Motorcycle Industry Evolution: Market Trends and Strategies

Posted on Jan 27, 2025 in Business Administration and Management (BAM)

Motorcycle Industry Overview

Motorcycle market evolution: from basic transport to recreational vehicle.

Early Market Dynamics

  • Initial growth in the USA, followed by Japanese leadership.
  • First two-wheeled vehicles in Germany, evolving into mopeds and scooters.
  • Key dimensions: cylinder, stroke, size, and fuel efficiency.
  • Varied uses of motorcycles.

Production Approaches

  • Labor-intensive (UK) vs. capital-intensive (Japan) production.

Market Trends

  • Motorcycles replacing cars for basic transport.
  • Increased recreational use of cars.
  • USA/Canada: Increased car ownership, demographic shifts, attraction to cheaper Japanese products.
  • Increased sales of off-road bikes.
  • Japan matched British strengths with superior reliability.
  • EU: Basic transport in 1960s, UK sales decline, increased sales in 1970s.
  • Japan: 1.7 million units in 1960, 1.2 million units from 1966-74.

US Consumer Behavior

  • Motorcycle introduction via family or friends.
  • Intensive shopping process (credit, discounts).
  • Creation of related markets (accessories, R&D).

Japanese Strategy

  • Redesigning products based on market perception.
  • Setting prices at market level.
  • Establishing effective marketing systems.
  • Long-term planning objectives.
  • Lower dividend payouts and higher debt.
  • Highly mechanized assembly operations.
  • Benefits of intracompany demand.

1974 Competitors

  • Honda: Pioneer, largest company, wide range of products, promotional efforts, R&D.
  • Yamaha: Second largest producer, faster growth since 1962, strengths in off-road machines.
  • Kawasaki: Rated closest to UK motorcycles.

US Market in 1960

  • Market size: 40-50,000 units.
  • Growth rate: Stagnant.
  • Competitors: UK (Triumph, Norton), Italy (Ducati, Benelli, Moto Guzzi), Germany (BMW).
  • Strategies: Big, heavy bikes, little R&D, labor-intensive, independent distribution.
  • Buyers: Leisure use, performance-focused, less price-sensitive.

Market in 1975

  • Market size: 1,200,000 bikes.
  • Product: Wide range of bikes by engine size.
  • Competitors: Honda (85%), Suzuki, Kawasaki, Yamaha.
  • Market: Considerable R&D, capital-intensive, heavy advertising.
  • Distribution: More concentrated, exclusive dealers.
  • Buyers: Middle class, varied ages, leisure use, less brand loyalty, value quality and price.
  • Demographic changes: Increased US population, income, and recreation spending.

Honda’s Entry Strategy

  • Exports to US, starting with West Coast.
  • Small, high-quality, modern, easy-to-use, low-priced bikes (125cc).
  • Own distribution network and dealers.
  • Heavy advertising to create a positive image.
  • Goals: market share, sales volume, economies of scale.
  • Financing: low dividends, high debt, equity ratio.