Nov. 29, 2010 – Tracking the four-wheel trends

The industry’s road to recovery has been littered with recessionary challenges the past few years, but some four-wheel manufacturers see a smoother trail ahead.

A number of UTV and ATV manufacturers spoke in detail to Powersports Business about the different retail segments, their focuses for the coming year, the segments’ future trends and their key marketing tactics.

Mike Cotter, director of consumer sales at Club Car, echoed what others have said: The UTV portion of the off-road industry is in pretty good shape.

“It took a beating due to the recession, but we believe it is going to recover. In fact, we see signs of that already,” he added. Club Car, a division of Ingersoll Rand Industrial Technologies, has been in the two-wheel-drive utility vehicle business since 1982, but moved to 4×4 models in 2003. Since then it has seen the market peak and hit valleys, but Cotter says Club Car’s sales in its first three quarters of 2010 are higher than the same time in the two previous years.

Cub Cadet Director of Marketing Jeff Salamon described the UTV market as stabilized and recovering, but said it has not reached its pre-recession levels. He added that the organization, which has both powersports and power equipment dealers, has trended very close to the industry numbers for both sectors.

Cub Cadet has produced utility vehicles since 1995 and, since 2006, has manufactured a more aggressive Volunteer UTV, which caters to utility applications and has some recreational off-road relevance, too. “But in the utility area, where the Volunteer is positioned, our outlook is positive. We are anticipating retail growth as economic conditions continue to make a rebound,” he said. “Our retail sales mid-year last year were very encouraging and dramatically reduced dealer inventory. Retails sales were outpacing, in a positive sense, shipments/wholesale sales.” And, Salamon says, so far in 2010 Cub Cadet’s retails sales have outpaced its projections.

Tomberlin, which entered the off-road industry in 1999 as AlphaSports, reinvented itself in 2004 when it started producing adult-sized ATVs. Since that time, it has continued to innovate and has recently launched a new line of segment-leading electric UTVs. Owner Mike Tomberlin said 2009 was a “banner year” because of its electric models. Success has carried over through the first three quarters of 2010 as sales were up approximately 30 percent. However, Tomberlin anticipated a flat fourth quarter.

In terms of manufacturing, Tomberlin made a huge investment in 2008 because of the improved regulatory measures and reduction of noncompliant competitors, according to its owner.

“If you look at it from a retail position, the suppression of margins at the dealer level combined with a much lower demand has been very difficult for dealers that relied on the continued ATV market growth,” he said. “We are pleased with the acceptance our products are currently obtaining and weren’t afraid to release brand new product in 2010 in fear of the economy. We drive retail and concluded long ago that we would not play the inventory game with dealers. We are not looking for another warehouse. We partner with the dealer and focus on retail.”

Dan Kelly, of CF Moto, said 2010, a year that included a new UTV model, has been stronger than 2009 for the Minnesota-based company, which produced its first ATV in 2007. “In 2008, we ran out of inventory. And in 2009 the market was so horrendous we were left with excessive inventory at the end of the year. We are finally getting caught up and expecting a strong year for 2011.”

Trends & Future

Industry trends can be as diverse as the manufacturers. However, with more proven means, like surveys, consumer studies, concept vehicles and focus groups, manufacturers can better assess the industry and create a better product by listening to its network of dealers and its customers. All the manufacturers agree that perceived value is huge for sales, as are innovative features and product advancements.

For Tomberlin, trends include bigger dealer margins and offering more bells and whistles on its products. “We believe products will increasingly have standard equipment features that were previously considered as optional,” Tomberlin said. “Dealer margins must be improved and technology advancements will most likely occur in the safety sector.”

Club Car suggested an increased focus on safety, alternative power sources and on-road use. “UTVs will become more and more like small trucks and cars as time goes on,” explained Cotter.

Salamon said Cub Cadet’s vision for UTV trends include more versatility and utility aspects. “Among our audiences and dealer network … we envision the utility vehicle as much as a mobile personal work station as it is a vehicle to get from Point A to B or for recreation,” he explained. “We see it as a tool to aid consumers in meeting challenges that they face day in and day out. (Consumers want) products that offer real value — not the lowest price, but a sincere, valuable proposition that’s coupled with superior service, extreme durability, usable performance, high quality and innovation that can provide real solutions.”

Cub Cadet’s Volunteer VTX concept turned heads at the 2010 SEMA show, officials said. Salamon alluded to it becoming a production vehicle, but says the company will rely on its dealer and customer feedback before proceeding beyond the prototype phase. “The Volunteer VTX concept is the next generation,” stated Salamon. “It is stylized to have a distinctive and deliberate position — a very capable style that’s very suitable for our target audience. A concept vehicle pushes out there a vision for the future; a vision that is going to be tested and tried and hopefully proven to be true.”

He called it only the first phase of a dynamic concept that will be unfolding.

“The vision the VTX projects mirrors the broad line of Cub power products when it comes to delivering solutions to a wide array of outdoor tasks, work and applications,” he explained. “Because work out there is varying, we need to be versatile; we need to meet the demands of the audience of tomorrow. As we present this concept vehicle to our dealers and audiences, we’ll listen and make decisions based on how we best meet the market needs and also set the bar for the market and push the concept of the next UTV out there.”

