By Joe Delmont, Editor
CANCUN, Mexico — Arctic Cat held perhaps the most interesting dealer meeting of the season so far when it introduced its new proprietary 641cc engine here, surveyed dealers about their reaction to the new side by side ATV prototype, launched a certified used ATV program and talked at some length about its strategy of partnering with big box retailers such as Gander Mountain and Bass Pro Shops.
Certified used atvs
Arctic is developing a certification program for used ATVs to help dealers generate additional revenue. Details of the new program, which is expected to be available this summer, haven’t been worked out yet, says Chris Twomey, Arctic chairman and CEO.
The program is so new, says Twomey, that Arctic hasn’t set any evaluation goals for it. “We’re not sure what might happen.” However, similar programs have worked for years in the auto industry, he points out.
The program is designed to help dealers increase profits by stimulating new unit sales through trade-ins. If it works properly, says Twomey, dealers will sell more new units, sell more used units at a profit, and create more opportunities with new customers.
When a dealer takes in an ATV, says Twomey, this program should provide the incentive for him to make sure it’s in the best possible condition for resale. To win the dealer’s participation, Arctic will provide some floor planning and some help with extended warranties. The certification checks will be extensive, says Twomey, but those specifics are yet to be worked out.
About 100 dealers signed up to participate in the program, said John Tranby, Arctic marketing communications manager. “We don’t expect to sign up all the dealers,” says Tranby. “It’s really tailored for larger dealers who turn volume.”
Dealers like prototype Side by side unit
Dealers seemed especially excited about Arctic’s new prototype side by side ATV, dubbed the Two Plus. “Obviously, it got the biggest interest at the show,” says Tranby. “And of course they want it now. We did get a lot of good info from dealers and we can implement these (ideas) into the design because we’re still flexible.” The machine should be available with a year, he said.
When the Two Plus was introduced to dealers at the business meeting, it drew the biggest applause of the night. “It was a home run,” says Twomey.
Arctic is one of the last major OEMs to offer a side by side machine. Suzuki has added a rebadged Kawasaki Mule this year and BRP (Bombardier Recreational Products) offers a rebadged Gator under its joint venture deal with John Deere.
The market for side by side vehicles is expected to reach 100,000 units within five years, according to Dave Crocker of Power Products marketing, a Minneapolis, Minn., research firm. (See related story on Page 18.)
Approximately two-thirds of ATV owners say they ride with a passenger, according to various industry surveys, and so it makes sense to offer a machine that enables them to do this safely. Arctic already has a two-passenger vehicle, the TRV, which is designed to carry a passenger behind the driver. This machine sells well in Canada where there are plenty of riding areas, but it’s not allowed in many states in the U.S. BRP has a similar vehicle that also sells well in Canada. “This (prototype) is our attempt to do something about the industry problem,” says Twomey.
new engine manufacturing program
Dealers also were pleased with Arctic’s launch of its own proprietary engine manufacturing program. The company has begun building a 641cc single cylinder four-stroke to be used in its new 650 H1 ATV which is scheduled to begin shipping later this year. Previously, Arctic had purchased all of its ATV engines from Suzuki and Kawasaki.
“Dealers were real pleased,” said Twomey in discussing dealer reaction to the engine initiative. “Sometimes I feel the dealers are not at the same place we are; then, you come to something like this and find that they are leading us. They’re right there on this. The biggest question they ask is, ‘Why haven’t you done it before?’”
Dealing with Big Box Retailers
Arctic has taken the unusual step of setting up big box retailers such as Gander Mountain and Bass Pro Shops as dealers, a subject that Robert Bonev, Arctic vice president of sales and marketing, addressed at length in the business meeting. Arctic announced its alliance with Gander Mountain in April 2003, and expanded its venture when it added Bass Pro Shops about six months ago. Bass Pro, based in Springfield, Mo., has 21 stores, mainly in southern states, and Gander Mountain, based in Minneapolis, has 65 stores spread from the Midwest to the East Coast.
Only one store, the 100,000 sq. ft. Gander Mountain located in Geneva, Ill., has been open more than one year. In order to sell Arctic machines, the retailers have to have service facilities and have to meet all other conditions required to open a new dealership.
Arctic is in 21 of the stores, says Twomey, and the program is working well for everyone, including other Arctic dealers located in the same market areas as the large retailers. “We’re tracking the numbers,” he says, “but we believe that selling through Gander Mountain and Bass Pro will significantly improve our brand recognition which we are working hard to build, particularly in the south. But we also believe it will not harm our independent dealer network.”
Twomey says that big retailers actually increase sales for other dealers in the market. “They have nice stores and they know how to merchandise,” he points out. For example, average sales per store in the Geneva market increased more than 12%, compared to about a 4% increase industry-wide. One Arctic dealer in that area chose not to reorder last year, Twomey said. psb
Copyright 2004 Powersports Business