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Some dealers prefer 0% interest deals to PCP

Figures provided by the MCIA show that the total number of two wheel motorcycles registered September year-to-date was 93,725 units.  In its latest analysis of market trends, Glass’s Guide says this represents a “rather impressive increase” of 12.3% over the same period last year. In September alone, unit registrations increased by 7.2% to 13,536 units.

Glass’s Guide notes that moped registrations continue to decline. They currently sit 12.7% down year-to-date and are 17.1% lower than September 2014. Over the last five years, there has been an almost 50% decline in 50cc sales. “This is a Europe-wide trend and the question is why has such a decline occurred? While it’s difficult to give definitive answers, the decline seems to have been offset by an increase in 125cc sales which leads us to think that the two have a connection. Figures show that in 2010, 16,581 mopeds were sold but during 2014, this number had dropped to 10,731. During the same period, however, registrations of new 125cc bikes increased from 28,066 in 2010 to 37,905 in 2014.”

Glass’s says it is possible that changes in youth employment patterns have played a part. The recent recession resulted in fewer jobs for young people, which in turn resulted in a lower number of young people needing and being able to afford a means of transportation. Young people are not only remaining in education due to the lack of work places but changes in the law have resulted in anyone who was born after 1 September, 1997 having to remain in full-time education or training until they are 18. “As a result,” says Glass’s, “by the time that they reach their 18th birthday and are able to get a job, they are legally permitted to ride a 125cc machine subject to attaining the relevant licence and, given the choice of a moped or a geared alternative, it is easy to see why there is a shift in the volume trends.”

Sports tourers and touring bikes also continue to see a decline in both year-to-date registrations and when compared with September 2014. Sports tourers saw a 15.6% decline over September 2014 and a 7% decline year-to-date, while touring bikes saw an 11.5% decline over September 2014 and 12.7% decline year-to-date. Registrations of naked machines in September, however, saw another large increase, up 16.7% over September 2014 and a 28.3% increase year-to-date. The reasons for such an increase are not clear, but it is thought that fashion plays a part due to there being some “exciting” models in the naked sector.

Geared motorcycles, excluding scooters, continue their month-on-month surge increasing by 15.6% in September and bringing the year-to-date total to 68,612 machines, a rise of 18.1%. Registrations from 651-1000cc have seen another healthy rise at 22.5% up on September 2014 and up year-to-date by 26.5%. That’s a 4553 year-to-date volume increase to 21,713 machines. Registrations for 51-125cc machines continue to show an increase over September last year at 10.95% and 13.8% year-to-date.

With total registrations at 93,725 September year-to-date, the prospects of exceeding that 100,000 mark by year end is now looking very likely.

New Sales

“Combining feedback from dealer visits and subscribers who have responded to our latest market survey covering retail activity in September, it would suggest that demand for new bikes is up overall on this time last year. However, while 59% reported an increase, 36% reported a decline and just 5% reported demand remaining level. Some dealers reported that while new sales were good up to the end of their financial year (June), demand has been a little lower than they had been expecting since. However, this is not thought to reflect the overall market and they are optimistic that demand will pick up again with new models in the pipeline to help increase interest. The overall consensus was positive.

“Sixty-four per cent of respondents reported discount levels as being level, 18% reporting an increase and 18% reporting a fall. However, feedback from dealers suggests that they prefer to offer free accessories/clothing rather than cash discounts and tend to only offer small cash discounts to secure sales when required.

“Finance penetration was once again strong, with 50% of respondents reporting an increase, 30% reporting it remaining level and 20% reporting a decline. Although the popularity of PCP deals have contributed to the majority of the increased finance penetration, some dealers reported that they prefer to offer 0% interest deals instead.

“Dealer stock levels of new bikes continue to remain fairly stable, with 45% reporting an increase, 41% reporting stocks remaining level and 14% reporting a decrease on this time last year.

“Confidence in business levels was more mixed this month, with 23% expecting levels to increase, 36% remain level and 41% expecting a drop. However, this is mainly due to the time of the year and some dealers expect business volumes to hold up better than they did for the end of 2014. Expectations for profitability were similarly mixed, with 24% reporting an increase, 43% predicting that they will remain broadly level and 33% expecting a fall.”

Used Sales

Turning to used sales, Glass’s reports that feedback from dealers and Glass subscribers was rather mixed regarding the demand for used machines during September, with 37% reporting an increase, 33% reporting demand remaining level and 30% reporting a decline when compared to September 2014. “It is now widely recognised that the popularity of PCP deals are impacting negatively on the demand for used machines and this is becoming concerning, especially for used dealers. Consumers would understandably rather have a brand new machine for a relatively small amounts of money per month rather than purchasing a used one. With this trend likely to continue for the foreseeable future, used values on late plate bikes in particular are likely to decline at a faster rate than what would normally be expected.

“We received feedback from some dealers commenting that sales during September were unexpectedly quiet, but that they were hoping for a late period of order intake due to dry weather being forecast during October. However, others reported that sales had picked up during August and September after a quiet July. 41% of dealers who responded to our latest survey of retail activity reported that current used stock levels were up, 45% reported them as being level and 14% reported a drop. However, the majority believe that their stock levels are in line with the demand that they are currently experiencing. It remains to be seen how stock levels will sit as we move into the early winter season, with demand naturally expected to fall away.

“Now that the clocks have changed, the days are shortening and the weather is expected to deteriorate, demand will fall away and this will lead to a fall in transaction prices. Taking this into account, used values in the November issue of the Guide have been reduced by a greater margin than has been seen in recent months. Based on extensive research and feedback from dealers and subscribers we have focussed the majority of reductions on the larger, more powerful bikes. This included Sports bikes (750-1500cc), Naked and Roadsters, Tourers, Harley Davidson Sportster, Big Twins and V-Rod models. All other machines have been eased back by a more modest amount but have still reduced by more than they have over the last few months where there has been relative stability in the market-place.”

Jayson Whittington

Manager – Commercial and Leisure Vehicle Valuations

 

 

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