Warm weather, increased buying interest lead to sales hikes
There’s a hint of optimism floating around among the scent of exhaust lately. Many dealers saw a positive first quarter, as warm weather hit record levels and more people coming through doors were looking to drop their money on a new toy.
Two-thirds of dealers said their first-quarter business performance was above or on plan, according to an online survey of 240 dealers by Powersports Business and RBC Capital Markets. Also, 45 percent of dealers rated overall business conditions as very strong or somewhat strong. And dealer after dealer is reporting a first quarter with increased buying interest and increased sales compared to the year-ago quarter.
Steve Littlefield of Central Texas Powersports in Georgetown, Texas, saw a 34 percent increase in new unit sales in the first quarter. But it wasn’t the only department at the dealership that was up, either. Service saw a 31 percent increase, and P&A was up 29 percent.
“Every one of them were up a lot over last year,” he said. “It seems like nearly all the dealers I have talked to, their sales have been up.”
Mark McGrath, owner of McGrath Powersports in Cedar Rapids, Iowa, is another dealer who saw success in his first quarter.
“Fantastic, huge — it was the best first quarter we’ve ever had,” he said.
McGrath’s dealership is only five years old, but it saw record sales months in January, February and March, and by mid-April, sales were showing an upswing as well. He and other dealers found much of their early-season increases were due to increasing buying interest.
“I think peoples’ intentions are very strong right now,” he said.
McGrath is one of a few who reported traffic was down or flat, yet sales were positive. Despite only a slight decrease in door swings at Kearney Yamaha in Kearney, Neb., Craig Stokebrand said sales were up 16 percent in the first quarter.
“I think a lot of it is our staff is doing a really good job with the chances that they get,” he said. “But it does seem like people really come in with the intention to buy. It seems like consumer confidence is a little bit better.”
Sales also increased at dealerships that did see more traffic in the early months of the year. Joe McKnight, general manager of Action Motor Sports in Idaho Falls, Idaho, saw a 15 percent traffic increase translate into a 15 percent sales increase. Raymond Walters, of Got Gear Motorsports in Ridgeland, Miss., also saw the benefit of a 15 percent traffic increase.
“New unit sales and used unit sales were up almost 20 percent over last year,” he said. His service department was also up about 10 percent, and parts were up 13-14 percent.
Mark Porter, owner/operator of Porter’s Toys for Big Boys in Brookings, S.D., said very few people came into his dealership to kick tires; most were ready to buy.
“People have money to spend,” he said.
And when customers didn’t have cash on hand, more were able to obtain financing than of late, some dealers reported.
“I think a few more people are being financed and a few more people are getting bought than were a year ago,” Littlefield said.
Warm weather also contributed heavily to early-season sales. The first quarter of 2012 was the warmest on record for the contiguous United States, according to the National Oceanic Atmospheric Administration. Many dealers reported that winter in their cities was so warm that the riding season never stopped, and others said early spring fever led to an increase in unit sales.
“Spring came early, and that helps,” said Eugene Teigland of Bemidji Sports Centre in Bemidji, Minn. “It’s been nice, light weather, so people are out and about.”
McGrath said warm weather in Iowa drove his unit sales volumes of motorcycles, ATVs and other models high.
“I think the weather in March had a huge impact,” he said. “People are thinking that they’re going to get a nice long riding season.”
The only concern that early sales brought is that too many riders could already be done buying and might not show up during the peak riding season, but dealers are optimistic that the buyer has simply returned.
“You wonder how many people that were April, May or June buyers that you pulled into March,” McGrath said, “but April’s really good, so that would lead me to believe that may not be so.”
Littlefield is cautious not to get too excited, but he’s happy with the results so far.
“I go day-to-day, not year-to-year,” he said. “We’re just going to grab what we can while we’re there. I don’t know how long it’s going to last; no one does. We can hope, but we have no way of knowing.”
Most dealers who saw uplifting first-quarter numbers are hopeful that the year will continue on a positive path. McKnight expects a 5-15 percent increase across the board; Stokebrand is anticipating a 6-plus percent net for the year; Porter expects everything but snowmobiles will be “up significantly;” McGrath is looking at a solid increase, and Teigland also projects a slight increase.
“We forecasted a 10-15 percent increase.
I think we’ll get that if not a little bit better,” Walters said. “We feel like we’ve survived the worst of times, and a better road lies ahead.”