Demand in the European two-wheeler market has seen a significant rebound following the conclusion of the Euro 5+ transition period, while emerging markets continue to exhibit steady growth. Performance among major brands is diverging, with Japanese and Indian manufacturers achieving growth, while European and American brands face continued declines. Variations are also evident in unit prices, per-unit profits, and profit margins across different brand groups.
In the all-terrain vehicle (ATV) segment, North American demand continues a moderate recovery, and the European market has shown a marked improvement. Leading brands' performances are mixed, with Polaris Inc., BRP Inc. (Bombardier Recreational Products), and Kawasaki Heavy Industries, Ltd. benefiting from a low prior-year base and optimized inventory to achieve growth. Yamaha Motor Co., Ltd. continues to report losses in its ATV business and is gradually falling behind.
Looking ahead for the full year, overseas motorcycle demand is expected to continue growing. Japanese companies have issued guidance for further growth in their motorcycle divisions, and Chinese enterprises are poised to capture greater market share globally. The ATV market is projected to expand over the medium to long term.
Two-Wheelers: Growth in Both Mature and Emerging Markets, Japanese and Indian Firms Lead
With the Euro 5+ transition period ending in early 2026, new registrations in Europe rebounded notably, with significant year-on-year increases in Italy, Spain, Germany, France, and the UK. Southeast Asia maintained stability, while India and Latin America sustained high growth rates.
Benefiting from rising demand in emerging markets and gaining share in mature markets, Japanese and Indian brands have achieved continuous growth in both domestic sales and exports. Demand in high-end markets like Europe and America remains under pressure amid intensifying competition, putting local brand sales under strain. The consumption structure for motorcycles is shifting, competition in mature markets is heating up, and the performance metrics of unit price, per-unit profit, and profit margin are diverging among European, American, Japanese, Indian, and Chinese companies.
All-Terrain Vehicles: Recovering Demand in the West, Performance Split Among Leaders
Supported by a low prior-year comparison base and earlier interest rate cuts stimulating consumption, North American demand maintained an upward trend in the first quarter, while European demand improved significantly. Due to the low base, leading manufacturers saw their profit margins recover. Polaris Inc.'s Powersports segment revenue grew 14% with improved gross margin; BRP Inc. reported revenue growth exceeding 30% and margin expansion; Yamaha Motor Co., Ltd. experienced continued revenue decline and significant losses; Kawasaki Heavy Industries, Ltd. saw both volume and price increases for its ATVs, leading to substantial revenue growth; Textron Inc.'s Specialized Vehicles revenue declined by double digits, though its profit margin stabilized and began to recover.
Chinese Companies: A New Chapter in Globalization with Sustained Growth
Chinese companies are actively expanding into overseas markets to capture global share. CFMOTO (Zhejiang CFMOTO Power Co., Ltd.), Taotao (Zhejiang Taotao Vehicles Co., Ltd.), and Linhai Group Co., Ltd. have achieved sustained revenue and profit growth. Notably, Taotao's revenue has exceeded 10 billion yuan for four consecutive quarters. Meanwhile, companies like Qianjiang Motorcycle Co., Ltd., Taotao, and Lvtong (Lvtong New Energy Vehicle Co., Ltd.) are beginning to explore new growth areas such as AI, robotics, and semiconductors, gradually developing secondary growth curves alongside their core business expansion.
Outlook: Japanese Firms Guide for More Motorcycle Growth, ATV Brands to Diverge
For two-wheelers, Japanese companies forecast continued volume and value growth for motorcycles in the 2026 fiscal year. After two consecutive years of decline, American brand Harley-Davidson, Inc. anticipates a potential stabilization in 2026. Intensified global competition is expected to persist, creating opportunities for Chinese firms to gain market share worldwide.
In the ATV sector, overall industry demand is recovering, inventory levels at leading brands are optimized, and guidance for 2026 is optimistic. Second-tier brands like Kawasaki and CFMOTO are actively expanding, while Yamaha continues to lag. Taotao's dual-brand strategy is expected to continue capturing share in the golf cart market, potentially outperforming the industry and leading brands like E-Z-GO (a Textron brand) and Yamaha, leading to sustained market share gains.
Investment Recommendations
The powersports industry is on a fast growth track, driven by consumption upgrades and rising demand for leisure and entertainment, which is boosting the penetration of ATVs and medium-to-large displacement motorcycles. Chinese motorcycle manufacturers have enhanced their product capabilities in recent years, offering clear cost-performance advantages, positioning them well to seize overseas market share. Continuous product portfolio optimization is expected to drive further improvements in market share and profitability.
The analysis recommends CFMOTO, the leading ATV exporter which is expanding from the premium recreational segment into mass-market mobility, and Taotao, a strong brand in golf carts and a new entrant in humanoid robotics. Investors are also advised to monitor Chinese motorcycle exporters such as Loncin Motor Co., Ltd.
Key Risks to Consider
Potential risks include weaker-than-expected overseas demand, fluctuations in freight costs and exchange rates, and the risks associated with trade friction and additional tariffs.
Comments