After three consecutive years of flat sales, it appears that the U.S. PWC market is finally undergoing a significant turnaround.
Last year, the market was running about 6%-7% ahead of 2003 sales through May, and it looked like the season would finish close to that mark. However, the closing summer months were plagued by cool weather in much of the North, and, although the temperatures were warm throughout the southern United States, many areas were hit by excessive precipitation.
Surging gas prices didn't help either and several severe hurricanes in Florida and the southeastern U.S. during August and September closed out a disappointing summer and flat sales for the 2004 season.
During June, we surveyed 150 powersports dealers across the U.S. to check on the status of the current PWC market. In addition, we spoke with several other industry sources regarding recent trends. This market is undergoing some remarkable changes.
2005 YEAR-TO-DATE PWC SALES
According to industry sources, May year-to-date U.S. PWC retail sales were nearly 9% above the mark from a year ago, including our estimate for Honda's unreported sales.
May month sales were estimated to be about 8% ahead of May 2004 including Honda, and preliminary results for June are that sales could be as much as 25% above June 2004 as a result of the warm weather that since carried over into July.
Early indications are that June sales far exceeded everyone's expectations and July results could be as good.
According to our calculations, if sales for the final four months of the season follow the expected June performance and anticipated July results, we could expect to see the year finish at nearly 20% over 2004, including estimates for Honda's activity.
Bear in mind, however, that PWC sales for the final four months of the 2004 season were especially weak, as we discussed previously. This could put 2005 U.S. sales at near 95,000 units with the very real possibility of exceeding the elusive 100,000 unit barrier in 2006. The last time that mark was surpassed was in the 1999 season when 106,000 units were sold.
USED PWC SALES
According to our survey of 150 dealers, used PWC sales through May of this year amounted to about 17%-18% of new unit sales, although a quarter of the dealers responded they had not sold any used PWC to date. That equates to an average of one used unit for every six new units sold. Not surprising, this ratio has dropped some this year because of the surge in new PWC sales. Back in 2002, this ratio was one used PWC unit sold for every five new units sold.
PWC DEALER INVENTORIES
Based upon our 150 dealer survey, new PWC inventories at May month-end amounted to about 70% of May year-to-date sales. Dealers could receive some additional product but if May were to represent less than 40% of 2005 season sales, it appears some dealers could entirely run out of product before the season ends and indeed some reports are as of this July that PWC field inventories are rapidly being depleted.
Used PWC inventories at dealers at May month-end amounted to about 36% of used sales through May and it is likely that by season end used PWC at dealers could become a scarce commodity.
3-PASSENGER PWC GROWTH
Three-passenger PWC still dominate the overall PWC market. In 1999, about 55% of all PWC were three-passenger. By 2002, this percentage had increased to 74%, peaking at 79% in 2003, including estimated unreported Honda sales.
During 2004, however, the percentage dipped slightly as a result of Sea-Doo's new supercharged 4-stroke RXP 2-seater sales. Through May of this year, this percentage is reportedly back up to 80% of total and we expect it will continue to climb above that mark.
Four-stroke PWC have surged in sales during the 2004 and year to date 2005 model years to where they currently account for just over 70% of sales compared to two years ago when the ratio was tracking at about 30% through mid-2003, 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. The consensus is that in another few years all PWC likely will 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 40% currently being electronic (EFI), including estimated sales for Honda.
Currently, two-stroke carb models have dropped to between 15-20% of all U.S. PWC sales compared to about a quarter for the 2004 model year, a third for the '03 model year and about half for the '02 model year.
NEW YAMAHA FOUR-STROKES
The big story of the 2005 season has been the huge impact Yamaha's new VX110 Deluxe and Sport models have had on this market, which no doubt have drawn in new fringe buyers enticed by the attractive $7,699 and $6,999 SRPs, respectively.
So far this year, the Deluxe model is the number one selling PWC in the U.S. market, bragging rights previously reserved for Sea Doo machines.
COMPETING PWC DEALER COUNT
We asked our survey dealer body how many PWC dealers had dropped out of the market in the last year versus new dealers that had entered the market.
Our initial assumption was that far more dealers would have dropped out of the U.S. market over the previous 12 months. The 150 dealers who responded, identified a total of 905 competing PWC dealers. This computed to an average of six competing dealers per territory as defined by each dealer we surveyed.
It is interesting to note that although the surveyed dealers indicated that 90 dealers had dropped out of the market (a 10% attrition rate), 83 new dealers had recently entered the PWC market, more or less picking up that slack.
- 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.