Motorcycles: Trouble Ahead on Thunder Road?

Bike sales soared with the economy, but now the vroom! may be gone

If you were a fly on a barroom wall at Bike Week in Daytona, Fla., in early April, you would think not much has changed in the motorcycle world. Riders were predominantly male, bikes still predominantly Harleys, and the local Hooters still packed every night.

The numbers tell a different tale, however. In the past two years, motorcycle sales surged as aging baby boomers, women, and suits lousy with disposable income looked to capture a bit of the two-wheel lifestyle. Overall U.S. sales increased over 20% in both 1999 and 2000. More than 650,000 new motorcycles were sold in the U.S. in 2000, up from 539,000 the year before. Bike buyers, on average, are more affluent and better educated than ever before. They spent an estimated $5.45 billion on new bikes in 2000, forking over an average $11,000.

"The whole image of motorcycling is changing," says Alex Digbagno, general manager of Moto Guzzi North America Inc. "Hell's Angels don't run the sport anymore. Now it's groups of lawyers and doctors."

The threat of recession is slowing the influx of white-collar riders, though. Sales growth in 2001 is projected to be 12%, vs. 27% a year ago. Cash buyers, who represented as much as 10% of the market, depending on the region, are drying up. A motorcycle, after all, is hardly a necessary purchase.

So far, manufacturers are optimistic. "We have not cut production," says Bob Moffit, vice-president of U.S. sales at Kawasaki Motors Corp.'s motorcycle division. "Our motorcycle sales are still up--and frankly, we anticipate they will remain up." Even if sales suddenly screech to a halt, Moffit says, the industry is much better prepared to weather a downturn because it has kept a much closer watch on inventory.

Also encouraging to the industry are signs that the upswing in motorcycle sales wasn't just due to the wealth effect or looser credit terms that have proliferated. Women account for a good part of the new riders fueling the boost. In 1998, the latest period for which figures are available, 1 in 12 bike owners was female, up from 1 in 20 in 1991. Women-only riders clubs are spreading, often organized by bike, age, or even occupation.

Baby boomers, too, seem dedicated to the sport. They're perhaps the "youngest" 50- through 60-year-olds that the country has ever seen--in better shape and with more of an appetite for adventure. Once the kids leave for college, a lot more of them are hitting the road. And they're riding motorcycles, not lumbering along in Winnebagos.

Baby-boomer couples going motorcycle touring have inspired a cottage industry, with guides leading small packs of riders on luxury tours through the Pacific Northwest, Central America, Europe, and even Cuba. These riders have different needs than the jeans-wearing, beer-swilling bikers of days past. In his recent book, Great American Motorcycle Rides, aimed at this market, Gary McKechie recommends quaint bistros and bed and breakfasts. "I'm not sending these people to Hooters," he says.

Baby boomers may also be responsible for another phenomenon--the reintroduction of old brands into the country. Triumph, Buell, and Indian have recently reentered the U.S. market and continued to thrive even as overall sales fell during the first quarter. Triumph Motorcycles Ltd. expects U.S. sales growth to hit 30% this year, says Michael Vaughan, head of the British manufacturer's North American sales division. Not all companies have been as successful: A new company reintroduced the Excelsior-Henderson name in 1999 after it had been retired for 70 years; less than 12 months later, it filed for Chapter 11, citing lower-than- expected sales. And Polaris Industries Inc., which introduced its Victory line of bikes in 1998 to compete with Harley-Davidson Inc., has had disappointing sales to date.

WHAT SLUMP? The fashion world has embraced the cycle lifestyle as a marketing tool. A recent party sponsored by Swarovski AG featured a crystal-studded Kawasaki Ninja. Gap Inc.'s Everybody in Leather campaign last winter pushed millions of pairs of leather pants out the door. And New York's Guggenheim Museum, whose "Art of the Motorcycle" exhibit in 1998 broke records, will open Guggenheim Las Vegas with the show next fall.

So far, most individual dealers say they're not feeling a downturn. "A lot of the Wall Street guys are still making a ton of money and are still riding bikes," says Steve Travers of Manhattan's Motorsports. And, he adds, women keep shopping for horsepower. In fact, a few weeks ago, Travers sold a cruiser to talk-show host Rosie O'Donnell, who rode it out of the showroom. Bet she wasn't headed for Hooters.

By Heather Timmons in Daytona

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