Yes I’m a biker. In my former life as an analyst I visited the major Japanese motorcycle makers to discuss their bike businesses. Kawasaki and Yamaha were the most relatively upbeat with Honda and Suzuki keeping to a tired old script of commodity product. At least Honda could be forgiven because it was focusing on the 19mn odd bikes it makes annually, most sold in SE Asia.
In any event I said they should look to doing more retro product. I even argued and proved to these makers that good condition bikes of 30 years ago were selling for higher prices than that of the new product today. If that didn’t tell then where biker’s hearts are then nothing would. Suzuki’s bike business has been struggling for ages and for all the best intentions I said this is a picture I had on my wall aged 16. The GSX-R750. If you made a modern version I’d buy one in a heartbeat. I said that the 18yos who could legally ride one can’t afford it. Old buggers like me don’t need 200hp and fluorescent graphics. We ride to revive our youth. If it visually reminds us of that we’ll want to make the reconnection. Besides we are the ones that are likely to be able to afford it. Midlife crises averted. Marriages saved!
Even Kawasaki realized the Mad Max movies with rebel bikie gangs was absolutely positive for the brand that they’ve now launched the Z900RS, an homage to the original Z. They’ll sell like hot cakes.
Honda has managed to find a pulse in all of its dreary line up too with the CB1100. They did a custom version at the bike show but the Honda man said there was no plan. I never understand why makers openly ignore customer desires through overwhelming positive feedback.
Yamaha has also joined the party with the XJR1300 although weirdly don’t sell it in the home market?!?
So I’m praying Suzuki build the retro GSX-R because it was probably the model I coveted most as a kid. In its day it created a segment much like the Sony Walkman did for personal tape players. This would be akin to Suzuki switching their bike profitability with Sony megabass and presets! Do it!
The average age of motorcyclists in Japan is 53 years old and continuing to climb as younger riders looking to obtain new licenses continues to drift. Between 2010 and 2016 the Japanese National Police Agency (JNPA) noted that large capacity motorcycle license holders (ogata – classified as 400cc+) have fallen by nearly 1,500,000. While mid-size (chugata – classified as below 400cc) have risen around 715,000. Female riders have shown a similar pattern of 178,000 fall in ogata licenses and 147,000 increase in chugata respectively. While there are still 9.175mn men and 625,000 women willing to get out on the highway with large capacity bikes, the trend is alarming. More frighteningly, new graduates aren’t lining up either. 30,000 fewer students lined up to get a mid or large size bike license between 2014 and 2016 representing a 12.3% dip. Latest report found here Motorcycles in Japan – Analogica KK
Earlier in the week we touched on the 1,800,000 fall in the number of Japanese who possess a large capacity motorcycle license. The status of the Japanese motorcycle companies makes for some interesting comparisons. Honda remains the largest global manufacturer with over 17.7 million units produced annually. Yamaha has seen a c.1mn unit decline over the last 5 years but a jump in the average profitability of its bikes. Suzuki has cut production by almost 50% as it continues to rack up losses and Kawasaki has stuck to a large bike bias which has stabilised profitability. Here is a look at the state of revenue growth over the last 5 years among major listed motorcycle manufacturers.
Profitability is a different picture among the global makers. Suzuki has been struggling to make a profit, Kawasaki has drifted down but remained in the black. Honda has been outpaced by Yamaha and among the foreign makers BMW Motorrad and KTM have beaten Harley-Davidson’s performance.
The foreign makers are all much smaller scale than the Japanese and tend to focus in the larger engine size segments. Harley-Davidson has suffered the most among the 5 big players in terms of unit growth. KTM, followed by BMW Motorrad have made the biggest relative gains.
Looking at average EBIT/unit produced yields starkly different results. Harley nets around $3,000 per motorcycle in EBIT with BMW around half of that amount at €1,285 ($1,430) with KTM half of that. Kawasaki makes the most per motorcycle among the Japanese on a unit basis. Honda has remained relatively stable at $103 (although we should note that this is closer to $170 as the consolidated production number is about 10m units and the global number including equity method companies is the 17.7m) and Yamaha at $64. These are ridiculously low numbers and of course identifying mix within that would yield far more healthy results for certain models and losses on others.
One thing it points out is that focused strategies appear to be paying off for the Europeans and to some extent Kawasaki which has moved away from a me too approach. Efficiency and brand seems to be paying off for BMW’s continued rise and a broad range of product unlike Harley which seems to be stuck in a divine franchise scenario. Profitable but struggling to break out of cruisers. It has had a stab at sports bikes through Buell (business was spun off and EBR has since closed) and the Porsche designed V-Rod (now out of production). Now that Ducati is potentially being sold by Audi, does Harley look to use a proper sports brand with no clash in its line up to fuel (no pun intended) its growth?