Weather detrimental for some dealers in Q1
Everyone in the industry knew last year’s first quarter’s sales would be hard to replicate. With warm weather blanketing much of the country in February and March 2012, unit sales were brisk. But that weather was abnormal, as it is for many places across the country this year. But this year is different in that the weather has been cold, snowy and rainy through early spring.
Half of the record 251 dealers from 48 states and Canada who participated in a first quarter survey by Powersports Business and RBC Capital Markets reported their Q1 business performance was below plan this year. Considering the 11.3 percent year-over-year decrease in March same store sales that ADP Lightspeed reported (Page 10), that’s no surprise.
Overall business conditions were “somewhat weak” or “very weak” for 39 percent of dealers, and new unit sales received the same rating from 47 percent. Another 38 percent reported traffic was “somewhat worse” or “significantly worse” than the year-ago quarter. Many cited weather as the reason for the gloomy results.
Because of the cold, wet weather in Knoxville, Tenn., Dile Brown saw flat sales at Knoxville Harley-Davidson and Honda Yamaha of Knoxville. Jan Downing reported the same at Outdoors in Motion in Rutland, Vt.
“We’re waiting for bike season,” she said. “It won’t go away, this snow. It’s killing us.”
But weather wasn’t all that bad for everyone. From snowy Pewaukee, Wis., Ross Bennett said Ducati Milwaukee reported a positive first quarter. Though February was soft, increased sales in January and March made up the difference.
“From March 1, it picked up, and people are like, ‘Man, it’s right around the corner — spring’s coming,’” he said.
The problem with early warm weather, he says, is that riders find themselves doing yard work and other spring chores.
“Last year we had a warm spell, and during that warm spell, people were going out and doing other things, or they were riding their current motorcycle and just trying to sneak it in quickly because they knew it wasn’t going to last,” Bennett explained.
Sales and parts were both up in Q1 at Ducati Milwaukee. Service was flat, but Bennett expects to see more traffic in that department as customers pick up their bikes from storage. He wanted all bikes out by the end of April. In March, to boost parts and service, Ducati Milwaukee offered free delivery to anyone who wanted to get their bike out of storage.
“Then we got people thinking about accessories early,” Bennett said.
The promotion worked, with many spending on expensive P&A, such as exhaust, to assure their bikes are ready for the spring.
Parts was the only department that was up for Brown’s Knoxville stores.
“People are getting ready for the spring and the weather, and they’re just purchasing stuff,” he said.
Despite a rocky start to 2013, dealers are still optimistic. Though many reported sales down for the quarter, 40 percent said buying interest was “somewhat better” or “significantly better.” And Bennett is even seeing traffic pick up from Q1. Early April, he said, was even better than March.
“There’s been a lot of activity, good floor traffic,” he said. “We’re waiting for our weekdays to start picking up a little bit stronger, but that’s a weather thing. Our weekends are off the charts, where we’re running around like chickens with our heads cut off trying to keep up with the customers.”
UTV, sled sales solid
According to the survey, side-by-side sales seemed to fare best in Q1, with 59 percent of dealers reporting sales up 5 percent or more for the quarter.
Downing said UTVs are one category where her dealership has seen the most success.
“We probably sell more Rangers than we do RZRs,” she said.
Of snowmobile dealers, 46 percent reported Q1 sales were up 5 percent or more, and 39 percent of ATV dealers reported the same.
For the coming year, dealers are expecting to see increased sales as the weather warms. As far as business outlook, 40 percent of dealers reported theirs is “somewhat better” or “significantly better” than six months ago. Increases of 5 percent or more in the next 12 months are projected by more than half of all dealers in the side-by-side, ATV, heavyweight motorcycle, sport bike, scooter and PWC segments, with three-quarters of side-by-side dealers anticipating an increase. In the off-road bike segment, 46 percent of dealers forecast a sales increase over the next year, and 41 percent of snowmobile dealers reported the same.
Bennett believes people are sick of not spending money, and they seem ready to strike.
“It doesn’t feel like people are pulling back on spending,” he said. “It’s just they’re more decisive on buying something they really want, rather than something they have to settle on.”
Despite Brown’s cold, rainy start to 2013, he’s looking forward to a successful year in Tennessee.
“I think there’s a lot of pent-up interest there, and if a lot of things come across as expected — and I think they will — I expect a slight increase in new, and a bigger increase in used, an increase in service, and a small increase in parts, maybe 5 percent or less.”
Downing in Vermont expects positive results for her dealership as well.
“I’m an optimist. I keep saying when that sun comes out, boy we’re going to get busy. They can’t stay away forever. That’s just the way it is. I’ve been doing this for 30 years,” she said.
She’s counting on strong motorcycle sales, as soon as the weather warms.
Q1 Survey available
The complete Q1 2013 Dealer Survey, with responses from 251 dealers from 48 states and Canada, costs $9.95 and can be downloaded as a PDF here.
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Copyright 2013 Powersports Business