JAMA - December 18, 2008

1. Total Demand for Motorcycles

   A number of negative factors have impacted Japan’s motorcycle market this year, including higher vehicle prices reflecting mandatory compliance with new emissions regulations (enforced in 2006, 2007 or 2008, depending on motorcycle type etc.) as well as a deteriorating economic environment stemming from the global financial crisis. Demand has also declined as a result of stronger crackdowns on illegal parking (starting in 2006) and the chronic shortage of motorcycle parking bays in cities and towns. On the other hand, surging fuel prices have underscored for consumers the economy and convenience of motorcycles in the 51-to-125cc category (or “Class-2 motor-driven cycles” as they are called in Japan) and smaller models. Nevertheless, and despite other positive developments such as new product launches, domestic market conditions are severe. Against this backdrop, total current and upcoming demand is forecast as follows.

   1. Total motorcycle demand in Japan in calendar 2008 is estimated at 570,000 units, down 21.1% from 2007. Declining sales have been recorded in all motorcycle categories except for the aforementioned 51-to-125cc category.
   2. In 2009 sales declines are projected in all model categories, with total domestic motorcycle demand expected to drop to 498,000 units, down 12.6% from 2008.
2. Class-1 Motor-Driven Cycles (50cc & under)
   1. Sales of Class-1 motor-driven cycles in 2008 are estimated at 297,000 units, a 35.2% plunge from the previous year. In addition to higher vehicle price tags resulting from compliance with stricter emissions regulations, this major decline also reflects the impact of stronger crackdowns on illegal parking linked to motorcycle parking bay shortages.
   2. In 2009, as a result of the continued impact of higher vehicle prices, limited parking availability and other negative factors including a shift to bicycle use, sales in this category will likely not exceed 270,000 units, a drop of 9.1% from 2008.
3. Class-2 Motor-Driven Cycles (51cc-125cc)
   1. Demand for Class-2 motor-driven cycles in 2008 should reach 123,000 units, a 22.1% surge over 2007. The factors behind this gain include an increasingly favorable consumer assessment of their economy in the light of soaring fuel prices and, therefore, a wider use of these vehicles for commuting to work or school, as well as a rush of last-minute purchases prior to scheduled vehicle price hikes.
   2. In 2009 demand in this category is expected to plummet 26.8% from 2008 to 90,000 units, as a result of higher vehicle prices caused by mandatory compliance with emissions regulations and, also, a smaller number of models on the market.
4. Mini-Sized Motorcycles (126cc-250cc)
   1. Mini-sized motorcycle sales in 2008 are forecast at 72,000 units, down 12.0% from 2007. Because these motorcycles enjoy particularly high demand in urban areas, the lack of parking bays in cities and towns has been the single most important factor in their diminished sales, with an additional factor being higher vehicle prices resulting from mandatory compliance with emissions requirements.
   2. Because of the continued impact of the aforementioned factors, sales in this category in 2009 are projected to drop to 64,000 units, down 11.1% from 2008.
5. Small-Sized Motorcycles (over 250cc)
1. Sales of small-sized motorcycles in 2008 should finish at 78,000 units, a drop of 4.7% from the previous year. Although compliance with emissions regulations also resulted in price hikes for vehicles in this category, there was a stronger demand for these larger models for the purpose of recreational use than for models in other categories, especially among middle-aged riders.
2. In 2009, although demand in this category for recreational purposes is expected to remain firm, negative factors will include increased price tags for models in the 400cc-and-over class as a result of emissions regulations compliance. Overall demand in this category in 2009 is therefore projected at 74,000 units, down 5.1% from 2008.