Following is a report from Powersports Business staff reporter Nick Longworth on how the rental business has been impacted by COVID-19.
The entire powersports industry has been dealt an unexpected curveball in the wake of the onset of COVID-19.
According to a recent a Powersports Business report, Same Store Sales revenue at 1,711 dealerships in the U.S. that use the CDK Lightspeed DMS decreased 19.7 percent overall on average in March 2020 compared to March 2019, due largely to the coronavirus. In contrast, this follows a February 2020 gain of 18 percent vs. February 2019.
As the economy continues to restrict production and spending, even the most resilient dealerships are beginning to feel to the pinch — with many changing showroom hours, shifting toward online-only sales operations and beginning to either furlough or layoff employees.
The same has been true for some in the powersports rental industry, which is often tied to tourism, vacations and disposable income. Although once faced with a strong economy, some shops have seen business slowing.
“We had an unbelievable winter last year, it was a record-breaking year. It was a long season with a lot of rentals. We also had a 25 percent growth the previous summer,” said Scott Newton, co-owner of 201 Powersports in Bingham, Maine, a Polaris ATV, side-by-side, snowmobile and Slingshot rental outfitter through the Polaris Adventures program. The business also offers service for all brands, as well as, a retail outlet. Launched in 2017, Polaris Adventures offers powersports rental opportunities through a network of 90 outfitters in 33 different states.
“It’s been horrible since COVID-19. We work with a lot of vendors that take reservations for us on a commission-based system, and they were starting to have good calls come in, and then it was like the water faucet shut right off.”
Newton estimates that during the summer months, 15-20 percent of the shop’s yearly total rental sales will be walk-in business. Unfortunately, like many states, Maine mandated non-essential travel be restricted until May 1 — leaving an unpredictable season.
“The Friday coming into Memorial Day weekend is huge for us, it would be a big hit for the entire area to lose that weekend,” said Newton. “We’ve had some bookings already, which is a good sign to see. We were taking ATV calls throughout the middle of February — a lot of times you don’t see that until the end of the season, or closer to the [booking] date. But then within two weeks into the virus outbreak we started getting calls and emails of concern, and people wanting to cancel bookings.”
In Maine, logging and paper mill companies own most ORV trails, and the state officially shuts down its trail system on Nov. 15. Meanwhile, social distancing has made club efforts to maintain trails a challenge.
This year 201 Powersports opened its second location in nearby Jackman, allowing the spot to offer its customers a “guaranteed location” for snow and winter adventures. During winter, the shop also offers transportation services, delivering machines from shops to consumers for $50 a trip. In total, they had a fleet of 36 snowmobiles this past winter, and will have eight ATVs and 16 side-by-sides this summer.
Recently a lifeline was cast for dealerships struggling to bridge the gap between busy seasons and a slow economy. Federal funds have been made available as a part of the economic stimulus package that passed Congress.
“We were told we’ve been approved for the Payroll Protection Program,” said Newton. “But it’s still early and it’s hard to tell.”
Another silver lining for some dealerships has been being able to rely upon a steady supply of repair service business.
“We’re still receiving quite a bit of calls about service specifically, as well as in the retail segment — people are still spending a little bit of money, because they want to support local business,” said Newton. “The irony is a lot of people have flooded to Maine from New York, Connecticut, Massachusetts and other states to come to their camp. In one sense it’s a huge opportunity, but we’re just currently mandated to sit idle.”
As a Klim dealer, 201 Powersports dedicates roughly 2,000 of its 6,000 square-foot shop to apparel and riding gear. “In the winter we probably do in the neighborhood of $400,000-plus for retail sales,” said Newton. “We’ve grown 200 percent a year over the last three years.”
Timberline Sports of Bergland, Michigan, has seen retail sales for off-road increase over last year, despite a showroom that is currently closed.
“And service is on-track with last year — we haven’t lost anything as far as service goes,” said Mark Hanson, owner of Timberline Sports, a BRP dealership offering rentals, new and used sales, service and parts. “A lot of people are using this time to get out their machines and get them going.”
Despite the economic downturn due to the inactivity caused by the pandemic, his dealership hasn’t reported being adversely affected due to the natural ebb and flow of seasonality.
“Winter is by far busier than summer — summer is kind of a ghost town around here. In the winter I have between 12 and 15 employees, but in the summer I have three. We have 50 rental units during winter, but in the summer we have four,” said Hanson.
During the summer the dealership offers a Can-Am Defender Max HD8, Can-Am Defender HD8 and Can-Am Outlander L 500. “We will have more people on a Saturday in February before noon than we’ll have the entire month of July. This time of the year for us is always a transition. Foot traffic is down a little bit, but as far as rentals we haven’t seen much change.”
During winter the dealership offers 44 snowmobiles for solo riders, and 6-10 available 2-up sleds.
Timberline owns the equipment it rents, offering the ability to sell rental equipment on its lot once it becomes non-current. “Half, if not all of our entire fleet will be new every year. This year we sold everything, so next year our entire fleet will be new,” said Hanson.
During the downtime, both Hanson and Newton have taken the opportunity to monitor their customers by following social media as well as updating their websites with new information and offerings.
However, some decisions for next season have been left unkown due to the uncertainty cast by COVID-19.
“A lot of people wait until September to book trips, which is where I will begin to run into a little bit of a grey area when I order my fleet. My order needs to be in in two weeks, and I don’t know what to do. How long is this thing going to last?” said Hanson. “A lot of spring order customers are people that have more money, and they’re not so much affected by this already. But if rental customers are out of work for three months, the first thing they’re not going to do is take their snowmobiling trip. Up to this point we’re doing OK.”