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Smaller, Lighter, Cheaper

Major OEMs Reach Downmarket for Growth

The biggest and most obvious trend observed in the new models released at October’s Intermot continued in Milan.  Nearly all major OEMs released small displacement, premium entry-level machines as part of their 2011 development strategies.  

From global leader Honda Motor, no less than three junior CBR sport models were introduced, in 125, 250 and 600cc capacities, each offering sophisticated styling and premium finishes, but also user friendly performance and prices.  KTM branched into the 125cc on-road market with the smallest Duke model, made in India by the company’s parent Bajaj Auto.  Even BMW unveiled downmarket models in their 650 range, and a concept scooter, promising to enter the lucrative high-volume commuter market.

This may seem like an unlikely development for western markets, where the industry in recent years has been typified by premium lifestyle brands like Ducati and Harley-Davidson, but in fact the less-is-more tactic has gaining ground since 2005.  Back then, Honda introduced to the UK and southern Europe the Thai-built CBR125, which stunned marketers and pundits by rocketing to best seller status in those finicky markets.  Follow up products like Kawasaki’s 250 Ninja and ER-6 family have similarly topped sales charts, often in unlikely places such as the United States.

For the legacy brands and Japanese OEMs, The main threat to continued growth over the past five years has been cheap imports from Asia, mainly China and India.  With their increasing size, sophistication and quality, the only way to combat these up and comers is to leverage superior brand equity and technological strength, and meet them head on in the lower register of the markets.

So far this strategy has worked for Honda and Kawasaki, adding vital sales in a deeply recessed retail environment, and boosting image among young and casual enthusiasts as brands that are in tune with the new reality.  At EICMA 2010, and the introduction of the budget Honda CBR600F faired standard, it appears that the majors are ready to play in entry-level middle capacity markets too.

Cheap and cheerful, it seems, no longer has to mean a choice between comforting established brands or unknown generic motorcycles.

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