A research note provided to Powersports Business from Wells Fargo Securities analyst Tim Conder reveals takeaways from a July 14 roundtable call with Wells Fargo Commercial Distribution Finance (CDF) colleagues. CDF oversees floorplanning in the powersports, marine and RV sectors.
Conder reports that “CDF commentary confirmed broad-based significant retail strength continued into June/early-July with inventories extremely lean as OEMs re-ramp production. Retail trends should start to normalize in late July onward as pent-up demand is satisfied and inventory shortages restrict activity.
“We believe OEM fundamental visibility remains strong through YE2020+ as OEMs need to meet current demand plus restock inventories to normal levels. We believe it could be well into 2021 for inventories to normalize in Core Powersports, at least Q121 for Marine, and YE2020 for RV. New entrants across each sector should keep a strong underpinning for demand over the next 2-5 years. Near-term, we question (1) the sustainable level of demand into 2021?, and (2) what is already discounted is Powersports equities?”
Wells Fargo Securities is raising its 2020E segment retail outlooks “for Core Powersports, Marine and RV given the strong retail rebound through mid-July, but lowering 2021E vs. stronger expected 2020 comps.”
“Motorcycles (US) +2%/(4%) prior (7)-(8%)/+6-8%.
“ORV (global) +2.9%/(0.4%) prior (5%)-(7%)/+1-3%.
“Marine (US) Flat/+0-2% prior (6%)/+2-4%.
“RV (N Amer) +2%/flat, prior (13)-(15%)/+4-6%.”
— Dave McMahon, editor, dmcmahon at powersportsbusiness.com