Slowing sales: It’s now a trend – February 12, 2007

By Tom Kaiser
ATV Editor
While sales of side-by-side utility vehicles continue to soar, the number of new ATVs sold by major manufacturers in the United States has decreased for the second consecutive year.
New unit sales dipped 4.2 percent in 2006, according to the Motorcycle Industry Council (MIC) report on year-end sales. That is almost the same percentage drop recorded the previous year.
The 2006 new unit sales total of 747,581 represented a decrease of more than 32,000 quads from the previous year and is the lowest number of ATVs sold in one year since 2001.
Total ATV sales are down more than 8 percent from 2004, when U.S. sales peaked at 812,970 units.
The two-year drop comes on the heels of the protracted explosion of ATV sales that began in the late 1990s and continued through the early part of this decade.
Other signs, such as the ongoing proliferation of side-by-side vehicles and growth of two-passenger ATVs, which are both not included in the MIC numbers, point to a healthy, yet maturing ATV market.
Sales of low-cost Asian imports, which also are not included in the MIC data, continue to increase and account for between 100,000-200,000 units, according to industry sources.
If those numbers are accurate, sales of nontraditional Asian imports — largely comprised of youth and entry-level ATVs — could account for approximately 15 percent of the total industry in the United States.

‘Pockets of growth’
Jeff LeFever, marketing manager for Polaris, acknowledged that reported sales of ATVs are showing declines, but added that consumer demand remains strong for off-highway recreational vehicles.
“Within ATVs, there are strong pockets of growth, such as two-ups, and opportunities to grow in ‘declining’ segments through superior product,” LeFever said.
He added that finding opportunities for growth is a matter of understanding the market and its consumers.
Industry sources tell Powersports Business the decline is not enough to worry OEMs and that after so many years of double-digit growth the market was bound to slow at some point
Steve Nessl, media relations manager for the ATV and side-by-side group at Yamaha, said despite the overall market conditions, the company is still looking to grow by specifically targeting specific types of customers with products tailored to their individual needs.
He cited the company’s recent introduction of its 2007 Big Bear 400 IRS, which was expressly designed for mud-loving customers in eight Southern states.
“Anybody who wants to play seriously in any segment of this off-road market can’t just sit back and pretend that their two-, three- [or] four-year-old models are going to get it done,” Nessl said. “You’ve got to continue to evolve and … give the customer what they need and what they want.”

Side-by-sides Influencing Market
Nessl said the presence of highly capable side-by-side vehicles, such as Yamaha’s popular Rhino, has had an effect on the quad market.
“Their emergence has helped give pause to the customer and give them something else to think about,” he said. “Ultimately, it’s not a category you can afford to ignore anymore. You’ve got to play there, because of the state of the utility ATV market right now … [and] the extreme growth potential for the side-by-side segment.”
He added the company expects growth on both the sport and utility sides of the side-by-side market in the near future.
Vince Iorio, Kawasaki’s product manager of the ATV and utility vehicle segment, said its Mule utility vehicle research has shown differing tastes, which reflect an aging demographic.
“If you’re an avid outdoor person,” he said, “would you rather straddle an ATV by yourself in the elements, or would you like to sit in the cab of a Mule with a heater, the radio and your wife or dog?”
He also said the company will be adding a new recreation-focused utility vehicle to the market within the next 12 months and a new utility vehicle annually for the next three years after its upcoming introduction.
“We’ve been exploring it for several years, and we have a complete strategy now for all our utility vehicles,” he said.
Iorio doesn’t feel the utility vehicles are stealing any of the thunder away from the traditional ATV sales.
“It appears that there’s not really any cannibalization taking place,” he said. “In terms of migration, yes, absolutely. There’s also new people coming to the market who might not necessarily want an ATV or a sport quad.”
One company that appears to be growing its quad sales in a down market is Arctic Cat. The company recently reported its ATV sales had grown 7 percent compared to last year.