Core U.S. ATV market: Has it hit bottom yet?

By Neil Pascale
Editor
A chart of ATV retail sales in the United States in the middle part of this decade could have been drawn to resemble a gradual downward slope. That changed in 2007 as sales began a deep slide that continued through all of 2008 and into the first quarter of 2009.
Is that downward trend going to continue or has the market reached its bottom? And if it has reached its bottom, will it now start making its way back toward the standout year of 2004 when more than 800,000 units were retailed in the United States?
Arctic Cat officials noted the possibility of the latter in a recent earnings conference call. Arctic Cat CEO Chris Twomey mentioned the company “began to see encouraging signs that the retail sales rate decline has begun to bottom out.”
As Twomey explained, that doesn’t mean Arctic Cat expects a sudden up tick in core ATV sales but a lessening of that deep slide. First-quarter Motorcycle Industry Council numbers show U.S. ATV sales down more than 33 percent compared to the previous-year period. That follows a year in which quad sales declined more than 28 percent.
To put it in perspective, the difference between retail sales from 2004 and 2008 was more than 350,000 units, or a decline of 44 percent. Of course, that only paints part of the four-wheel picture. At the same time core U.S. ATV sales were declining, side-by-side sales were increasing and lower-cost ATV imports from the Far East were escalating.
Fast forward to 2009 and most MIC-reporting OEMs are expecting to see ATV sales continue to decline, although at what rate remains the biggest question. Twomey noted Arctic Cat did see some positive signs in May.
Dealers interviewed by Powersports Business largely saw a mixed bag in May, with some reporting increased traffic and sales while other noted just the opposite.
Chris Watts, owner of America’s Motorsports, which has three dealerships in Tennessee, noticed a substantial increase in side-by-side business in the last few weeks of May, especially in comparison to the first four months of the year. That increased interest has not extended to ATVs, however. Watts said his dealerships have seen a huge decrease in big-bore ATV sales — “virtually zero interest” for those — with most of their ATV business being smaller-displacement machines.
“For us, the majority of ATVs we’re selling is 250ccs up to the Honda 420,” he said.
Watts noted this lack of interest in the big-bore ATVs has been a trend he and his staff have seen over the past couple of years after OEMs closed the price gap between big-bore ATVs and side-by-sides, “especially when you had Rhino 450s and Kawasaki Mule 610s that were virtually the same price as a big-bore. There’s more value with the side-by-side.”
At Beaverton Honda-Yamaha, May ATV sales were off dramatically from a year ago, said Jerry Lenz, general manager of the multibrand Tigard, Ore., dealership. Lenz did note the store’s April ATV sales were on par with the following year.
“I’m surprised they are as strong as they are for the recreational dollar not being there,” Lenz said of ATV sales. “I was surprised last year that ATVs were as strong as they were with the gas as high as it was. I think people had money last year and they were worried about the economy but they didn’t put their head in the sand like they did last Sept. 30.”
Last fall marked a significant change in the results from consumer surveys that Beaverton Honda-Yamaha conducts of its new and used unit buyers, including ATVs. For the first time in several years, consumers said the store’s vehicle selection was no longer the top reason they purchased a unit from the dealership. “Price is No. 1,” Lenz said.
Whatever the main purchase reason is, Jared Burt, co-owner of Rexburg Motorsports, said he is seeing considerably fewer ATV buyers this year compared to a year ago. The Rexburg, Idaho, dealership’s ATV sales are off dramatically from a year ago, although he did note the decline is occurring now at a slower pace.
One area Burt has not seen any renewed interest in is the sport ATV market, which is odd considering the dealership is located close to a popular riding area.
Not all dealerships are reporting decreased ATV sales, however.
Lee Van Zeeland, owner of Team Winnebagoland of Oshkosh, Wis., noted his new and used ATV sales are slightly ahead of last year’s pace, with Polaris’ Sportsman 500 being the hot seller.
Van Zeeland noted, however, that he had not seen any signs in late May to indicate a gradual increase in ATV sales.