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Side-by-side retail sales tracking positive: analyst

Similar to data from CDK Lightspeed we reported on earlier this month, June retail core powersports sales (motorcycle/ORV) is summed as follows in a research note provided to Powersports Business by Wells Fargo Securities analyst Tim Conder.

“Collective U.S. June unit retail likely flat, but tracking up YTD. Channel inventory levels remain healthy with liquidations currently outpacing wholesale. Aging remains at 4-5 year low of ~10% (down 200bps from 2017). Southeast including TX leading liquidation trends YTD.”

Conder reported the findings after communicating with industry floorplan lending contacts.

For the motorcycle segment, Conder reports “June unit retail –LSD% inclusive of BRP’s new Ryker vs. a moderate +4.1% comp. YTD retail flat vs. -2.6% comp, but –LSD% ex-Ryker.

“Touring and Cruiser continue to lag –HSD% YTD vs. easy comps, while Off-Road/MX are outperforming +DD%.

“Canada retail -3% YTD.

“ATV. June unit retail -LSD% vs. easy -4.8% comp, but +1% YTD vs. -2.4% comp. Ag appears to be impacting YTD trends. Canada retail -3% YTD.

“SxS. Unit retail tracking +3% May YTD. No apparent Ag impact. We remain cautiously optimistic for steady modest growth led by ORVs.

“Marine. June U.S. unit retail likely -5% (vs. +4.5% comp), Q219 also -5% (vs. +4.3% comp). Aluminum fishing retail continues to lag YTD, but all segments including ski/wake were challenged in June. Note June/Q2 typically accounts for 15%/44% of annual unit retail. While 2014 retail recovered June-Aug following a weather-impacted start, we are less optimistic this year. Weather has been the primary headwind, but we now believe much of the current cycle demand has been met. Channel inventory levels are becoming an increasing concern especially for pontoons and saltwater fishing given soft retail following optimistic dealer orders. Ski/wake still in decent shape as retail momentum continues YTD. Overall 12+ month aging remains at record lows, but 9+ month aging is increasing with dealer curtailments now setting in. OEMs have been more aggressive on channel control for aluminum fishing, but channel inventories will likely require broader wholesale cuts/promotional support through H219/early 2020. We now expect 2019 U.S. marine retail to be down 3-4% in units (prior down 1-2%) and +1-2% in dollars (prior +3-5%). Our initial 2020 outlook is retail units and $ of +/-1% ($ spread compressed as larger boats correct in 2020).

“RV. Soft U.S. retail trends likely continued in June. Note while YTD retail is down 7-8% from 2018, channel invs ~2017 levels. Dealer sentiment remains mixed as the industry channel inventory correction continues. Unit count is mostly right-sized, but the remaining problem is aged MY17/18 inventory. We believe there is increased stress on dealer margins as discounts to move aged units, higher yr/yr floorplan interest rates, and curtailments are collectively weighing on margins. While discounts have likely peaked, remaining channel clean-up will take through CY2019. We feel dealers will take most MY20 units in late Q419/Q120 as dealers now have greater power on shipment timing given softer demand and increased “real-time” supply. We believe 2019 RV wholesale unit shipments will be down ~15% given easier H219 comps and could stabilize in 2020.”

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