Lack of Millennials, Disposable Income Causing Lag in Motorcycle Sales

Tim Buche, president of the Motorcycle Industry Council Inc., gives a presentation at PowerSports Finance 2017 in Las Vegas late October.

The powersports industry has yet to rebound new-vehicle sales to the levels they were prior to the great recession, but an influx of millennial buyers may be the boost lenders need, two speakers suggested during separate presentations at PowerSports Finance 2017.

On the auto side, new unit sales have actually increased 7% above what they were in 2006 before the financial collapse hit, Brian Landau, senior vice president and automotive business lead at TransUnion, said during a presentation.

“The auto industry has recovered and more so has actually exceeded what we had pre-recession,” he said. “Motorcycle sales are still 48% below what they were pre recession, and there are a number of reasons for that, but the obvious one is the aging customer base.”

The percentage of riders 50 years of age or older rose to 46% in 2014, compared with 25% in 2003, Tim Buche, president and chief executive of the Motorcycle Industry Council Inc., said without divulging more recent figures.

“We looked at the point at which the millennials will overtake the boomers as the primary segment, and we predict it’s about 2019,” he said. “When you look at used bikes, millennials are already [the primary consumer]. Even though the average age is up, the millennials will pull it back down, and millennials are now into their mid 30s, so they are chasing us.”

In order to attract more millennials to powersports, the MIC is hosting 11 events in seven cities next year under the banner of “RiDE,” in which parents and kids can test drive real vehicles or go through virtual reality demos.

Another factor — and possibly a more impactful one — is a decline in consumer’s disposable income as a percentage of their transportation expenses. In 2015, consumers only portioned 8% of their transportation expenses as disposable compared with 11% in 2000.

“Disposable income is a big driver of motorcycle spending, and what you’re seeing here is that DPI as a percentage of transportation expense has been trending down,” Landau said. “Transportation expenses overall have been rising and it’s eating away at disposable income expense.”

For more coverage on PowerSports Finance 2017click here.

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