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

CITIC Construction Investment released a research report stating that the power sports industry is in a fast growth “express lane.” Consumption upgrading and rising leisure and entertainment demand are boosting the penetration of all-terrain vehicles (ATVs) and large-displacement motorcycle products. In recent years, Chinese motorcycle companies have improved their product capabilities, with clear cost-performance advantages. They are expected to capture a larger share of overseas markets. Their product structure continues to be optimized, and both market share and profit margins keep increasing. Looking ahead to the full year, overseas motorcycle demand will continue to grow. Japanese companies’ guidance indicates that motorcycle business growth will continue. Chinese companies are expected to seize market share in global markets; the four-wheeled vehicle market is expected to grow over the medium to long term, and Chinese brands are actively laying out, which could help them catch up with industry leaders.

CITIC Construction Investment’s main viewpoints are as follows:

Two-wheelers: Fast growth in emerging markets, with Japanese and Indian companies performing strongly

In Q4 2025, Europe’s growth was temporarily pressured by the high base effect brought about by Euro 5+.( Italy and Germany and France and the UK and Turkey respectively saw year-over-year changes of -26.9%/+0.5%/-68.6%/-26.7%/-33.5%/-42.3%.), Southeast Asia remained steady(, Indonesia and Vietnam and Thailand respectively saw year-over-year changes of +7.9%/-6.8%/-1.3%.). India and Latin America maintained a high growth momentum(. India, Pakistan, and Colombia, Mexico, Argentina and Peru respectively saw year-over-year changes of +16.9%/+25.3%/+29.8%/+20.0%/+45.1%.). Benefiting from growth in demand in emerging markets and gaining share in mature markets, Japanese and Indian brands achieved sustained growth in both sales and revenue in domestic and export markets; demand in high-end markets in Europe and the U.S. faced pressure, and competition intensified, putting pressure on local brands’ sales. The motorcycle consumption structure is changing; with competition intensifying in mature markets, the performance of unit prices, profit per unit, and profit margins among European/U.S./Japanese/Indian and Chinese companies has diverged.

Four-wheelers: North American demand rebounds, with leading brands showing differentiation in performance

Benefiting from the low-base effect and consumption-stimulating impact of interest rate cuts, Q4 North American demand recovered, while European demand weakened. Leading brands continued to adopt promotional strategies to clear channel inventory, but rising tariff costs and increased expenses continued to suppress leading manufacturers’ profit margins. In Q4 2025, Polaris’s all-terrain vehicle business revenue grew by low double digits, and its profit margin fell slightly. Yamaha’s revenue declined by low double digits, and it continued to incur losses in profit. Kawasaki saw all-terrain vehicle volumes decrease while prices increased, keeping revenue stable. Textron Specialized Vehicles’ (Dethleff) specialty vehicle revenue declined by double digits, and its profit margin decreased.

Chinese companies: A new journey of globalization, with Taitao/Taotao and Linhai continuing to grow

In Q4 2025, Chinese companies actively laid out overseas markets, seizing global market share. The revenue and profit of Taitao and Linhai achieved growth, with both reaching new record highs for quarterly revenue scale. At the same time, Taitao began laying out in fields such as robots and robotic dogs. Based on growth in their core business, Chinese motorcycle companies are gradually expanding a second growth curve.

Outlook: Japanese companies will guide continued growth in motorcycles; four-wheeled brand groups will diverge

For two-wheelers, Japanese companies predict that in fiscal year 2025 and fiscal year 2026 motorcycle volumes and sales values will continue to grow. After two consecutive years of decline, the North American brand Harley-Davidson expects that 2026 may stabilize. It is expected that the increase in global market competition will continue, and Chinese companies are expected to seize market share globally. For four-wheelers, overall industry demand is recovering, and leading brands are optimizing their inventory levels. The guidance for 2026 is optimistic. Second-tier brands such as Kawasaki and Chunfeng are actively laying out, while Yamaha is gradually falling behind. With a dual-brand strategy, Taitao and the other brand are expected to continue capturing the golf cart market. It is expected to outperform the industry and leading brands such as E-Z-GO and Yamaha, and market share will continue to rise.

Risk warning: Overseas demand falling short of expectations, risks of freight and exchange-rate fluctuations, risks of trade frictions and the imposition of additional tariffs.

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