Honda Motorcycle’s COO, Tatsuhiro Oyama is forecasting that there will be worldwide industry drop in bike sales as the credit fiasco finally rears its ugly head in motorcycling. Like the car industry, the motorcycle industry helps move product by offering financing options and extending credit to the purchasers of their bikes. Typically these credit liabilities are flipped to third-party creditors, who handle the debt from there (all unbeknownst to us the consumer), but with the state of economy and the meltdown of the credit industry, many of these creditors are either no long amongst the living, or not taking on any more debt.
Oyama was credited as saying, “There’s been a bit of a lag, but credit is being squeezed. I think if we have flat sales next (business) year we’d be lucky,” adding that forecasts for this year might need adjusting too.
This news leaves companies like GMAC, and in this case Honda, in a lurch. Unable to swiftly exchange the credit liability, they have to be more cautious on who they extend money too. This means more credit refusals, and higher interest rates, which in turn means more people who can’t afford a motorcycle purchase.
At the end of the day, it is Honda and the other manufacturers (except perhaps Ducati) who are left holding the bag with excess product sitting on the showroom floor come December.
There is some good news. Oyama went on to say that the motorcycle business as a whole was holding up better than the car side. So no government bail outs…yet.