Motorcycle sales slow

By Steve Miller, Journal staff | Saturday, August 04, 2007

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The runaway freight train of motorcycle sales has finally slowed.

For more than 10 years, sales of Harley-Davidsons and other heavy motorcycles had roared along, often showing double-digit annual increases, defying nationwide economic slowdowns and stock market dips.

Harley-Davidson, based in Milwaukee, and the other motorcycle makers made buckets of money as the popularity of motorcycles went mainstream in the 1990s.

But for the first six months of this year, sales of Harley-Davidson motorcycles were actually -- gasp -- down, although just 1.2 percent worldwide. Harley sales in Europe were up 17 percent, offsetting a 5 percent drop in U.S. sales.

Sales of all street bikes nationwide were off 5 percent for the first six months of 2007, with 389,765 units sold, compared to 410,421 sold during the first six months of 2006, according to an item on the Bike World Web site.

Al Rieman, managing partner of Black Hills Harley-Davidson, said the slight decline in sales nationwide is a blip that won't last, but he expects slower growth in the future. At the Rapid City-based dealership, sales are about even with last year, he said.

In any case, Rieman said he has anticipated the nationwide slowdown in Harley sales.

"A few years back, the growth rate was so far in advance of population growth, that you had to say, at what point does demand gets saturated, and you find a market that grows along with population growth."

But Rieman said he expects Harley sales to show steady growth over the long term.

Rieman and other local motorcycle dealers say the national economic picture could be having an effect on motorcycle sales.

Wade Rice, general manager of Rice Honda-Suzuki-Victory, said even with the slight decline nationally, 2007 will still be the third-largest year for motorcycle sales.

"The last two years were records. So it's still good," Rice said. He said sales at Rice Honda are down just slightly from 2006.

He said national economic worries, including those about high fuel prices, are a factor. "Fuel costs affect everything," he said.

Sales at Black Hills Powersports have bucked the national decline, according to owner Todd Gikling. But, he acknowledged, "You can see the market's changing a little. We have to be more aggressive."

Gikling said that, although sales are still up, he's seeing less walk-in traffic at his Rapid City store.

He and other dealers noted that with supply catching up with demand nationwide, consumers are getting better deals, with financing incentives and stable pricing. "I think you can buy a motorcycle today as reasonable as at any time in the last five years," Gikling said.

Bill Hearne, managing partner of Outdoor Motor Sports in Spearfish, which sells Honda and Yamaha motorcycles, agrees.

Besides prices being stable, the value actually is better because virtually all motorcycle manufacturers are adding features such as anti-lock braking systems, fuel injection and other technical improvements for very little cost, Hearne said. "They're raising the cost only $100 in some cases to a $10,000 purchase."

Hearne said the Spearfish dealership has dodged the national downturn bullet. "We're up significantly," he said last week.

Hearne has seen a big jump in scooter sales directly related to high gas prices.

On the other end of the size spectrum, he and other dealers are seeing an increase in sales of big touring bikes such as the Honda Gold Wing, cruisers that can be fitted with windshields and saddle bags for touring, and sport-touring models such as the Yamaha FJR1300.

"I attribute that somewhat to the graying of America," Hearne said. "The guy who has had his chromed-up noisy things he drove to the bars now wants to really go someplace, ride to Yellowstone, ride to Glacier."

Hearne also says wives who ride on the backs of their graying hubby's bike are demanding the bigger, more comfortable touring bikes.

Black Hills Harley's Rieman says he, too, is seeing a big increase in sales of Harley's touring bikes, which at least partly accounts for the Wisconsin company's continued increase in revenue (4 percent up for the first six months of 2007), despite the flat to slightly down numbers sold.

"People are buying the $22,000 Ultra (Electra Glide) rather than the $15,000 Dyna Low Rider," Rieman said.

Hearne has noticed a couple of other trends.

About half of his buyers are demanding satellite navigational systems, even though they are relatively expensive. "They want GPS. They won't be without it," he said.

Another trend, again driven by the aging biker population, is the move to trikes, Hearne said. Outdoor Motor Sports became a Lehman trike dealer this year, but Hearne says he didn't ask for enough of them. "In 40 days, I sold all of my allocation for six months. I way underestimated the demand."

Of course, the Sturgis rally is good for all local motorcycle dealerships. Rieman says 35 percent of Black Hills Harley-Davidson's annual business comes during the two weeks or so around the August rally. The dealership typically sells virtually every bike it has, including the bike he rides.

Of course, the curvy, scenic roads of the Black Hills are a natural attraction for motorcycle riders -- and dealers.

Pennington County, for example, has more registered motorcycles than more populous Minnehaha County (see table).

And motorcycle sales nationally have always been somewhat independent of practical economics. Price, however, is the main obstacle, especially for younger people with limited incomes and growing families, said Rice.

"They say 3 percent of the population rides motorcycles," Rice said. From the dealers' perspective, he said, "That's the bad news. The good news is that 28 percent want them."

Contact Steve Miller at 394-8417 or steve.miller@rapidcityjournal.com