During May, Power Products Marketing conducted a survey on behalf of Powersports Business among 125 ATV dealers across the U.S. These dealers collectively sold over 20,500 ATVs through April, between 8-9% of the actual market, which would represent a very good sample size. The following is a current update on this important powersports market.
2004 April YTD Adult ATV Sales
According to industry sources, who referred to recent MIC published statistics, U.S. adult-size ATV retail sales (i.e., over 150cc) for the first four months of 2004 were running about 5% ahead of the same period a year ago. Industry sales for the month of April, however, were reportedly down nearly 2% over April 2003, although March month sales were up over 10% from the previous year.
This increase through April is holding consistent with the mid single-digit sales increases in adult-size ATVs over the last two years: 3% in 2003 and 4% in 2002. And with the economic recovery shifting into a growth phase, forecasts of another single-digit increase for the industry in 2003 appear to be reasonable. A significant amount of sales continues to be bolstered by the generous finance and incentive programs offered by OEMs
According to our 125 dealer body we polled from our survey, they anticipate their 2004 ATV sales increasing 8% over 2003. This would seem to be the upper range of any forecast since dealers have historically been more optimistic than the subsequent actual figures. Too, it would seem logical that OEMs would likely curtail their finance and incentive programs should industry sales approach a 10% increase.
Used ATV Sales Through Dealers
According to our latest analysis from our dealer survey, used ATV sales through power sports dealerships averaged 6.5% of new unit sales. This is a sharp decline from the 18% and 15% ratios we recorded last September and October. Our only other readings of this ratio were also taken in the fall of 2000 and 2001, at 13% each, so it’s possible that this recent spring analysis could be a seasonal factor. Otherwise, our interpretation is that used ATV sales would appear to be down by over 50% from a year ago.
Dealer Inventory Levels
Based upon the responses from 118 of 125 ATV dealers we surveyed, dealer inventories on new ATVs at April month end were approximately 4.5% below a year ago. This may have been attributed to the sluggish sales at the beginning of last year, which did not kick in until June. This roughly computes to about 2.2 months of inventory on-hand based upon April month sales. April is typically one of the strongest sales months in the year while June, July and August have seasonally been the slowest, considering recent history.
Recent comparisons are 2.43 and 2.11 months on-hand from last October and September and 2.14 months on-hand from April ’03. Based upon these figures, new ATV field inventories appear to be at reasonable levels as long as sales continue to grow at these modest rates.
Used ATV inventories have historically averaged under one month on-hand. Our most recent survey, however, shows this index at about 1.85 months on-hand, which would explain why the used ATV sales to new ratio is so significantly down and that used sales are lagging. On the other hand, it may be that customers are more interested in purchasing new machines given the available financing and generous terms and other incentive programs that continue to be offered by OEMs. Surprisingly, many dealers do not consider used ATVs to be a viable profit center.
ATV Sales By Application
We asked the dealers we surveyed to provide estimates of their recent ATV sales based upon the primary application or use. Most ATVs, of course, are used in more than one application. For example, farmers may use them for farm chores, hunting or even recreational riding. Again, we emphasized the single most primary application. Here’s what we compiled, which we compared to our survey from a year ago. It appears that since our last reading from a year ago there has been a slight shift from older recreational riders to hunters, otherwise the data looks fairly consistent.
U.S. Adult ATV sales up 5% over 03
Farmers 17% 17%
Hunters 24 21
Young Sport Riders 21 20
Older Recreational Riders 24 29
Homeowners for Utility 10 10
Commercial Businesses 4 3
We asked our dealer body to estimate what percent of their new ATV sales are from first-time buyers. According to our weighted average based upon each dealer’s sales to date, the average is about 32%. Our last reading on this indicator was back in November of 2002, which reflected 28%. Historically this indicator was running at about 40% but in recent years indications were more owners had been purchasing additional units for other family members.
One interesting trend industry analysts have been discussing and researching heavily in the last year or two is the extent to which older ATV riders, 50 and up, are likely to start shifting from riding ATVs for primarily recreation to the newer “side-by-side” vehicles, which many simply refer to as utility vehicles. Besides being physically less demanding to ride off-road, the additional seating for other passengers along with a cargo bed for gear, game or a dog has shown considerable appeal.
Utility vehicles, which we profile annually each summer in the Trendline series, have become more popular with consumers in recent years, initially as a work vehicle but increasingly so in recreational applications. For example, large estate and hobby farm owners have been snapping them up in increasing numbers. Hunters are also buying them in significant numbers.
There may be some disagreement as to whether the new side-by-side vehicles are by definition ATVs or utility vehicles. Utility vehicles have been designed off golf car and ATV chassis. One clear distinction lies in the fact that an ATV is a single passenger vehicle that the individual rides astride like a motorcycle and not on a bench or bucket seat as in a utility vehicle. However, the light cargo bed capacities of these newer vehicles with nearly twice the ground clearance and ungoverned speed makes it difficult to classify them as true utility vehicles, especially since their primary applications are recreation. Lately, there has been some discussion that these new side-by-side vehicles, such as the Yamaha Rhino, will constitute a new ATV, or SxS, category in the future.
We asked our survey group of 125 dealers to estimate what percent of their customers purchasing new ATVs considered a side-by-side or utility vehicle purchase instead. According to the responses, this figure averaged 13.5%. We noted that dealers we surveyed in Texas showed higher averages than any other state. If we do a simple extrapolation of this percent to the total ATV market, one could assume that the potential for this new market segment could reach 100,000 units annually within the next five years. psb
Copyright 2004 Powersports Business