Jeremy Jansen, president of the Motorsports Group at Wells Fargo CDF, provides insight to Powersports Business readers about the U.S. unit retail sales trends in the second half of 2019 for side-by-sides, ATVs and motorcycles as well as a look at the health of dealership inventory levels. Jansen's report follows.
By Jeremy Jansen
President of Motorsports Group, Wells Fargo CDF
As another year comes to a close, it is a great time to reflect on what has been generally a successful year for the Powersports industry. The retail cadence in the second half of 2019 has been very similar to the first half of the year. In the individual Powersports sectors, our CDF Motorsports group saw some consistency from previous years, unexpected strengths, and a few areas of opportunity for next year:
UTVs — Retail of UTVs saw a nice rebound in the second half of the year, some of which was weather driven, and the segment continues to grow in the mid-single digits per year.
ATVs — Sales of ATVs have been consistently solid throughout the year, and should be up by low single digits by the end of 2019, with much of the growth coming in the 400-600cc sector. Given typical cannibalization of ATV by the UTV sector, this is a promising result year over year.
Motorcycles — Overall, motorcycle retail sales are very similar with 2018 levels, however, different product groups are driving strength and weakness. Sport bikes, which was a successful sector last year (specifically <500cc), has fallen back. Off-road bikes, however, will be up by double digits percentage with dual sport models also posting growth this year. Heavyweight motorcycles remain a key industry challenge as the industry continues to adjust to the preferences of the millennial generation.
Pockets of strength
An incredibly successful product this year has been the BRP Ryker, which has retailed more than 8,000 units in the U.S. This product is bringing new and non-traditional motorcyclists into the sport. Bringing in new riders and enhancing the rider experience is very important to the industry right now. This was a successful product introduction and I look forward to seeing how the Ryker performs over the next 24-36 months.
Product innovation continues to be strong with technical advancements, new models, and improved performance and comfort. Whether it’s being able to connect your phone, a more advanced GPS system, or an improved suspension, vendors are leveraging technology and looking for ways to enhance the rider experience.
Inventory levels are very healthy right now. Product that is aged more than 360 days on our portfolio remains near record lows. Snowmobile inventory is as low as we’ve seen in five years, partially attributed to a favorable snow season in 2018-2019, but also driven by balanced inventory shipments. There are, of course, pockets of aged inventory by brand and model, but overall we’re seeing balance, less product that’s turning faster and a lower interest rate environment to drive dealer profitability.
Things to keep an eye on in 2020
As far as any economic impacts on the industry, we’ll continue to watch slowing manufacturing components of the economy; however, overall I’m fairly optimistic about the economic environment. Unemployment continues to be very low, oil prices are relatively stable at a profitable level for producers in the U.S., wage growth is strong, and consumer and small business confidence remains high.
Areas of opportunity looking ahead
From a dealer standpoint, a great area of opportunity is continuing to focus on building the local rider community. Organize events, let people feel and experience the products, introduce diversified groups of people to powersports, and continue to leverage social media as a way to reach new audiences.
Manufacturers have their own unique approach. They’re shifting to smaller displacement vehicles at lower price points and an increased focus on bringing new technological elements to the vehicles. This allows riders of all backgrounds and experience levels to have access to the industry and feel connected to the broader community. In the end, we’re trying to encourage a lifestyle, not just a product.
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