How’s the PWC market? Good news travels fast

Personal watercraft sales in the U.S., through mid-April, were up a reported 10% to 13% over the same period last year(not counting figures from Honda, which is still not obligated to report).
While some will argue the actual units these figures represent may not indicate a total rejuvenation of the market, a number of industry representatives tell Powersports Business they say the manufacturers’ significant investments in new technology — most notably clean and fuel-efficient four-stroke engines — appears to have paid off.
“The market is actually doing quite well,” says Kawasaki Product Manager Steve Fischer, a man who has seen his own company’s numbers outpace the average. “March numbers indicate a slight upward growth rate in retail sales for the last twelve-month period over the prior year. That’s the first upward trend in some time.
“The industry has done a great job responding to critics with incredible technology that makes today’s watercraft cleaner, quieter and more economical to operate. If we can design, build and sell watercraft that exceed the buyers’ expectations and address the concerns of regulators, we can expect the upward trend to continue.”
Yet another company that has seen a marked improvement in sales is Polaris. Hampered by the unexpected lack of a four-stroke to sell in 2003 (the company held back its original ‘03 models due to a variety of concerns), the Minnesota-based manufacturer now has both the MSX 150 and MSX 110 four-strokes in the pipeline, and is reaping the results. Sales for the first quarter are up a jaw-dropping forty-six percent over the same period in 2003, and growth across all of the company’s product lines bodes well for the recreational industry in general.
“We’re excited to have delivered hundreds and hundreds of four-strokes so far,” says the company’s Dan Schroepfer. “I think we’re up to about 1400 so far, and our dealers are loving them. It’s definitely nice to be in the four-stroke business!
“Dealers were totally excited in general. There were a few issues here and there, but in general the response has been phenomenal. The sell-through is picking up just exactly the way we expected, and even all of our older two-strokes, the sell-through has been phenomenal. So we’re really cleaning out the pipeline, cleaner than we’ve been in many years.
“Everything’s right on track. We’re accelerating our market share growth, and pretty excited to see that the industry is slightly up.”
Honda officials also reflect the positive trend. “I think from what we’re seeing there might actually be a little growth coming back into the market,” agreed Lee Edmunds. “We’re feeling pretty good about things because our dealer network is growing, we feel we’re starting to turn a corner.”
Cautious Optimism
Still, given the tenuous climate of the past several selling seasons, some manufacturers prefer to view the upturn with caution.
“We fully now believe that we have stabilized,” says Yamaha’s Scott Watkins. “The last six months have exceeded the same six months of a year ago, so that’s kind of a sign that it’s happened. Where we go from here, we’re still forecasting a little conservatively, that it will be flat, just because we’re coming off a number of bad years. But the economy looks like it’s going to turn around a little bit, things look positive.”
Still, manufacturers acknowledge that challenges remain. “Huge challenges remain for us as an industry,” says Fischer. “Competition for discretionary spending remains fierce as consumers are deluged with messages from so many different industries. As an industry, we must remain diligent in our efforts to ensure fair and equal access to local waterways. This effort starts with us as manufacturers, but also includes dealers and consumers as well.”
“There will always be challenges ahead,” warns Edmunds. “We will always have to keep our guard up, in terms of making sure that people are getting trained and using these things in a responsible way that is also friendly to other users out there. Access issues will always be present, we just have to be mindful of doing things the proper way to keep those areas open.
“And it can happen. It’s not doom and gloom, it’s not like, no, things are going to continue to be closed. It’s no, things can stay open, but everybody has got to make sure they’re doing the right thing, and getting trained, and operating their product in a safe manner. It’s something that’s always there.”
How much of an issue is the ever-rising cost of fuel as summer cranks into gear? “These things all burn fuel,” says Watkins. “The boats burn fuel, the SUVs and trucks that people normally use to tow these things burn fuel. If it becomes enough of a hit in the pocketbook it might be something that makes people hold back a little bit.
“But for the most part, I think everybody is pretty positive. We’re all saying we need to be ready for the possibility of a definite increase, and be ready to capture as much of it as we can. We’re thinking about trying to hit it hard if it happens.”
Four-Strokes Thriving
Deserving a good share of the credit for those optimistic sales predictions is the continued acceptance of the four-stroke, an engine category that only a few short years ago was said to be too heavy and slow to thrive in the PWC marketplace, but one that is now rivaling, and even surpassing, its two-stroke brethren. In just two short years, four-stroke platforms have proven the best sellers in every manufacturer’s lineup, offering a level of emissions reduction that has seemingly taken the wind out of the sails of so-called environmental groups like Bluewater Network, and introducing consumers to a new era of quiet, clean, fuel-efficient PWC.
“I think the environment was ripe for it,” says Edmunds, who admits Honda’s all four-stroke lineup came into the market at nearly the perfect time. “People we’re looking for something that they wouldn’t feel guilty about going out and riding and having fun on, because there was so much anti-PWC stuff going on. People in general, I think, are more aware of the impact they have on the environment. So I think it was the right time for this type of technology.”
