May sales slip 6%, but preliminary
June sales are up 10%. July is make or break month
After eight consecutive years of annual declining sales, it appears that the U.S. PWC market is finally experiencing a turnaround. In addition, several other developments are taking place that continue to transform this market from what it was just 5-6 years ago. We talked with a number of powersports dealers and other industry sources to access the current status of this now rejuvenated water sport.
2004 Year-To-Date PWC Sales
According to industry sources, May year-to-date U.S. PWC retail sales were between 6-7% above the mark from a year ago, including a conservative estimate for Honda’s unreported sales. Although May sales may have been about 6% below May 2003 including Honda, preliminary results for June are that sales were about 10% above June 2003.
Although Honda’s sales are much smaller than the other four OEMs’ volumes, their rate of increase this year has been pegged to be at least 50% over their 2003 sales performance.
Indications are that the weather may have affected sales in the final week of June and at least through the 4th of July weekend at the time of this writing.
Through much of the South, rain and some thunderstorm activity kept riders off the water despite the warm temperatures. In the North, in much of the upper Midwest, rain and cold temperatures significantly affected sales.
Last year we remarked about the apparent shift in weather patterns since 1997 through much of the Midwest U.S. with mild winters followed by cold, rainy springs resulting in short summers. The Northeast U.S. also has experienced cold, rainy springs in recent years, according to dealer reports.
People who used to be able to put their boats in the water as early as April have had to wait until as late as June in some locales. It is becoming more and more apparent that these prolonged unfavorable spring conditions continue to adversely impact annual PWC sales.
With June sales already in, July looms big as far as a make or break month for the 2004 fiscal year. According to our calculations, if sales for the final three months of the season are no worse than flat, compared to the previous year, we would expect to see the year finish at about 5% over 2003, including estimates for Honda’s activity.
Any significant decline in July sales would put the year end closer to a 3% increase.
Current/Non-Current Sales Ratio
Based upon our best estimates available, we believe this ratio is running at close to 85/15, about the same as a year ago. It should be apparent by now that non-current product is no longer hampering current product sales. Of the Top 12 best selling models, only one is classified as a non-current.
3-Passenger PWC Penetration
Three-passenger PWC continue to dominate their share of the overall market. Back in mid-season 1999, 54% of all PWC were three-passenger. By mid-2002, this percentage had increased to 74%, including estimated unreported Honda sales.
Through May of this year, however, the percentage dropped several points to 75% compared to 78% from a year ago. This was attributed to the successful launch of Sea-Doo’s new supercharged FI 4-stroke RXP two-seater, although the specs reflect a length and weight comparable to a 3-passenger boat. Despite this fallback, many analysts still feel that 3-passenger PWC will exceed 80% of sales, if not by the end of the 2004 season perhaps by the end of the 2005 model year.
Four-stroke PWC have surged in sales during the 2004 model year to where they currently account for about 46-47% of sales compared to a year ago when the ratio was tracking at about 30%, including estimates for Honda’s models.
For the 2002 model year four-stroke model sales represented less than 20% of total U.S. PWC sales and by season end 2003 the ratio had climbed to over a third. We expect this ratio will top 50% by the 2004 season end. The consensus is that in another few years all PWC will likely be four-stroke driven, rapidly displacing all remaining two-strokes, including DI, FI and EFI models. All four-stroke PWC are fuel injected with about a third being electronic (EFI).
Currently two-stroke carb models account for just a quarter of all U.S. PWC sales compared to about a third for the 2003 model year and about half for the 2002 model year.
One new product that has caught the attention of both the media and dealers is Sea Doo’s 3D that was launched in the May/June time period.
Promotional literature indicated that the company was projecting sales of 3,000 units this season and that it would account for about 14% of industry sales for the 2005 model year, a figure exceeding 12,000 units.
The two most appealing things about the 3D are the price at $6,999 and the three distinct optional modes of riding the craft – standing, straddling or sitting. The company boasted that the innovative 3D will be the reinvention of watercraft. Targeted at Gen Y consumers, Sea-Doo said it expects to spend an estimated $5 million on promoting the 3D through the Internet, test rides and at various venues such as action sports events and festivals.
Sales to date, however, reportedly have been light and as of this writing, no significant promotional events have appeared. There is concern among some dealers that with the summer and 2004 watercraft season fast approaching its close, the product could have a significant number of carryover units and some industry watchers are skeptical the product will ever achieve its projected success, especially given the ongoing focus on multi-passenger craft and the growing number of four-stroke models. psb
Dave Crocker is senior partner for Power Products Marketing, a market research firm based in Minneapolis, Minn. PPM (www.powerprods.com) specializes in the power products and components, powersports and marine industries. Crocker may be reached at 952/893-6870 or at firstname.lastname@example.org.
Early PWC sales increase
May sales slip 6%, but preliminary