During November, Power Products Marketing conducted a survey among 206 power sports dealers across the country, on behalf of Powersports Business, pertaining to current new and used ATV sales and inventories. These dealers sold collectively nearly 5,000 ATVs through October, which is estimated to represent about 6% of the total market, a respectable sample size.
Promotions and special financing incentives have driven ATV unit sales recently.
A report on ATV inventories has been compiled on Page 1.
2003 Year-To-Date ATV Sales
According to MIC industry statistics, year-to-date October 2003 U.S. ATV retail sales were running 4-5% ahead of the same period from a year ago. Since April, when year-to-date sales then were running about 1% behind the 2002 pace (see PSB June 30, 2003, Page 5), sales have nudged ahead during the summer months and through the fall on the strength of aggressive OEM promotional programs including very generous finance terms. November sales were off 5.2%.
Since April, U.S. adult ATV sales have been averaging an estimated 8% increase over the same period for 2002. In particular, August, September and October month sales were up 20%, 10% and 15%, respectively, over prior year levels.
Earlier this year, OEMs predicted 2003 ATV sales would increase in the mid-single-digit range, despite the fact that at that time sales were running behind prior year sales. Many skeptics then thought this was unattainable. Although difficult to accurately determine, it’s safe to say that the finance and promotion programs being run since last spring have significantly contributed to incremental 2003 ATV sales.
This would be the fifth consecutive record year for U.S. sales of ATVs with 2003 perhaps reaching 910,000 units compared to just over 850,000 units for 2002, including estimates for all youth models that are expected to grow perhaps 15% or more this year.
Other Industry Sales Trends
After losing share slightly in 2002, sport ATVs appear to have rebounded this year with the introduction of several new models catering to different segments of the sport market: Kawasaki’s KFX700, Suzuki’s Quadsport Z-250 and Yamaha’s YFZ450. Sport ATVs comprise nearly a quarter of the adult-size ATV market.
Automatic transmissions are continuing to grow. We anticipate that by year end they could exceed 60% of adult sales. This compares with about 55% last year, 50% in 2001 and 2000 and 37% in 1999.
The 500cc and over niche of the market also continues to grow. These large displacement 4-wheelers first started appearing eight years ago and in just three years (1998) they accounted for about 15% of industry sales. By 2002, they represented about a quarter of the market and, during 2003, their penetration is climbing toward 30%.
The ratio of 4WD machines has been holding steady between 55-60% of sales for nearly 10 years.
The Asian Invasion
Last year about 5,000 ATVs were sold in the U.S. market between 150cc and 260cc by non-MIC members, excluding several models that sold in significant numbers that were subsequently recalled for defects. Up until now, these mostly Taiwanese, Chinese and to a lesser extent Korean manufacturers were limited by their being able to produce reliable engines exceeding 250cc displacement. Not any more.
Several Taiwanese and Chinese OEMs are importing competitively priced ATVs with engines in the 400cc and even 600cc range. Other OEMs will undoubtedly follow. As one importer who regularly visits China told us six months ago, “There are probably 200 manufacturers in China either producing or capable of producing scooters, motorcycles, ATVs and engines.”
Quality and reliability have been problems with these bargain-priced products, but indications are these OEMs are improving in these areas and it may just be a matter of time, perhaps five years, before they become a serious threat to the established ATV and motorcycle OEMs.
We anticipate perhaps 10,000 ATVs of 150cc engine displacement and over will be sold in the U.S. market during 2003 by these predominantly Taiwanese and Chinese manufacturers. And for 2004, this number could possibly exceed 20,000 units.
Meanwhile, heavyweight John Deere will enter the market next spring with its new Buck and Trail Buck ATV series. Deere has specifically targeted the growing 500cc and over niche of the utility market.