Q1 dealer survey shows slow, steady improvement: analyst

‘Encouraging’ results show third straight quarterly rise

The Q1 2017 Powersports Business/BMO Capital Markets Dealer Survey shows that, similar to the Q4 2016 survey, the main takeaway is “incremental improvement.”

“While conditions may not be ideal, there appears to be a slow and steady improvement, which began in the third quarter of last year,” said BMO Capital Markets analyst Gerrick Johnson.

The survey was taken by 127 dealers, representing 38 states and four Canadian provinces. Of the 127 dealers surveyed, Polaris and Yamaha (47 dealers each) had the greatest representation, followed by Honda (38), Kawasaki (30), Can-Am (28) and Suzuki (21).

Other brands sold by dealers who took the survey include American LandMaster, Aprilia, Arctic Cat, Benelli, Beta, Bintelli, BMW, Brutus, California Sidecar, CFMOTO, Cub Cadet, Ducati, EBR Motorcycles, Eton, GEM, Genuine Scooter, Hammerhead, Hannigan Trikes, Harley-Davidson, Hisun, Husqvarna, Hyosung, Indian, John Deere, Joyner, KTM, KYMCO, Moto Guzzi, Motor Trike, Norton, Piaggio, Sea-Doo, Ski-Doo, Slingshot, SSR, SYM, Triumph, Ural, Vespa, Victory and Zero.

States with no dealers participating in the survey are Arkansas, Delaware, Hawaii, Iowa, Maine, New Jersey, North Dakota, Oklahoma, Rhode Island, Tennessee, Vermont and Wyoming. Dealers interested in taking the Q2 survey should send PSB editor in chief Dave McMahon an email at dmcmahon@powersportsbusiness.com.

“The results of our 1Q survey are encouraging and represent the third consecutive quarter of sequential improvement. While business conditions are not necessarily robust, 81 percent of dealers do characterize them as either average, good or very strong, up from 74 percent in 4Q and 73 percent in 3Q. We are getting better feedback from dealers not only on business conditions and new unit sales, but also regarding their outlook. Inventory remains elevated as does promotional activity, and we see no changes in responses in those categories on a sequential basis.

“The results of our 1Q17 [survey] are encouraging and continue a trend of modest sequential improvement. We note that the 4Q survey occurred in early January, after the U.S. election, but before Donald Trump was sworn into office. At that time, our survey was buoyed by a wave of optimism from dealers, which we think are overwhelmingly Trump supporters (or perhaps more accurately, Obama/Clinton detractors). Despite the Trump effect wearing off, with little action on the regulations and tax policy dealers care about, conditions and dealer outlooks are still ticking higher.

“Aside from boats, personal watercraft (PWC) were once again the best-performing category in the powersports industry, though with little sequential change in metrics on a sequential basis (which were already at a high level).

“After PWC, side-by-side was the next strongest category, though with a slight deceleration from 4Q results. We note that side-by-side is the category showing the highest levels of optimism from dealers. 

“Powersports dealers are often an optimistic bunch. Dealers’ outlooks are usually stronger than current results dictate they should be. As such, despite moderately positive unit sales results, most dealers cite business as being below plan.

“Dealer outlook continues to be positive and has improved from 4Q16. In addition to boats and side-by-sides, we are encouraged to see motorcycles beginning to engender an increase in optimism. The outlook for motorcycles is still weaker than other categories, but showing needed improvement. Though it should be noted that the answers primarily reflect the performance of metric or sport bike dealers, which tend to share space with ORV and snowmobiles, rather than of Harley-Davidson.

“While most metrics are flat to slightly down when compared to this time last year, just about all of them are up when compared to our 4Q16 survey results, continuing a trend of sequential improvement that began in 3Q16.

“While some of the post-Trump victory euphoria has worn off among dealers, we find them still more optimistic than pre-election and more than they were even last quarter.

“In 1Q17, 46 percent of dealers said that overall business conditions were either good or very strong, while only 20 percent said they were poor or very weak. This is a nice improvement from 4Q16 when 39 percent reported business conditions being either good or very strong and 26 percent said either poor or very weak. In 3Q, the ratio was 30 percent to 28 percent.” 

Interested in learning more about how the industry performed at the retail level in Q1 2017? Download the 8-page PDF of the dealer survey results for $39.99 at www.powersportsbusiness.com/digital-downloads.