Oct. 15, 2007 – An industry bright spot

By Neil Pascale
While first-half industry reports show a down market for new powersports units in comparison to last year, that doesn’t appear to be the case for UTVs.
Nearly 55 percent of dealers said sales of UTVs, also referred to as side-by-sides, are up over last year, according to a national survey conducted for Powersports Business.
Only 13 percent said their UTV sales were down compared to last year while about a third said new side-by-side sales were flat, according to the survey of 150 dealers.
For those dealers who have increased their UTV sales this year, the payoff has been noteworthy. Those dealers report an increase in sales of 24 percent in 2007 compared to a year ago.
The survey’s findings were not a surprise to OEMs, who see this still relatively young segment growing not only in the short term but for years to come.
“America is kind of the land of the new concept,” said Vince Iorio, ATV, UV and RUV product planning manager for Kawasaki Motors Corp. USA. “Look at plasma TVs. We’re a consumption society.”
The national dealer survey, conducted in late July, also revealed:
Dealers are averaging almost twice as much in PG&A sales with every new UTV compared to ATVs;
Profit margins on UTVs are nearly identical to ATVs;
Demand for utility side-by-sides far outpaces the sport or recreational vehicles, a trend that mirrors ATV retail sales;
Although there is some disagreement, dealers find the majority of UTV buyers did not come into the store looking for ATVs.
“If you look at the market, there is still a fair amount of new users coming in that have not owned a powersports vehicle before,” said Matt Homan, general manager of the side-by-side segment for Polaris Industries.
The survey reflects that. Dealers said only 13 percent of eventual UTV buyers came onto their showroom floor looking initially at ATVs.
“There’s no telling how many of the ATV guys will come over and how many new people will come into the market because it’s a little easier, a little less of a learning curve for the side-by-sides,” said Steve Nessl, marketing manager for side-by-sides for Yamaha Motor Corp. USA.
Perhaps because UTVs are bringing new consumers into the market, dealers are mostly confident about the segment’s sales growth potential. Sixty-eight percent of dealers believe UTV sales will continue to grow, with only 18 percent believing the segment has hit its peak. Only 14 percent believe UTV sales will decrease.
Likely because of that confidence in the segment, many dealers are giving side-by-sides more favorable location or a bigger presence on their showroom floor. Nearly 60 percent of dealers are moving UTVs to more prominent locations, sometimes at the expense of another vehicle.
Nearly 45 percent of dealers said they are removing some units off their showroom floors to take better advantage of increasing UTV sales. Of the dealers who are removing products, most often they’re taking ATVs off (38 percent of the time) the showroom floor, although PWC (18 percent), motorcycles (14 percent) and snowmobiles (10 percent) also have been moved.
So far, according to the survey, the larger-displacement UTVs have been the big sellers. Dealers said 450-500cc machines make up only about 31 percent of their sales. Kawasaki’s Iorio believes that number could increase in the future as the smaller-displacement machines provide a key price point for manufacturers.
One sign of continued strong sales in UTV sales: inventory concerns. Dealers said they “seldom” or “never” have inventory challenges only 58 percent of time. On the other hand, keeping enough UTVs in stock is an issue “frequently,” according to 16 percent of dealers, and “occasionally” by 25 percent of dealers.

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