As sport ATVs have declined in sales, major OEMs have exited while higher-dollar side-by-side sales have grown
Flash back to the sport ATV market of 2008: KTM, Polaris, Kawasaki and Can-Am had just joined Suzuki, Honda and Yamaha in fielding 450cc sport quads that were battling both at race tracks and dealerships across the country. As an industry insider, you know the next chapter of the story: Recession. Credit crunch. Plummeting sales. OEM exodus.
Five years later, the flagship 450cc category — the displacement most popular in ATV racing— is a shadow of its former self, along with the rest of the sport quad category. According to the Motorcycle Industry Council’s latest sales figures, 2012 ATV sales through December totaled 225,244 units, a 1.4 percent increase over 2011. Total sport quad sales totaled 15,463, according to MIC numbers released in September, nearly 20 percent less than the year before, and a mere 9.5 percent of the total industry. That’s a big change from the category’s potent peak in the mid 2000s.
But it’s not all bad news for off-road manufacturers and dealers. Can-Am and Yamaha remain major sport quad players with continued investment in both models and racing, which has held strong. Honda is still in the game with three adult sport models, although its flagship TRX450R has soldiered on largely unchanged since an update in 2006. And, quite significantly, the dramatic growth of side-by-sides — especially sport side-by-sides — has eased the pain for a handful of manufacturers burned by the drop in sport quad sales.
At best, a rough patch
The off-road industry simultaneously undertook two great experiments in the first decade of the 2000s — the rush to enter the sport quad market and the creation of the side-by-side category. While the side-by-side market grew both more utilitarian and sportier, with a wide range of products from nearly every major off-road OEM, sport quad sales sputtered.
It’s hard to overstate the hard times that impacted the sport quad market as consumer credit and sales dried up. Models quickly disappeared and some OEMs abandoned sport quads altogether. KTM stopped production of its still-fresh sport quad lineup and exited the ATV business altogether. Polaris quit building its MXR 450 just two years after its introduction in 2008. Honda’s TRX700XX, with its innovative but unloved independent rear suspension, also left the stage prematurely. While Suzuki’s LT-R450 is still found at racetracks, only the Z400 remains in production. Racing programs were also shelved by several of the onetime major competitors.
This drastic turnaround of fortunes has surely caused headaches in countless boardrooms. Powersports Business spoke with Can-Am, Honda, Polaris and Yamaha about the future of the sport quad category, the enduring popularity of ATV racing and the continued growth of the diverse side-by-side category.
Can-Am’s racing DNA
Jerrod Kelley, media and public relations consultant for Can-Am and former editor of the now-defunct ATV Sport magazine, still lives and breathes sport quads, ATV racing and the off-road market as a whole in his role for BRP. In reflecting on the wild changes the industry has weathered, Kelley acknowledged the tough times but reaffirmed BRP’s commitment to the sport quad market and ATV racing series through its contingency programs throughout North America.
“Racing has always been part of the [company’s] DNA and that hasn’t changed,” he said. “That’s partly why you saw the DS 450 come out, because we also wanted to capitalize on the success of the sport quad market — we’re not going to stop.”
Its flagship sport model, the DS 450 received upgraded Fox shocks for model year 2013. He added that the company has no plans to let the DS 450 stagnate without successive changes. With that model, along with the company’s sporty-but-utility-based Renegade crossover ATVs, and Commander and new-for-2013 Maverick sport side-by-sides, the company has continued to expand its presence in the athletic side of the off-road market.
“We view [sport quads] as an important part of the lineup,” Kelley said. “You want your fingers to extend out, you want to be able to branch out to the user and we do that with side-by-sides, 4x4s, 2-ups, sport quads. We have all that and it isn’t going to change.”
Looking at why the sport market declined more than other ATV and off-road segments, Kelley suggested that sport quad buyers were particularly impacted by the nationwide decline in housing values — especially in the southwest United States — and tighter access to credit. He also added that the growth of the side-by-side market has given sport riders a vehicle to move up to as they age.
While a migration to sport side-by-sides is just a theory, Kelley cited the example of ATV racers like Can-Am’s Josh Frederick, who has begun racing a side-by-side in the WORCS and Best in the Desert series, while still racing his DS 450 sport quad.
“It’s a natural thing for racers with competition in their blood to want to drive the biggest, baddest, latest product, whether it has handlebars or a steering wheel. That’s why we’re seeing the popularity and following for the Maverick, because it has all of those things — performance, power, handling and the rider-focused design that is a perfect fit for these guys,” he said. “I don’t think people are choosing side-by-sides over sport quads, but people feel like it’s a more natural fit at a later age.”
Honda ready to pounce?
Formerly a major player in the sport ATV category and ATV racing as a whole, Honda has comparatively pulled back from the market and associated racing series, while still offering a lineup of 2013 sport quads that are primarily carryover models.