“Four-stroke technology has contributed greatly to the recent turnaround in retail sales,” emphasizes Fischer, whose company’s STX-12F watercraft was the first PWC to receive the California Air Resources Board’s coveted Three-Star rating, and a company that recently added the more powerful STX-15F to that very same list. “We can easily attribute our recent sales success to these two great models.
“Consumers are as demanding as ever, and as long as we can continue to develop product that meets their needs, we will be successful. Four-stroke power sure seems like the best way to do that at the moment.”
With such overwhelming positive acceptance, it appears obvious that four-strokes will be the number one choice for future product line expansion. “As a company I think we’re probably a little surprised (at the four-strokes overwhelming success),” said Schroepfer, “but as the product manager here, I’m not surprised at all. When people realize you get good acceleration and good top speed, and that a four-stroke gives you all the versatility a good two-stroke gives you, plus it’s cleaner and quieter and smoother running, I think we’ll see more and more people trading in their old craft and switching over.”
In fact, Polaris forecasts the market will be an overwhelming 85% four-stroke in just two short years. “We’ve got a good growth plan for future four-stroke expansion,” confides Schroepfer. “That’s where all our focus is.”
Even the aftermarket, which many felt would continue to dwindle in the face of more and more complex four-stroke engines, has shown signs of renewed life thanks to the four-stroke’s overwhelming appeal. Riva’s supercharger system for the Yamaha FX line captured Watercraft World’s Magazine’s Aftermarket Product of the Year award, and proved that potential for growth still exists in a four-stroke world.
“It was a big commitment,” explained Riva’s Dave Bamdas, “but it was an investment in the future because we plan to produce parts for four-stroke watercraft of all makes and models. We needed to do it to make a statement to the watercraft community to show that Riva’s in it for the long haul, and that we’re serious about four stroke technology.”
Price Watch
Still, many think the intimidating cost of four-stroke models must come down in order to sustain any lasting growth.
“Bringing this technology in has really turned a lot of things around for us, image-wise, EPA-wise, you name it,” says Watkins. “The environmental people are starting to get off our backs and the negative press is turning around into more positives. There’s less risk of closures and regulations. There’s a lot of positive things.
“But four-strokes are expensive. There’s a definite, very clear correlation between the dropping of the market in the last three years and rising prices. Average prices have gone up a lot, compared to just three or four years ago. So there’s a huge need for an affordable four-stroke. That could be like the piece of the puzzle to complete things out, and hopefully get that buyer who would come into the industry or repurchase, and has so far resisted.”
And to prove his point, he points to a competitor who has already had success with just such a formula, Kawasaki, and the fast-rising STX-12F. “It’s nothing special,” says Watkins, noting that the boat used an existing hull with arguably a dated style and ergonomics. “But they threw a four-stroke engine in it and offered it at $8,499. That’s not cheap, but it’s the cheapest four-stroke on the market. And now it’s the first time they’ve (Kawasaki) been in the top-eight sellers in forever. I can’t remember the last model they had in the top ten. That’s a good indicator that an affordable four-stroke is needed.
“It’s something that’s going to really help the industry. When everyone has one, that’s when I really see the industry numbers starting to jump up again. It’s great, it’s all good, but if everything out there is over ten grand, it’s pretty hard to see the numbers take a jump.
“We’re working hard on trying to offer that. We think it’s the big missing link for everybody.”
Everybody, of course, except Kawasaki, the company that had the foresight to offer such a model while other manufacturers concentrated on higher-end offerings.
“The introduction of our STX-12F in 2003 was a carefully crafted strategy to establish Kawasaki’s four-stroke technology as the leader in the price/performance arena,” explains Fischer. “We turned a potential disadvantage of not being first to market into an advantage by hitting a very high performance target and doing it at a price that would really get the attention of PWC buyers. The strategy has proven successful so far.”
Edmunds, however, believes that consumers have begun to realize what it costs to produce a quality vehicle, and are coming to terms with the cost. “Now I think what we’re looking at is pricing that is more in line with what it takes to actually build one of these,” he explains. “I think what you’re seeing as the market is starting to grow a little bit is that people have gotten over that initial shock of ‘oh, wow, here’s what it costs to do this.’ But I think it will come back. It will come back in spite of the pricing.”
Besides, he points out, building a cheaper boat is not a simple task. “You can’t really change the quality of the materials, especially if you have a brand name to protect.”
A Bright Future
Are good times here to stay? At this relatively early stage of the game, that’s hard to say with absolute certainty. The elements for a sustained recovery, however, appear to finally be in place.
Product is better, lingering environmental concerns have been addressed, and the recent momentum enjoyed by those who would rather see PWC banned from popular waterways has finally swung back around in favor of renewed access.
“We’re finally picking ourselves up and brushing the dust off from the ass-kicking that we’ve gotten from all directions in the last five years,” Watkins bluntly summarizes. “Like the new kid on the block who’s been just getting beat up constantly, we’ve finally grown up and established ourselves as someone who’s going to hang around. I think that’s great. I hope dealers in the business start to realize that and start to become a little more confident and feel good about ordering up and selling through the inventory.”
Agrees Fischer: “You can feel a sense of excitement growing as we see what we’ve been able to overcome in the past, and look down the tunnel to a light …that, for once, isn’t a train coming at us.” psb