Today I’m going to dive into something that’s been rumbling in the background for a while now.
In the scheme of things the motorcycle industry is a small one, and just cant exert the pressure that say the big car manufacturers or food industry can on the various governments of the world.
So, we get stuck with rules that often don’t help the industry at all.
We have been going through a global reshape for a while now and for better or worse, things are changing.
The world market, first dominated by British, American and European brands had its heart and soul moved to Japan in the 70’s, and however much they have tried no one has challenged that dominance since. That is, until the slow march of China and India began to eat into the market share of the big four.
This is often touted as simply being about cheaper wages and running costs, but you must have noticed, that while the American, British and European brands concentrate their efforts on gouging more and more profit per sale from what they see as a dwindling market. Adding bigger engines, more tech and other farkles until the bikes that are offered look like overweight christmas trees adorned with all the gadgets to take your home with you on every journey.
Whereas both India and China seem to have listened much more to what the customers they are trying to woo from their more established competitors are saying.
So, we have already seen a swing. Both China and India have upped their game on quality, and are offering simple, more affordable motorcycles that not only win sales from the established customers, but do much more to attract new riders into the fold.
That is something that has been sadly missing from the industry for too long.
Remember, it isnt that long ago that Yamaha admitted the only thing keeping them afloat was the Asian market for smaller bikes.
The Asian and Indian markets are maturing now too, and their burgeoning middle class are buying bigger bikes as well as small commuter bikes.
So even without trade barriers you can see how the industry is already changing.
The big expensive bikes are just less important now on a global scale, and the dwindling customer base the big 4 have relied on for years are just getting old.
So, today, we do truly have a global industry, a varied choice of bikes that offer riders a very different experience, so in general all our tastes are catered for. I say in general because I still think that all the manufacturers should be offering bikes with less electronics for cheaper prices. Then they can have their range toppers with all the bells and whistles, but I am just a luddite at heart.
The latest world economic twist has been the USA’s decision to increase import tariffs and the subsequent retaliations that have already begun.
And let me say from the start, I am not here to say tariffs are good or bad for America. All I am talking about is their effect on the motorcycle industry.
We can only guess at the long term implications, but there are some problems it raises that are unavoidable.
The example of this that has been in action for many years. Where we can see the effect in action, is in China and India, where the high tariff rates they impose on each other make trade between the two countries almost impossible.
US tariffs, especially on steel and aluminum aren’t just numbers on a spreadsheet and they will hit the motorcycle industry hard. That will mean most manufacturers will have higher ticket prices across the whole of their ranges, and at a time when we have all been saying for too long that bikes are just too expensive, that is not a good way for the industry to expand.
So let’s break it all down a bit.
The thing is, steel and aluminum are the bread and butter of motorcycle manufacturing. Tariffs on these materials alone are already pushing production costs through the roof. For manufacturers, that means tighter profit margins, but for us, it inevitably means we will have to dig deeper into our pockets when buying bikes, and no one wants that, do they?
It gets messy because the US tariffs have already begun to spark a tit-for-tat reaction by other countries. Take the Canada and the European Union, for example. They’ve already shown they’re not afraid to hit back, and that will mean higher tariffs on US-made motorcycles and other goods.
For companies set up with manufacturing plants in different countries the impact will be less, but understanding the massive impact just the tariffs on Aluminium and steel will have on all the manufacturers and the industry we all love as a whole should not be underestimated.
It’s like a game of economic ping-pong, and no one in the motorcycle industry is at the table. Our voice is a tiny one at the back of the room, drowned out by the economic titans.
Harley-Davidson, the iconic US brand, has been feeling the heat for a while now anyway, and this is not going to help them on the world stage. Not only are they dealing with a shrinking home market share, higher costs for imported components and retaliatory tariffs from other countries. Somehow they have to increase their global sales and profits. Higher costs is going to do nothing to help them so it’s just not looking pretty.
There are no US companies making affordable entry level bikes set up to take advantage of the new tariffs either, so that will be something else that has a knock on effect. With less cheaper bikes there will be fewer new riders and new customers.
Electric brands like Zero could be hit even harder. Their reliance on imported raw materials and components will make their electric bikes even less affordable, but even the likes of Yamaha and Honda won’t be immune. They may not have the import cost of the motorcycles with the bikes that are manufactured in the states, but they will still have to deal with the increased costs of the raw materials.
So you can see where this is going i’m sure.
Motorcycles and motorcycling will get more and more expensive, and as an expensive hobby already for most of us, that’s not good. It will do nothing to bolster the dwindling numbers of new riders in the west.
The uncertainty around tariffs is causing chaos. Companies are rethinking not only where they produce their bikes, but how they manage their supply chains, and yes, how they price their products.
It’s a global shake-up, and it’s anyone’s guess how it’ll all play out.
Remember, it was only 7 years ago in 2018 that the EU slapped tariffs on US goods, including Harley-Davidson motorcycles, in response to US tariffs on steel and aluminum then, and they have already said they will match any new tariffs with tariffs of an equal value, so it is only time before those legislations come into place.
Things can escalate quickly when politicians start meddling with trade barriers, and the fallout isn’t just felt by big corporations. We the riders are always the ones who pay the price in the end.
Higher prices for motorcycles will make them less affordable for many people, and with an ageing and dying customer base and no new riders coming in, that’s a hard road for manufacturers in the west.
Some companies will have to consider relocating at least part of their production to avoid tariffs, but they’ve got to make sure those moves make economic sense.
Splitting production sites means savings on scale go out of the window and makes quality control much harder to manage.
Then, try to imagine the chain of tariffs involved in building, selling and exporting a bike. Parts might come from 10 different countries, each with their own trade agreements with the place the bike is being built, but some sub assemblies might also be built outside the country of origin, so you have parts say shipped from China or India to Thailand for sub assembly, then the sub assembly is shipped to the manufacturing plant with another layer of tariffs, then you have the tariffs on the bikes exported by the factory, so the problem is like a snowball rolling downhill.
It is never definitive, but in this case I think we can all be pretty sure that prices will be going up. Let us hope quality doesn’t go down at the same time.
So, there you have it. It’s a tricky situation, and one that’s worth keeping an eye on.
As always, I’ll keep you updated on how things unfold.
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