International Dealer News IDN 144 August/September 2018 - Page 4

• COMMENT • COMMENT • COMMENT • COMMENT • COMMENT • COMMENT • 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. EU MOTORCYCLE REGISTRATIONS – THE “BIG FIVE” JAN-JUNE 2018 1. Spain +17.14% 2. Italy +9.76% 3. France +9.1% * 4. Germany +6.87% 5. UK +3.48% * Jan-March 2018 However, the latest batch of national trade association data for the period to end of June this year from Italy, Spain, Germany, the UK and other markets such as Poland, Switzerland, Austria and Sweden (see pages 6-8; no data for France is available yet) suggest that growth overall is robust so far in 2018. 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.. Robin Bradley Publisher robin@dealer-world.com 4 INTERNATIONAL DEALER NEWS - AUGUST/SEPTEMBER 2018 COMMENT • COMMENT • COMMENT • COMMENT • COMMENT • COMMENT • • New motorcycle registrations estimated at +5.5% for January to June; au revoir free trade ell, a few months ago I warned that there was no room for will have been published. complacency where the health of the motorcycle market in So, also in this edition (pages 22 and 23 respectively - American Report) are the first Europe is concerned - that although sales were headed in industry statistics that show some impact of the first stage of tariffs - the increase the right direction still (despite the 2016/2017 Euro 4 bump to 10% and 24% percent respectively of U.S. import tariffs on aluminium and steel. in the road), that at any moment any one of a number of industry or 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 wider economic issues could come along and change all that. At the time I was mostly thinking in terms of global economic growth, inflation, shared aim of working towards zero tariffs on a wide range of goods (including employment levels, interest rates, the stock markets, exchange rates and currency some of America’s massively subsidised agricultural produce), but NOT automotive stability, consumer confidence and enthusiasm for riding - those routine disclaimers whole goods or components. that populate the disclaimers of fragility that characterise life in the international he iconic status that Harley-Davidson has spent 115 years cultivating had seen motorcycle industry. it firmly placed up front and centre (along with Levi Jeans and Jack Daniels Then, just as everything appeared to be going well, along comes a trade war - and whiskey) in the crosshairs as culturally and geo-politically significant targets now, working as we are in a market that is almost entirely predicated on the import for EU response. and exports of metal components and finished goods (apparel and some accessories As a consumer of aluminium and steel, Harley in particular has become the global excepted of course), we find ourselves looking at the possibility for any number of poster child for the spat between Trump and the EU. In June the company made two largely unexpected and unprecedented, unintended very significant announcements. EU MOTORCYCLE REGISTRATIONS – consequences to stop the music. First, that it would absorb the average of US $2,200 per The ACEM data for the first quarter of 2018 shows that THE “BIG FIVE” JAN-JUNE 2018 bike impact that the tariffs would otherwise have on while mopeds now have their turn to suffer the impact their retail price, rather than asking their dealers in 1. Spain +17.14% of their Euro 3 to Euro 4 churn, motorcycle registrations Europe to pass it on to consumers (these issues also in the EU were +4.7 percent, and that while many of affect Polaris Industries’ Indian Motorcycle subsidiary, 2. Italy +9.76% the smaller markets were still showing declines, the ‘Big but it is unknown whether they intend to do the same). 3. France +9.1% * Five’ that account for some 80 percent of sales between Second, that with 50 percent of sales targeted to be 4. Germany +6.87% them were all up (France +9.1%, Italy +1.4&, Spain “international” by 2027 (Polaris have also said the same +16.7%, Germany +1.9% and the UK +7.4%). about international sales for Indian), Harley would move 5. UK +3.48% The stats for the second quarter of the year (to 30 June production of its EU inventory outside the United States. * Jan-March 2018 2018) were due for release the week after this edition It may be that more on this will have been unveiled in a of International Dealer News went to print and will have Harley investor briefing slated for July 30th (again, after been published in the following edition of IDN’s MotoWEEK newsletter. this edition of IDN closed for press), but either way, speculation that it would involve However, the latest batch of national trade association data for the period to end extra production activity at the Thailand facility that is due to start producing later of June this year from Italy, Spain, Germany, the UK and other markets such as this year (or its Brazilian assembly plant) is likely to be short term at best. Poland, Switzerland, Austria and Sweden (see pages 6-8; no data for France is In all probability Harley will seek to find a production solution within the EU (that available yet) suggest that growth overall is robust so far in 2018. would certainly be the smart play) as a hedge against future economic issues and pain (at +17.14%, 79,217 units) leads the way in 2018, with Italy picking up production needs. Polaris is already in Poland manufacturing ATV and Side x Side strength again at +9.76, having had a relatively soft first quarter (+1.4% Jan- units, and with a major German and Polish pedigree in Milwaukee, my hunch would March/ACEM); France is probably third, but no trade association data had been either be Poland (maybe Hungary where Yuasa is producing Lithium ion batteries) published for 2018 yet at the time of writing this piece (ACEM data showed the or Germany, where Harley’s originally UK based European head office is now French market +9.1% for Jan-March); the German and UK markets have also both located.. strengthened following uncertain starts to the year at +6.87% and +3.48% respectively. Based on this BFrF66VBFR4TfwW&RbBrRf"f&V67@f"WrF&76R&Vv7G&Fw&wFf"&FVRBf"FRDBb&WGvVVBRBrRvVBV"F&R&'W7BגV6vVB7VvvW7BFBf&V67G2f "b&VBbRRvFFRDBB&VBRRR6VB&R&'W7BFVV@&&'&FW66W'fFfRV&Ɨ6W b6W'6R'FRFRFR&BfW'6bF2VFF( ƆG2FW6>( FR4TFF&&FVW"v&B6Хp@0@DU$DDTU"Uu2TuU5B4UDT$U"#