Motorbike riders are taking to the roads again, snapping up models ranging from luxurious Harley-Davidsons to commuter Hondas in record numbers, and challenging the current wave of electric vehicles. Yet even the humble two-wheeler must grapple with the same challenges as its four-wheel counterpart, including rising costs, a slowing global economy and chip shortages.
Honda Motor and Yamaha Motor, the world's two-largest motorbike makers by revenue, emerged from a disastrous pandemic-hit 2020 to post two years of explosive growth. The Japanese giants were joined by Indian leaders Bajaj Auto, Hero MotoCorp, and TVS Motor. Each posted record revenue and they are on track to continue that momentum this year.
All told, revenue at the world's 10-largest motorcycle makers by sales dropped 11% in 2020, according to a Bloomberg Opinion analysis, the worst in at least a decade, before climbing 30% in the subsequent two years. Global shipments of motorbikes are expected to climb to 42.3 million in 2027 from 32.2 million units this year, according to Statista Market Insights.
By comparison, the battery EV market - dominated by Tesla Inc. and a handful of Chinese rivals - will expand to 13.5 million by 2028 from 7.7 million currently, Statista predicts.
Emerging-market demand is a chief engine of motorcycle velocity. Increasingly mobile populations coupled with crowded cities make motorbikes the preferred choice of transport for millions of people, while the advent of on-demand services has given commercial impetus to buy a new model and make money as a delivery driver. India and south-east Asia remain the largest markets for motorised two-wheelers by volume.
Nevertheless, these relatively simple models are dependent on the same components required in high-end vehicles including top-of-the line BMW AG motorcycles and Tesla cars.
Niraj Bajaj, the chairman of Bajaj Auto, wrote in the 2021-2022 annual report that he had never seen the company face such global supply constraints in terms of the sheer scarcity of components. “No modern automobile can exist without a slew of semiconductor chips. Motorcycles … are no exception.”
Those supply-chain woes largely cleared up by the middle of this year, but challenges continue. Economic uncertainty and political disruption in export markets such as Nigeria, Sri Lanka and Bangladesh were cited by Bajaj as major headwinds. Honda expects costs to rise and sales to be crimped by new environmental regulations in India, while Yamaha notes that raw material prices continue to soar.
These cost increases are particularly difficult to contend with because developing-economy consumers are more price sensitive than those in richer countries. Yamaha, which gets around three-quarters of its revenue from emerging markets, is looking at a 20% drop in operating profit from its motorcycle business this year despite expectations for a 7.7% rise in sales, according to Bloomberg Opinion.
A quick commute across town isn't the only impetus to get on a bike, which is proving a boon to those at the luxury end of the market.
Harley-Davidson, the storied name famous for the romance of cross-country road trips, is enjoying a resurgence. The Milwaukee, Wisconsin-based company is the world's third-largest motorcycle maker by revenue. An operating loss in 2020 is all but forgotten and it's approaching a third-consecutive year of growth which could top $5 billion (R97bn).
In January, an early-model Strap Tank Harley-Davidson sold at auction for a record $935 000, testament to the enduring popularity of one of America's most-famous brands. Its revival is still in progress, however; problems at a supplier last year crimped output and the company remains short of the $5.5bn revenue figure it reached in 2014.
Harley-Davidson's rivals in the luxury market are also enjoying a renaissance, evidence that well-heeled riders are back in the saddle.
Ducati, the Italian brand best known for racing bikes, is on track to boost sales 70% this year from 2020, after posting record revenue and shipments in 2022. BMW, the German carmaker, sold its highest number of motorbikes ever last year and will again post historically high revenue and operating profit from that category in 2023. This revival for larger touring and cruising bikes means that even Britain's Triumph Motorcycles Ltd. managed to return to profitability last year.
The beauty of the motorbike business is that it's accessible to all echelons, with utilitarianism giving way to thrill and luxury as consumers climb the wealth ladder. All you need to enjoy the ride is to get your motor running and head out on the highway.
Tim Culpan is a Bloomberg Opinion columnist covering technology in Asia. Previously, he was a technology reporter for Bloomberg News.