Kevin Aschenbach, off-road media coordinator at Honda, feels it would be best if all players had maintained their footprint in the category, but said he views carry-over models as legitimate contenders in the eyes of its customers.
“You’re always going to have the customer that doesn’t need the most up-to-date technology and would rather spend a little less, so that non-current model is just as enticing to them as the brand-new state-of-the-art design that the hard-core enthusiast is seeking,” he said.
While Honda no longer fields a company-backed ATV racing effort, privateer riders continue racing the brand at all the major off-road racing series. Like the other brands, Honda sees stabilizing ATV sales as a positive sign, but the company expects it to be a while before the industry gets back to pre-recession sales numbers.
As utilitarian ATVs have continued to fare better than the sport market, Aschenbach said the sea change has led to sportier utility ATVs with vastly improved handling, better suspension and more power.
“It used to be necessary to have both a sport and utility machine in your garage to handle all the requirements,” he said. “Now the one machine can do a good job of doing both — obviously it’s not going to take over the pure sport crowd, but for a lot of customers the utility ATV is the perfect answer.”
In discussing where the sport off-road industry is heading, Aschenbach declined to offer future product specifics, but also suggested that aging sport riders are naturally transitioning to athletic side-by-sides to keep involved in the sport.
He also suggested that the company’s transfer of its Big Red utility side-by-side production to United States from Mexico could open the door to an expansion of its side-by-side presence.
“When a segment shows promise it is definitely something that we’re going to closely monitor,” he said. “Whether we’ll have an offering for the sport [side-by-side] segment any time soon remains to be seen, but … transferring our current Big Red production to our Honda of South Carolina manufacturing plant definitely opens up the possibility of expanding our current lineup.”
Yamaha bets on a renaissance
Of all off-road manufacturers, Yamaha offers the largest sport ATV lineup, with models ranging from the Raptor 90 up through the segment’s largest displacement model, the Raptor 700R — including two distinct 450cc racing models. As the sport ATV market dipped, Yamaha continued fielding updated models for every model year, and remains bullish on the future of the category.
“Yamaha has more vehicles in our sport lineup than all the other sport manufacturers put together,” said Van Holmes, public relations manager for Yamaha’s ATV/side-by-side group. “I think that’s a huge point in showing how Yamaha is in the sport market now and for good.”
As many of its OEM competitors have dropped out of the market, Holmes and Travis Hollins, product planning manager for Yamaha’s ATV and side-by-side categories, said having fewer players makes it more difficult to maintain the same level of exposure in the sport market.
“When you’ve got six or seven different manufacturers out there advertising, promoting, talking about sport quads and racing, the exposure for the sport market as a whole is a lot broader,” said Hollins. “Right now, it’s pretty much us and I think that limits the amount of exposure that the industry gets as a whole.
“If we were to have pulled back also, there might not be any sport market, period,” Hollins said. “Hopefully our customers appreciate that.”
He added that Yamaha’s corporate DNA is very sport-focused. The company believes the market is going to recover, and that Yamaha will be the major benefactor of that future growth.
While sport quad sales are down, sport quad owners are still riding and racing their machines, and he said that once the economy improves further, sales of new sport ATV units should begin to increase.
To grow the sport from this point forward, Yamaha continues pushing its sport models, sponsoring racers in a variety of national and regional series and supporting its in-house OHV Access Initiative program that funnels money into local efforts to expand, maintain and rehabilitate off-road riding areas.
In the second quarter of 2012, the program awarded $122,000 to programs in Missouri, West Virginia, Minnesota, Utah, California, Pennsylvania, as well as grants to TreadLightly!, the National Wild Turkey Federation and the Off-Road Business Association.
Holmes stressed that the OHV Access Initiative isn’t just a marketing effort, but rather a necessary investment in the future of the ATV and off-road industries as a whole.
“People get an altruistic take on the program, it’s a feel-good program, but the reality is if there aren’t places to ride, nobody’s selling an ATV — there’s a real hard-core business objective to it as well, and we encourage dealers to get involved in the program if it makes sense for them,” Holmes said.
As for any potential fully new product in the sport category, Hollins said that Yamaha has not historically been one to allow its products to grow stale, and that the company has a sharp eye focused on the still-growing side-by-side market.
“The side-by-side market is an evolving industry that we’ve definitely got our finger on right now, and we’ll be there when it’s appropriate in all the right categories,” he said.
Hollins also said he feels that the ATV and side-by-side industries fail to get the attention that they deserve for their size.
“If you’re a dealership and you’re selling a broad line of products, you may specialize in motorcycles while the ATV and side-by-side market may be twice as big,” he said. “The emphasis seems to be on motorcycle even though ATVs and side-by-sides are probably a bigger opportunity in a lot of the markets out there, and I think a lot of people in the industry don’t have the right perception of that.”