U.S. sales down 24%, Canadian sales off 10%
During the second half of December, Power Products Marketing conducted a survey on behalf of Powersports Business magazine among 122 snowmobile dealers across the Northern United States and Canada. These 122 dealers collectively accounted for over 7,500 snowmobiles sold through mid-December for the 2003 season, which we estimate represents about 8-9% of the total market.
We asked these dealers specific questions pertaining to their snowmobile sales, inventories and other trends. We supplemented this research with recent reported industry information obtained from several knowledgeable industry sources.
Year-To-Date ’03 Sales
According to the most current industry reports, total year-to-date North American snowmobile sales through December are estimated to be running as much as 20% behind last year’s pace.
Although December ISMA official sales data was unavailable at this time, reports are that sales had remained sluggish during the entire month due to the lack of snowfall and cold weather throughout the north central U.S.
Estimates are that the downturn in Canadian retail sales (-10%) is much less severe than in the U.S. (-24%) because of poor snow conditions throughout Michigan, Minnesota and Wisconsin. These three states comprise as much as half of U.S. snowmobile sales.
Snow conditions in the Northeast U.S. and in Colorado and other Rocky Mountain states are favorable, although conditions in Alaska have been unusually poor this season.
November year-to-date sales historically represents the mid-point in annual sales and December year-to-date can account for about two-thirds of the snowmobile season’s sales. Reports are the new performance models and certain heavily discounted non-current models are the only product moving through dealerships to date. Hardest hit are most trail models, two-up and entry level models.
Performance Model Sales
We asked the 122 dealers we surveyed to compare their performance model sled sales this year with last year. These models specifically include Yamaha’s RX-1, Arctic Cat’s Firecat, Ski Doo’s REV and Polaris’ Pro X.
According to the 121 dealers who responded, about 48% of recent 2003 season sales comprise these models compared to what they estimated to be 44-45% from a year ago.
Last spring, our dealer survey indicated carryover inventories at about 25% of annual sales, well above the acceptable level. In addition to the sharp downturn in sales, indications are that the current/non-current sales ratio has significantly shifted to more non-current product from what had been about 80/20 during the 2002 season.
Estimates are that non-current sled sales could be in the 30-35% range to date with significant differences in shares between the two mixes among the four competing OEMs. In fact, non-current sales are running well ahead of non-currents from a year ago, which would mean current model sales are running considerably below those from last year.
Based upon our dealer survey of 122 dealers, inventories through mid-December were about 10% above 2002 levels for the same period. With retail sales down 20% from a year ago and inventories up 10%, it appears new sled production has been trimmed back 10% for 2003.
We asked the sample of 122 dealers we surveyed to indicate how many new snowmobiles they had planned to order for 2003. According to the 119 dealers who responded, the composite total amounted to over 11,350 units, compared to just over 7,400 units the same dealers had sold through mid-December — a 65-66% ratio.
Our analysis of this is that if January through March fourth quarter sales can account for at least a third of total 2003 fiscal year sales, carryover inventories will probably be no worse than the previous year.
However, if fourth quarter sales this year dip below last season’s dismal fourth quarter performance, carryover inventories are sure to exceed last year’s 25% ratio, and possibly reach 30%.
Our 122 dealer survey was segregated into three U.S. regions and Canada. In the U.S. Eastern Region we telephoned 23 dealers, in the Midwestern Region, we telephoned 56 dealers, and in the Western Region, we telephoned 13. In the Canadian Region, we telephoned 30 dealers.