The Motorcycle Index: Are Bike Sales a Sign the Economy Is Revving Up?

Motorcycle index
Motorcycle index


For the most part, recent economic news has been filled with doom and gloom. Unemployment remains high, consumer confidence remains low, and unqualified good news is hard to come by. However, one recent indicator provides some cause for optimism: Motorcycle sales have revved up to a roaring recovery, and reached their highest level since before the recession.

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Sales at motorcycle and all-terrain vehicle dealers have surged by almost 16% over the past year, surpassing the 15.9% growth rate high they hit in 2004, according to data recently released by Sageworks, a financial information company. During the same period, their profits have also gone up steeply -- from about 0.64% in 2009 to 2.55%, almost a four-fold increase.

While the recession can be blamed for some of the slowdown in the motorcycle market -- in 2009, sales fell by 13.77% -- sales had been falling steadily since 2004. Robb Granado, an analyst with Sageworks, offers several possible reasons for the recent comeback. Part, he argues, can be credited to a snap-back from the recession, when tough times kept people from buying bikes and low sales kept dealers from replenishing inventory. But the post-2010 growth, which is still continuing, is hard to explain.

sales of motorcycles
sales of motorcycles



One clue might be the fact that, while gas costs are dropping, they still remain high. Motorcycles are far more fuel efficient than cars -- even Harley Davidson bikes, notorious for their high gas consumption, get between 44 and 59 miles per gallon on the highway. More efficient brands like Kawasaki and Yamaha often do much better, and commuters looking for cost-effective transportation may find that a new motorcycle can quickly pay for itself.

Another factor, Granado notes, may have been the surprisingly temperate 2012 winter. For many riders, motorcycles are a seasonal option, and often get parked in the garage when the weather gets rough. If last winter was any indication, motorcycle season may be getting longer ... further extending the possible savings on gas.

%Gallery-157580%Regardless of the reasons why, things are looking bright for motorcycle manufacturers: Harley Davidson's stock (HOG) has worked its way out of the hole it fell into in 2009, and the company reported that retail sales grew more than 25% in the last quarter. Other manufacturers have also announced steep sales growth.

Whether the recent motorcycle sales jump is just a summer fling or the start of a period of sustained growth in fuel-efficient vehicles, one thing is certain: For now at least, bike manufacturers are stepping on the gas.

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Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at@bruce1971.