Jeremy Jansen, president of Motorsports for Wells Fargo Commercial Distribution Finance, provided an exclusive midyear outlook report to Powersports Business.
“It is hard to believe we’re already more than halfway through 2019. What better time to reflect on how the industry has performed so far, discuss expectations for the balance of the year, and offer insights on how to maintain positive performance.
"Overall, the industry continues to be stable. There are certainly pockets of strength, some of which we didn’t necessarily expect at the beginning of the year. All-terrain vehicles have seen positive retail sales year over year, and the motocross segment has been strong this year, with double-digit retail growth. The last two to three months of snow season were also successful with heavy, late season snow in key markets. Snowmobile inventory levels are the lowest we have seen in years.
“Dealership inventory appears to be reasonably balanced. The amount of aged product on a dealer’s floor that exceeds one year is the lowest we have seen in five years. Vendors and dealers are working together to ensure that dealers have the right amount of product at the right time (versus too much product just in case it is the right time). We continue to see a consistent flow of dealership sales and transfers, as many as 20 per quarter.
“However, there are market headwinds. Retail sales of cruisers, touring bikes, and medium and large sports bikes continue to be down in the high single digits year over year. The generational shift concerns vendors and dealers as consumers evolve in the way they share or engage in experiences. A lack of new riders entering the market, especially in motorcycles, is forcing dealers to rethink the way they connect with potential customers.
“Together, there is a huge opportunity for dealers and vendors to leverage social media to drive product and lifestyle recognition, interest potential new riders and connect with them. Also, having events to draw people, riders, and non-riders alike is a terrific idea. Not just a place to buy, but a place to go and a place to be — more of an experience. That is something we are seeing many successful dealers doing.
“Looking ahead to the rest of 2019, we are optimistic about performance in the side-by-side sector. That has been an area of growth for the industry. Even though sales slowed a bit in the first half of the year, we expect them to be a bright spot in the second half. The snowmobile channel is in good shape, and if Mother Nature cooperates again in 2019-2020, dealers could be in for a successful season.
“Our team will continue to work with the dealer network and our vendor customers to provide transparency into inventory levels and product aging. Using the available tools to constantly manage inventory levels and cost of carry remains a critical component of dealership profitability.
“The opinions expressed in this document are general in nature and not intended to provide specific advice or recommendations for any individual or association. Contact your banker, lawyer, accountant or tax advisor with regard to your individual situation.
“The opinions of the author do not necessarily reflect those of Wells Fargo Commercial Distribution Finance or any Wells Fargo entity. Wells Fargo Commercial Distribution Finance is the trade name for certain inventory financing (floor planning) services of Wells Fargo & Company and its subsidiaries.”