ATV inventory levels increase

EDITOR’S NOTE: Power Products Marketing in conjunction with Powersports Business is developing an inventory tracking system for new and used ATVs sold by powersports dealers across the country. This program is designed to provide useful ATV inventory information for manufactuers and dealers.
The program monitors ATV field inventories relative to sales by ATV category (small utility under 400cc, large utility 400cc and over, sport and youth) on a monthly basis, similar to what the Motorcycle Industry Council (MIC) does in reporting retail sales.
The success of the program ultimately depends upon the number of participating dealers.
During October and November, hundreds of powersports dealers across the country were contacted by phone and agreed to contribute operating data for the program.

According to the latest analysis from the September and October data compiled from our participating dealer body, used ATV sales through powersports dealers averaged 18% of new unit sales for September and 15% of new sales for October. Two years ago, the average used/new reading for October, 2001 was about 13%, which was nearly identical for October, 2000.
According to the data submitted by 206 participating dealers, field inventories of new ATVs overall averaged 2.11 months on hand for September and 2.43 months on hand for October. The slight October increase was mostly attributed to sport and youth model buildup that normally takes place during the Christmas buying period.
Small utility models under 400cc averaged 2.2 months on-hand for both months while large 400cc and over utility models averaged 2 months to 2.1 months on-hand. However, sport models increased between September and October from 1.6 months on-hand to 3.33 months, and youth ATV jumped from three months on-hand to nearly four months. It is estimated that a third to as much as 40% of youth ATV sales occur in the final two months of the season.
Based upon the data we analyzed for used sales and inventories, used inventories overall average just under one month on hand (26 days).
Several dealers said that it is not unusual for dealers to unload their used ATV machines from trade-ins to third party middlemen who regularly make such pickups.
This is also common practice in the snowmobile market: to find middlemen who acquire large numbers of carryover new and used sleds, typically at the end of the season, and store or recondition them over the summer months in preparation for the following season. This would also tend to explain why the used/new ATV sales ratio is so low.
Only between the summer of 2002 and the summer of 2003 did new inventories rise above the approximate 2.4 months on-hand level we have logged over the last four years, excluding 2001.
Last spring we indicated inventories appeared to be running at “the upper extreme of the acceptable range.”
Not coincidentally, the period from the summer of 2002 through the summer of 2003 was affected by slow and inconsistent ATV sales, mostly as a result of the sluggish economy, which contributed to this condition.
Since then, with the resurgence in sales, due in part to the recovering economy and the OEM promotion programs in place, inventories were able to fall back into line with sales prior to this normal Christmas buildup.

Dave Crocker is senior partner for Power Products Marketing, a market research firm based in Minneapolis, Minn. PPM (Web site: www.powerprods.com) specializes in the power products and components, powersports and marine industries. Crocker may be reached at 952/893-6870 or at dcrocker@powerprods.com.

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