BMO Capital Markets analyst Gerrick Johnson has provided Powersports Business with a research note related to promotions and OEM surcharges for the month of May.
“Each month we analyze the promotional strategies of the largest companies in the Powersports industry. We include findings from companies we cover, such as Polaris (PII-NYSE, $111.88; Outperform), BRP (DOO-TSX, C$101.48; Outperform), and Harley-Davidson (HOG-NYSE, $38.41; Outperform), as well as companies we don't cover, such as Textron/ Arctic Cat (TXT), Honda, Yamaha, Suzuki, and Kawasaki.
“Promotional activity continues to be minimal, with most dealers offering some basic financing offers. The lack of promotions has been the trend since late 2020, as inventory levels have been insufficient to meet heightened customer demand. We have also been paying more attention to model year price increases and freight & commodity surcharges, which are mostly incremental compared with last year.
“Polaris' (PII) May offers were basically unchanged y/y and m/m. PII's Spring sales event began in March and deals are little changed — the main offer remains 3.99% financing for 36 months across its ORV lineup. PII is still running its Ag and Heroes Advantage programs, which offers free accessories plus a two-year warranty for farmers and veterans. Logistic surcharges are unchanged vs. last month: SxS (up to $500), ATV (up to $250), Indian (up to $800), and Slingshot ($700), generally adding +2% to +4% to the cost of a vehicle.
“BRP (DOO) continues to rely on financing offers, now at higher rates compared to the prior month. The primary offers across DOO's ORV lineup are 4.99% financing for 36 months on ATVs or 7.49% for 60 months on SxSs, compared to 3.99% for 36 months on ATVs and 6.99% on SxSs last month; last May, DOO was running 3.99% for 36 months or 6.99% for 60 months on current MY ORV and ATVs. Agricultural and commercial businesses can still save up to $1,750/unit when purchasing multiple Defenders or Commanders, or up to $750/unit on multiple Outlanders. DOO commodity surcharges remain the same as last month, up to $765 on three-wheel vehicles, up to $615 on personal watercraft, up to $400 on SxS, up to $300 on ATV, and up to $400 on snowmobiles. Surcharges generally add +2% to +8% per vehicle.
“Honda, Kawasaki, Suzuki, and Yamaha promotions were mostly less aggressive in May. The Japanese OEMs continue to rely heavily on financing offers with the only area of increased promotional activity being current model year Kawasaki motorcycles. Japanese OEMs continue to advertise surcharges in line with the other OEMs, basically flat compared to last month, with up to $600 for SxSs (from up to $500 prior month), up to $300 for ATVs, up to $300 on snowmobiles, and up to $500 for motorcycles, which adds +2% to +9% to the cost of a vehicle.
“Harley-Davidson (HOG) offers remained minimal in May. We observed only a handful of offers, as most dealers were advertising the new MY2022 bikes. HOG freight surcharges remained flat m/m across the board, ranging from $500 to $1,200 (+3% to +5% to the cost of a vehicle). Our most recent check of 30 geographically diverse dealers indicates overall inventory is up +53% y/y (+20% current MY22, -37% prior MY, +86% preowned). On a two-year basis, total dealer inventories are up +3% (-52% current MY, -49% prior MY, +77% pre-owned).”