs on a wide range of goods( including some of America’ s massively subsidised agricultural produce), but NOT automotive whole goods or components.

The iconic status that Harley-Davidson has spent 115 years cultivating had seen it firmly placed up front and centre( along with Levi Jeans and Jack Daniels whiskey) in the crosshairs as culturally and geo-politically significant targets for EU response. As a consumer of aluminium and steel, Harley in particular has become the global poster child for the spat between Trump and the EU. In June the company made two very significant announcements. First, that it would absorb the average of US $ 2,200 per bike impact that the tariffs would otherwise have on their retail price, rather than asking their dealers in Europe to pass it on to consumers( these issues also affect Polaris Industries’ Indian Motorcycle subsidiary, but it is unknown whether they intend to do the same). Second, that with 50 percent of sales targeted to be“ international” by 2027( Polaris have also said the same about international sales for Indian), Harley would move production of its EU inventory outside the United States. It may be that more on this will have been unveiled in a Harley investor briefing slated for July 30th( again, after this edition of IDN closed for press), but either way, speculation that it would involve extra production activity at the Thailand facility that is due to start producing later this year( or its Brazilian assembly plant) is likely to be short term at best. In all probability Harley will seek to find a production solution within the EU( that would certainly be the smart play) as a hedge against future economic issues and production needs. Polaris is already in Poland manufacturing ATV and Side x Side units, and with a major German and Polish pedigree in Milwaukee, my hunch would either be Poland( maybe Hungary where Yuasa is producing Lithium ion batteries) or Germany, where Harley’ s originally UK based European head office is now located..