Managing the things you can’t control

With COVID mainly in the rearview mirror, the biggest issue the industry is grappling with now is the economic outlook for the rest of the year.

If we extrapolate the first quarter results of some of the largest OEMs in powersports, then you may think that everything will be just fine, and we are continuing down the track that started during the early months of 2020.

But if you’re even slightly curious (some say pessimistic), the numbers tell another story. While the OEMs are getting the kinks worked out of the supply chains and making record deliveries to your dealership, you are now worried that you’ll be sitting on that stockpile for months as the effects of economic conditions (i.e., inflation and rate hikes) scare customers away in droves. Finally, you have inventory, which is good news, but will you have enough customers to buy it all? It’s the classic case of supply vs. demand.

At a recent event, we spoke to several dealers who are concerned that the economy will tank right at the worst time – during the early riding season. One dealer said there would be significant promotions and discounts to move the inventory. However, as he noted, it’s far better to move it than to sit on it and pay for the flooring.

This month’s survey

This month’s survey of dealers goes more in-depth about Q1 sentiment and where dealers feel things are headed. By and large, dealers are split on their outlook, but it is leaning towards “somewhat worse” to “significantly worse” for the first three months than at the end of last year. More than half of our dealers said their inventory levels were about right, while 28 percent said it was too high.

The biggest concerns dealers identified as “risk factors” for their businesses were not a surprise, with inflation topping the list at 82 percent, followed by availability of consumer financing at 70 percent. The current political environment in the U.S., which faces a historic debt ceiling showdown as we go to press, comes in third at over 60 percent.

One dealer said the OEMs should take the last couple of years as a bonus as retail buying habits return to normal. “[Record quarters] won’t continue,” he says, “and filling dealers’ yards with products isn’t going to work.” Another respondent worries that dealers will return to discounting to sell their inventory. But a dealer with a more “glass is half full” approach says it is still a good time to be a powersports dealer, but he is worried about the future.

Some dealers were more surprised with everything going on in the economy that sales were still looking good. We have heard other dealers talk about how interest rates are better than the media makes them out to be. We have even looked at some housing data that suggests interest rates are acceptable for many buyers. If you think about when sales were red hot, most dealers were just taking orders for new vehicles. And home sales became major bidding wars to see how much over the asking price a family was willing to pay.

While rising interest rates don’t help sell anything, the customers who wait until the rates drop may be on the sidelines for a long time. Perhaps the OEMs will step up and give dealers more options for low financing. So far, they have yet to do many promotional deals to entice customers, and the demand still seems strong.


As one Minnesota dealer told us recently, the buying season really kicks into full gear in early summer (Q2). He thinks they can move vehicles as more riders get out, and events start happening. But it’s a game of chicken to see if you have the inventory to match the demand.

So far, the bottom hasn’t dropped out, and I remain optimistic about the rest of the year. It’s about more than unit sales; many customers who bought from you in the last two years want to accessorize their machines to fit their interests, whether for fishing, hunting, camping, or racing. The key here is to keep your customers engaged with the sport and your store. It can be easy to get distracted by things you can’t control, which is why two-wheel therapy is one of the best ways to cope.