The COVID-19 health crisis severely disrupted the global economy when initial shutdowns took effect in March, 2020. Following the sales slump, many motorcycle manufacturers rebounded in the latter half of 2020 and rode that momentum into 2021. However, supply chains, production costs, and freight haven’t fared as well.
Countless industries are still dealing with the ripple effect of the initial lockdowns and the situation could get worse with impending magnesium shortages. Motorcyclists may associate magnesium with high-spec performance components such as wheels and cases, but automotive manufacturers use the metal for chassis construction. Currently, China supplies 95 percent of the Continent’s magnesium, but supply is falling well short of demand.
With little stock on hand, Chinese companies haven’t imported magnesium into Europe since September, 2021. As a result, the metal’s price has inflated to seven times over its rate at the beginning of the year. The European Association of Motorcycle Manufacturers (ACEM) fears the shortage could cripple the industry, especially with semiconductors still in short supply.
In April, 2021, news of global semiconductor shortages dominated the headlines. Due to the shortfall, brands such as KTM, Husqvarna, and Bajaj reported slower rates of growth than expected. ACEM has since called for semiconductor production to return to Europe in an attempt to increase demand and ease the strain on manufacturers.
Facing the same hurdles as and rising production costs, Harley-Davidson announced that it could implement a two-percent surcharge on current models in July, 2021. Of course, in order to levy a surcharge, OEMs have to produce the motorcycles first, and the ACEM believes that the current environment will result in factory shutdowns and job cuts.
The organization is imploring European manufacturers to find short-term solutions to the issue. Unfortunately, analysts don’t see the semiconductor supply chain fully recovering until mid-2022 or 2023. Under those circumstances, each brand will have to handle the situation according to its current capacity.