CITIC Construction Investment: The power sports industry is on a fast growth track, with China's motorcycle market share and profit margins continuously increasing

China Securities Construction Investment published a research report stating that the power sports industry is on a fast growth track, with consumption upgrades and increased demand for leisure and entertainment driving the penetration of all-terrain vehicles and large-displacement motorcycles. Chinese motorcycle companies have improved product strength in recent years, with obvious cost-performance advantages, and are expected to capture overseas market share. The product structure continues to optimize, with market share and profit margins steadily increasing. Looking ahead for the year, overseas motorcycle demand will continue to grow, Japanese companies guide motorcycle business to maintain growth, and Chinese companies are expected to seize market share globally; the four-wheeled vehicle market is expected to grow in the medium to long term, with Chinese brands actively deploying and likely to catch up with industry leaders.

China Securities Construction Investment’s main points are as follows:

Two-wheelers: Emerging markets grow rapidly, Japanese and Indian companies perform strongly

By Q4 2025, Europe’s growth was briefly pressured by the high base effect of Euro 5+(, with Spain, Italy, Germany, France, UK, and Turkey respectively down by -26.9%, +0.5%, -68.6%, -26.7%, -33.5%, -42.3% year-on-year). Southeast Asia remained steady(, Indonesia, Vietnam, and Thailand respectively up by +7.9%, -6.8%, -1.3% year-on-year). India and Latin America maintained high growth momentum(, India, Pakistan, Colombia, Mexico, and Argentina respectively up by +16.9%, +25.3%, +29.8%, +20.0%, +45.1%). Benefiting from demand growth in emerging markets and market share gains in mature markets, Japanese and Indian brands achieved continuous sales and revenue growth domestically and in export markets; high-end markets in Europe and America faced demand pressure and intensified competition, putting local brands under sales pressure. The motorcycle consumption structure is changing, competition in mature markets is intensifying, and the unit price, profit per unit, and profit margins of Chinese, Japanese, Indian, and European brands are diverging.

Four-wheeled vehicles: North American demand recovers, leading brands show divergence

Benefiting from low base effects and consumption-stimulating interest rate cuts, North American demand recovered in Q4, while European demand weakened. Leading brands continued promotional strategies to clear channel inventories, but rising tariffs and increased costs continued to suppress profit margins. In Q4 2025, Polaris’ all-terrain vehicle business revenue grew by low double digits, with a slight decline in profit margin; Yamaha’s revenue declined by low double digits with continued losses; Kawasaki’s all-terrain vehicle volume decreased but prices increased, maintaining stable revenue; Dethleff’s specialty vehicle revenue declined by double digits, with profit margins decreasing.

Chinese companies: A new journey of globalization, Taotao and Linhai continue to grow

In Q4 2025, Chinese companies actively expanded into overseas markets, seizing global market share. Taotao and Linhai achieved revenue and profit growth, setting new quarterly records for scale. Meanwhile, Taotao began to explore fields such as robotics and robotic dogs. Based on growth in core business, Chinese motorcycle companies are gradually developing a second growth curve.

Outlook: Japanese companies guide continued motorcycle growth, four-wheeled brands will diverge

In two-wheelers, Japanese companies forecast that motorcycle sales will continue to grow in fiscal years 2025 and 2026. After two years of decline, Harley-Davidson expects stabilization by 2026; global market competition is expected to intensify, and Chinese companies are likely to increase their market share worldwide. In four-wheeled vehicles, overall industry demand is recovering, leading brands are optimizing inventory levels, and the outlook for 2026 is optimistic. Kawasaki, Spring Breeze, and other second-tier brands are actively deploying, while Yamaha is gradually falling behind. Taotao’s dual-brand strategy is expected to continue capturing the golf cart market, likely outperforming the industry and leading brands like E-Z-GO and Yamaha, with market share continuing to rise.

Risk warnings: Overseas demand falling short of expectations, freight and exchange rate fluctuations, trade frictions, and additional tariffs.