During November, we conducted a survey among 150 powersports dealers across the country on behalf of Powersports Business magazine pertaining to the U.S. ATV market. Collectively, these dealers sold nearly 44,000 ATVs through October, which is estimated to represent about 7% of the total market, a significant sample size.
Besides analyzing year-to-date ATV sales and certain trends, we asked the dealers to evaluate other important issues impacting the ATV market. Here’s what we found.
2002 October Year-To-Date ATV Sales
According to MIC statistics, year-to-date U.S. ATV retail sales are up about 5.2% through November 2002, compared to the same period a year ago.
Since April, when year-to-date sales were running about 9% ahead of 2001 (see Powersports Business, Vol. 5, No. 9, Pg. 13), sales maintained the same pace through September. But recently sales began fluctuating on a monthly basis.
For example, for the month of August, retail sales were reportedly down 6% from a year ago, while September rebounded 16%. But sales in October decline 10% from the previous year. November sales were off 3,747 units or 5.5%, from last November, according to MIC figures.
Last April, industry sources projected U.S. ATV sales would finish 2002 about 10% over 2001, near the pace registered for 2001. This estimate now seems unreachable, and perhaps an increase in the 5%-6% range is more likely.
This would be the fourth consecutive record year for ATVs with U.S. sales perhaps reaching 840,000 units in 2002 compared to 795,000 units for 2001, including estimates for all youth models that are expected to grow perhaps 10% this year.
October Month-End Inventories
Based upon our survey of 150 powersports dealers, inventories of new ATVs at the end of October for all brands were at 26-27% of estimated 2002 annual sales, the equivalent of three months on-hand, which appears to be very reasonable.
An increasing number of youth models are sold during the Christmas season, which would tend to further reduce this level by year-end; so our assessment is, based upon figures reported from this survey, that inventories do not appear to be an area of concern as long as sales continue to reflect positive growth.
2003 Projected ATV Sales
According to 148 dealers who responded from our sample, orders and sales are projected to increase about 11.5% for 2003, slightly better than that for 2001 and 2002. There were 21 dealers that projected sales would be flat for them, while only three dealers expected a decline in their sales. There were 35 dealers, nearly a quarter of the respondents, who forecasted their sales would increase about 10% — the most frequently mentioned figure.
We looked at the extent to which accessories and attachments were being purchased with new ATV sales. We asked each dealer we surveyed to identify the top five accessories or attachments they sell with new ATVs and what percent of total new unit sales they represent.
It should be pointed out that these are dealer-sold accessories and that many new ATV owners prefer to outfit or accessorize their machines through other sources, such as at retailers like Fleet Farm. (Side note: A number of dealers have complained that OEM pricing on PG&A items is not competitive with other aftermarket companies).
According to the dealers we surveyed, the number one accessory mentioned was winches, which averaged out to about 22%-23% of all new ATV units sold by dealers.
The second and third most often mentioned accessories were gun racks/boots and helmets, each at 12.5% of all new units sold.
The fourth ranked item was plows or blades, which computed to about 10.5% in all new ATV unit sales by dealers. Another 11% of new ATVs sold by dealers are outfitted with additional racks, either extended, basket type or other.
Thereafter, other accessories tend to fall in the 5% range or lower. Examples are: tire upgrades (5%), windshields (3.5%), exhaust pipes (3.5%), storage bags (3.5%), cargo boxes (3%), bumpers (3%), hand guards (2%) and brush guards (1%).
Other accessories such as heated grips, lift kits, skid plates, trailers, sprayers, rock guards, spot lights, covers, ramps, whip antennas and mowers were mentioned in less than 1% of new ATV units sold by dealers.
Analysis of Public Trail Systems
We asked our sample of 150 powersports dealers several questions pertaining to their local public trail systems. Of the 150-dealer total, 108 dealers said there were public trails within 50 miles of their dealership, while 42 dealers, or 28% of the sample, indicated the distance exceeded 50 miles.
Then we asked if there has been a program to expand the public trail system in their area. Surprisingly, only 38% of the 150-dealer sample said Yes while 62% of the dealers said No.
We then asked them what impact this had upon their dealership’s ATV sales. We found their answers intriguing.
For those 57 dealers that answered Yes, 17 dealers (30%) said the program to expand the public trail system in their area had no impact on their sales, while 17 dealers (30%) said there had been some positive impact but not a lot. There were 19 dealers (33%), however, that said the impact was significant. There were 4 dealers that gave other answers, often expressing the need for more trails.
Now for those 93 dealers that said No, there was no program to expand the local public trail system in their area, there were 22 dealers that did not comment as to what impact this had on their dealership’s ATV sales. Of the 71 dealers that did respond, 32 dealers (45%) said there was no impact while 16 dealers (23%) indicated there had been some negative impact. Only 7 dealers (10%) said there had been a significant negative impact on their sales. There were 10 dealers (14%) that responded it would help if there were a program to expand the public trail system in their area and 6 dealers (8%) gave various other unrelated responses.
Overall, our assessment is that in nearly two-thirds of the cases it appears that expanding the public trail system for ATVs has a definite positive impact on ATV sales while in cases where there were no programs to expand the public trail system, ATV dealership sales were negatively impacted in about a third of the cases.
Last, we asked our sample of 150 dealers if they planned to run any promotions on accessories during the Christmas buying season. Only 24 dealers (16%) said they would not run any special programs while the vast majority (84%) indicated they would run some holiday program. Of the 125 dealers who indicated they would run some type of program, there were five dealers who indicated they didn’t yet know what programs they would run at the time we inquired during mid-November. Some dealers mentioned more than one program so there were a total of 197 specials mentioned.
Our 150 dealer survey was segregated into four U.S. regions corresponding to the motorcycle industry regional alignment: Eastern, Southern, Midwest and Western.
In the Eastern Region we telephoned 26 dealers by state as follows: ME (3), NH (1), MA (1), CT (1), NY (5), NJ (2), PA (8), WV (3) and MD (2).
In the Southern Region, we telephoned 59 dealers by state as follows: VA (3), NC (5), SC (2), GA (6), FL (5), TN (5), KY (5), AL (4), MS (4), AR (5), LA (4), TX (9) and OK (2).
In the Midwestern Region, we telephoned 41 dealers by state as follows: ND (1), SD (2), NE (2), KS (1), MO (3), MN (6), IA (3), IL (3), WI (6), MI (4), IN (4) and OH (6).
In the Western Region, we telephoned 24 dealers by state as follows: AK (1), WA (2), OR (2), CA (6), AZ (2), NV (1), NM (1), ID (2), MT (1), UT (2) and CO (4).
U.S. dealers with year-to-date October ’02 ATV sales of less than 25 units were not included in the survey.