On the flip side of the utility spectrum, Kelly said CF Moto is paying more attention to high-performance models. In fact, one of its new models, the X-6 UTV, finished third in the 700cc class at a recent Mud Drag race in New Hampshire. “Performance side-by-sides and higher-performance sport utility ATVs will dominate the market,” he said. “Mud drag races, desert racing and ATV pulls are becoming increasingly popular.”

Tomberlin, meanwhile, has introduced an electric UTV.

“We recently launched our segment-leading electric UTV featuring several world-firsts, like multi-speed transmission, Scout Mode and Operator-In-Charge technology, to name a few. Our 2011 Vanish E-UTV is clearly setting a new standard,” Tomberlin said.

The company also has aggressive plans for other powersports vehicles.

“We’ll continue our next generation of electric/off-road platforms, expanding our mid-range ATV models and launch our largest Schwinn scooter yet,” he said. “We are also focusing significant resources to safety awareness and will challenge the top-shelf brands to step up and recognize we can do better in the safety arena.”

Brand keys

Some of the manufacturers Powersports Business spoke with may not be perceived as the traditional powersports leaders, but they don’t see that as a negative.

Club Car’s research reveals powersports products are only one of several paradigms through which UTV customers view the market, meaning a buyer won’t overlook them because they don’t have motorcycles and ATVs. “Many folks know us because of our parent company, Ingersoll Rand, our golf products or our commercial products,” said Cotter. “However, when they are exposed to our whole story — American designed and manufactured since 1958; all we make are small vehicles; total production of over 2 million units; best warranty in the industry — they are very pleasantly surprised. We like to think of ourselves as the best-kept secret in the UTV industry.

“We probably have the broadest price points of any UTV manufacturer, so it helps us play in multiple segments,” he explained.

Much like Club Car, Cub Cadet is already a legitimate brand and has a proven name in the outdoor power equipment industry. “If one looks at our engineering achievements, global manufacturing capabilities and ability and product lines, we are very proven and legitimate,” stated Salamon. “The Volunteer line and VTX concept is dedicated to meet those needs in that market. We’re talking how the product is used, its durability, its functionality and its performance.”

Salamon said Cub created the concept vehicle because the brand is built upon a reputation of four key attributes: premium quality, innovation, high-performance and a progressive approach. “This is really keeping with who we are and the over 50 years of establishing the brand, which has a very broad product line, too,” he said.

Kelly of CF Moto said, “as a Chinese manufacturer, it is very difficult getting around the stigmatism other Chinese manufacturers of any type of product have created.

“Once people realize we are not the typical exporter from China, all of the roadblocks are gone.”

CF Moto dealers have told the company that it has the best website for ordering parts, machines and entering warranty claims, which is critical for an importer. “We have a warehouse dedicated to parts, so we have a fantastic turnaround time for consumer purchases and warranty claim delivery,” Kelly said. “There is staff to help in warranty, parts, tech support and dealer support.”

Tomberlin said, “Everyone imports, from Harley to Honda.

“For almost a decade, we have functioned as an OEM with many of our products built around our American-based engineering, testing, product development and leading dealer support. We are not aware of any brand that does not manufacture offshore to some degree. We do not consider ourselves an import brand any more than those who manufacture in Canada, Mexico, Japan, South Korea, etc.”

Tomberlin, which has distribution and assembly centers in Georgia, Mexico and California, said it achieves brand awareness one customer experience at a time by staying true to itself, avoiding organizational arrogance and relying on its dealers.

Tomberlin said his experience has taught him pricing and value acceptance are the property of the consumer. “We are a small business that relies on relationships with the dealer. We must make certain that somehow we do not infer that big is always better. Our job is to get the product on the target and listen to the customer who will bring it to the bull’s-eye. It isn’t all that hard or complex. Quality, values and doing the right thing do not recognize any specific culture. With that said, we agree strongly that the improved regulatory positions requiring fairly substantial investments to participate in this industry will increasingly become a sustainer of the Tomberlin brand.”

Social Media/Marketing

Every manufacturer addressed the importance of participating in social media. Many view social media as a portion of the entire marketing and consumer communication model. The most successful players seem to balance social media with other forms of communication, from Web-based to print.

Social media, along with traditional media, is a great channel for Cub Cadet to engage its loyal owners and potential customers, according to Salamon. “We look at it as an opportunity to maintain continual dialog, listen to feedback and embrace the technologies that are out there and do it in a meaningful way,” he explained. “We currently have out there our Future Vision Contest that engages people to look at how we look at product development and the future. We have launched an opportunity for customers and potential customers to share with us their vision for power equipment.”

Cotter says Club Car has had to adapt to go where its customers are going. The company’s two favorite mediums are Facebook and YouTube. “Internally, our employees are more connected than ever.”

Tomberlin expanded on his company’s entire web-based initiative, which can average more than 1,000 hits per day. “It allows us the opportunity for a more one-on-one bond with our customers and to get them involved with our brand. Building this relationship and having an open forum for conversation is what drives ownership and awareness.” PSB