MARKET WATCH

Market Watch Market Watch

Trade & industry report with cap/hpi motorcycle editor Alan Elsworth

MARKET OVERVIEW

Another interest rate increase, cost of living increases, GDP dropping and uncertainty on fuel bills – all have been much talked about in the press and are not giving much confidence in the economy.

The last time there was a global economic slowdown, the motorcycle industry didn’t immediately follow other automotive sectors into the doldrums, and at the moment, there are still positives, at least in the short term, as some lack of product and continued retail activity keeps supply and demand in the correct ratio to keep prices strong.

July’s registration figures are the latest released by the MCIA, with the headline registrations number down 11.4% from 12,437 to 11,017 on the same month in 2021. However, the big picture of what’s happening will become more apparent as time progresses, and year-todate 2022 sales are still up by 4438 (6.3%) for the first seven months. UK car registration numbers are similar for their monthly comparison at -11.5%, but the first seven months of the year see figures dropping by 9%.

As we enter into the last third of the year, the problems dealers face have changed little over the previous month. The result is a slightly negative trade vibe around at the moment, which is added to with UK GDP dropping an estimated 0.1% in Q2 2022, although it is still estimated to be 0.6% up from the prepandemic Q4 2019 figure.

NEW SALES

REMEMBER THE HIGHS AND LOWS THROUGH the year are not what could be classed as normal seasonality due to lockdowns.

A couple of sectors that have not had a good month are the two biggest ones as far as market share is concerned. Naked bikes have been the king of the castle for a few years and still account for just over a fifth of total registrations, but their numbers reduced by 12.5% compared to July 2021. The predominantly commuter-orientated non-moped scooter class, with a 23% market share in July, was the biggest loser, with registrations down 21.5% compared to the same month of 2021. Over the year, the market share in all the categories remains very consistent.

The type, style and size of bike that will attract a PCP deal will most likely be the larger capacity machines. And engine size charts might just tell a bigger story. July still saw sub-125cc take a 45.7% share of newly registered bikes, a bigger slice of the market than seen for the year so far, which stands at 41.4%, in itself marginally down from the 42.5% seen in 2021. The only positive petrol band in July was 126-650cc, the largest growth band for the year, which will attract some PCP business. This leads to the suggestion that price could be a factor in purchasing larger bikes and possibly signals that the over-650cc market is succumbing to economic pressures, or it could just be the usual pre-winter slowdown! The consequence of lower large bike sales has positives and negatives: used values could remain high, and demand keeps residuals high and less risky long-term.

To finish up on comparisons, as will probably be the norm for the rest of the year, we again look back to pre-Covid 2019. The outlook for headline total registrations isn’t that bad, with a significant monthly rise of 11.1% from July 2019 to July 2022 and a 5599 unit (8.1%) increase in the year-to-date figures. Again, a slight cause for concern is the reduction in numbers for the two larger engine bands and consequences that follow as far as profitability goes, as the larger capacity bands tend to also be the large-ticket ones. FREQUENT VISITORS TO MARKET Watch will by now have worked out a repeating pattern seen over the last year – massively lower entries throughout the auction system.

In the later months of the year, historically, it has been more likely that dealers will start to clear the decks of unwanted stock via auction, but as good quality retail units remain in short supply, part-exchanges usually traded or auctioned are being retained for retail.

There are still a few machines appearing at auctions, mainly from dealers who have a stock time limit and do not sell directly to traders, but we are coming to the time when machines taken in part exchange at higher summer prices can start to outlive their welcome in slower sales months. That point has not yet been reached, and, generally, high sold penetrations are continuing to be achieved with prices not suggesting any adverse movements are required. Noticeably, at a recent auction was a slight decline in the sold percentage rate, and although prices remained similar, the stock that didn’t sell was at the lower quality end of the market and needed some work to get it ready for retail.

AUCTION SUMMARY

USED MARKET

THERE HAS BEEN LITTLE CHANGE IN THE used market, with what has become the pattern we have seen over a period stretching back several years, with stock difficult to find. Typically at or around this time of year we would see the thoughts of dealers turn to easing back on stock levels and prices paid in the pre-winter preparations for lower retail activity. Not so this time, as lower than desirable stock levels are being topped up where possible. In this latest research period, dealers mentioned more than once that dealer groups are chasing bikes in large numbers and this pushes prices higher. Groups tracking larger quantities of used bikes to fill bigger showroom areas is nothing new in the industry. At the moment, though there are a couple of dealer groups expanding rapidly, so, therefore, accelerating their buying rather than spreading purchases over a longer period of time.

Once inventory levels are close to optimum, stocking then becomes a position of maintenance or replacing sold units as necessary. At the moment, towards the end of the summer season, the quest for used machines is not as desperate as it was six months ago. However, it is still there, and feedback is not pointing to any weakening of prices – some are even pointing to further increases. Over the next few weeks, it will become clearer if there has been unsold new stock that will attract schemes to help them out of the door and as a result possibly lower used values, but little of this is currently having that particular knock-on effect.