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Supply Crunch Likely to Push Increase of Dealmaking Among Business Owners

A view of a rider looking to buy a motorcycle

I think we can all agree 2021 was a record-breaking year for business owners in the Powersports industry.

From the sky-rocketing sales experienced by big brands across the world (creating fresh potential for companies to reinvent themselves and expand their product), to the latest struggle with chip shortages and demand overwhelming supplysuffice it to say that 2021 had a few ups and downs.

Now, according to the predictions of the CEO of a financial service firm called Canaccord, we’re told that the continuing supply crunch will likely cause businesses to cut deals with other brands and land acquisitions in an effort to beat what is still a volatile market. 

A man in a jacket locking a motorcycle

The reasoning behind this prediction? When supplies are limited, both clients and companies looking to supply product to the masses have a tough time finding what they need at a good price – or any price at all. 

“You can’t build stuff today,” Canaccord CEO Dan Daviau says in an interview on The Globe and Mail.

“If I’m a car manufacturer and I want to get into the motorcycle business, I can’t go and build a motorcycle plant. There’s no supply of metal, there’s no supply equipment … everything has got a very long lead time, so if I really want to be in something, I have to go out and buy it.”

A view of two businessmen shaking hands in a merger agreement

With Daviau letting us in on the tidbit that Canaccord has a robust pipeline for deals in other areas of the market to continue generating revenue (and sitting back to take a look at our end, with recent moves/acquisitions in the Powersports space proper), it appears that a few practical ways for a firm to continue forging ahead in a limited supply market are by venturing out on the following limbs:

  1. Buying into a brand (opportunities such as when Harley-Davidson went public)
  2. Buying out smaller boutique brands (Brembo’s all over this)
  3. Landing partnerships with bigger fish to benefit from the symbiotic relationship and data sharing (Lightning Motorcycles’ recent collab with CBMM on the testing of an ultra-metal called niobium would be a good example of this)

A view of a rider looking to buy a motorcycle

With more tidbits of news slotted in the pipeline for 2022 and technology in the Powersports industry evolving so fast that standards are struggling to keep up, we’ll be intrigued to see how the balance of integrated tech and rider safety pan out. 

Let us know what you think by dropping a comment below – we love hearing from you. 

Be sure also to check out other news happening in the industry proper, and as always – stay safe on the twisties.

*Media sourced from iStock, WestEnd61, AllState, HiConsumption, Texas Monthly and Forbes*