Sales at 80,000 units for third
During October, Power Products Marketing conducted a season-ending survey on behalf of Powersports Business on the U.S. PWC market. Sales for the year were down about 1% from the 2002 year mark, making sales essentially flat for the two-year period.
2003 U.S. PWC Sales
According to industry sources, 2003 season-ending U.S. PWC sales were reportedly just 1% below the 2002 mark, including sales estimates for Honda, which basically puts the market at flat for the year.
When we analyzed U.S. watercraft sales through May in the July 28, 2003, issue of Powersports Business, cumulative sales then were running 8%-9% behind 2002.
It appears that sales for the season ending June through September four-month period, which accounts for about 60% of the season’s sales, were approximately 4% ahead of the previous year. Although there has been a decline in sales for eight consecutive years, it should be pointed out that for the last three years the market has been essentially level, hovering at around 80,000 units annually.
Current vs. Non-Current Sales
We have been tracking the current/non-current PWC sales ratio for more than five years. In 1998, the current/non-current ratio was 58/42. More recently, this sales ratio has been holding at 80/20 and it’s possible that non-currents could even have fallen below 20%.
Another indicator we have been following is the current/non-current ratio for the top 10 selling PWC models, which collectively represents about 55% of the total industry sales. These models for 2003 were mostly all current, with the GTX DI being the lone exception.
Overall, the non-current percentage for this select group is estimated to be about 10%.
More encouraging news is that dealers are expecting to sell through the 2003 carryover by next spring after which they will be focusing on selling essentially current models. When was the last time that happened?
Reports are that PWC inventories again significantly improved for the industry during 2003, although this varied for each of the four OEMs.
A year ago, we estimated dealer inventories had declined by about 12% for 2002. Our best estimate is that the industry decline for 2003 was about 10%, largely attributed to Sea Doo’s significant improvement during the season.
2003 Dealer Orders
Dealers we spoke with differed with regard to their ordering requirements for the 2004 season. Many indicated they were conservatively holding close to their order level from 2003, although some dealers indicated they would be ordering up, even in significant numbers.
However, fewer numbers of dealers indicated they would be ordering less compared to prior years and that is an important trend.
Reports are more dealers were making a profit and holding prices this last year and turning their inventory than in years past. For the first time in years there is genuine enthusiasm among dealers entering into the 2004 PWC season.
Last year, we reported that the percentage of first-time buyers showed improvement in 2002, moving up over 45%. Another healthy sign is that this ratio continued to increase during the 2003 season to approximately 48%. Once again, the ratio for 3-passenger PWC is reportedly well over 50% and some four-stroke models also reported very high sales to first time buyers.
We continue to be optimistic that the people who purchased watercraft between the peak 1994 and 1998 seasons will at some point have to buy again and replace their existing aging two-stroke PWC with the newer, superior four-stroke models.
Another ratio we have continued to track over the years is the percentage of 3-passenger PWC. Prior to 1997, the ratio was below 50% but by 2000 it had climbed to 59% and reached 74% by the end of the 2002 season. For 2003, 3-passenger PWC sales accounted for about 79% of the market, including estimates for Honda’s two models of unreported sales.
Standup and 4-passenger PWC sales each still account for just 1% of sales, which means that 2-passenger watercraft represents about 19% of sales, down from about 24% last year.
Now 2-passenger PWC mostly all represents high performance musclecraft with intermediate models declining.
Some industry followers believe the 3-passenger segment of the market could approach 90% of sales over the next three years with musclecraft eventually evolving into 3-passenger boats.
It seems that one important and a growing standard with PWC in recent years is that they be able to tow a skier or wakeboarder; most states have mandated that one legally must have a 3-person PWC to tow.
Four-Stroke and DI Products
Four-stroke models are continuing to catch on with consumers and together have surpassed sales of the older direct injection technology models. Our best estimate is that both four-stroke and DI models comprised about 55% of U.S. PWC sales for the 2003 season with four-stroke outselling DI by nearly a 2:1 margin. Four-stroke technology is where this industry appears to be ultimately headed in the coming years with two-stroke and DI systems expected to significantly decline, if not be phased out entirely at some future point.
2004 Model Year Expectations
There are many reasons to feel bullish about the coming PWC season, more so than at any other time in recent years. As indicated earlier, the final four months of the 2003 season closed with a healthy 4% year-over-year increase.
This is certainly cause for optimism and with the significantly improving U.S. economy and consumer confidence it would not be unrealistic to see an increase in PWC retail sales for the 2004 season.
At this time we’re projecting 5% growth. It’s possible that the 12-month moving average could move into the positive side by calendar year-end or at least by next spring when most of the non-currents are cleaned out.
U.S. PWC retail sales flat for 2003
Sales at 80,000 units for third