Floor space and inventories increase; holiday sales are hot
During the first week of January, Power Products Marketing conducted a telephone survey on behalf of Powersports Business magazine among 120 authorized motorcycle dealers across the U.S. These dealers collectively reported 2002 motorcycles sales of more than 68,000 units, about 8% of the market, which is a significant sample. This report is an analysis of the feedback we received pertaining to the parts, garments and accessory (PG&A) lines, new and used motorcycle sales and inventories and percent of new motorcycle sales by buyer type.
Apparel And Accessory Items
We asked the 120 motorcycle dealers we surveyed to describe how the number of motorcycle apparel and accessory items they are carrying in inventory had changed during 2002. It should be emphasized that this is not inventory but the number of different items and brands dealers choose to carry in apparel and accessories.
Based upon the responses, the number of items increased on average 8.8% last year. This compares with a 16.4% increase dealers reported during 2001; 25% over the two-year 1999-2000 period, a 12% annual average; and 20% in 1998. This computes to an overall increase over the five-year 1998-2002 period of about 90%, nearly double the items in 1997.
There were 10 dealers who reported a decrease in their apparel and accessory offerings during 2002, and 38 dealers reported no change. But 72 dealers, 60% of the those sampled, reported an increase of varying amounts.
Floor Space for Apparel And Accessories is increased
According to the 120 dealers we surveyed, the amount of floor space in motorcycle dealerships devoted to apparel and accessory items increased 9.3% during 2002. This compares with the 9.7% increase reported during 2001 and the two-year increase of 19% reported by dealers for 1999 and 2000, a 9% annual average. For 1998, dealers reported a 16% increase. This computes to a 66% increase in floor space over the five-year 1998-2002 period, about two-thirds.
Only four dealers reported a decrease in floor space during 2002 while 73 dealers, 61% of the sample, reported no change. There were 43 dealers who reported increasing the amount of apparel and accessory floor space during 2002.
PG&A Profit Margins slip
Profit margins on motorcycle parts, garments and accessories continue to face pressure from competition and a stagnant economy.
We asked the 120 dealers we polled to indicate how much their motorcycle PG&A profit margins had increased, decreased or stayed the same over the last year and by what percents.
According to the responses, the overall average amounted to just a 1.1% increase during 2002. This compared to a 2.4% increase during 2001, a 3% increase between the two-year 1999-2000 period and a 3% increase during 1998, based upon surveys conducted by PSB then. All told, this would compute to about a 10% increase in margins over the five-year 1998-2002 period.
There were 25 dealers who reported a decrease in their PG&A profit margins during 2002 while 68 dealers reported essentially no change. Only 27 of the 120 dealers we surveyed, roughly one in five, reported an increase.
Christmas PG&A Sales increase
Based upon our dealer survey, motorcycle PG&A sales over the 2002 Christmas holiday were on average 3.9% better than 2001, which is remarkable, considering retail sales in general for the economy were reportedly the weakest in 30 years during the recent holiday period.
Last year, our dealer survey indicated 2001 motorcycle PG&A holiday sales were 8.9% better than 2000. This figure had consistently been tracking at the +9% rate each year between 1998 and 2001 Powersports Business had been tracking Christmas holiday sales for motorcycle PG&A.
Of the 120 dealers who responded in our telephone survey, 34 indicated their motor-
cycle PG&A sales during the 2001 Christmas
holiday had decreased, 23 reported no change
or flat sales compared to the previous year and
63 dealers, just over half, reported increases of varying amounts.
Used Motorcycle Sales
We asked 120 dealers to report their new and used motorcycle sales for 2001. As indicated earlier, there were over 68,000 new motorcycles collectively sold by our sample of dealers during 2002 compared to over 14,500 used cycles sold.
This computes to a 21.5% used/new ratio on average, nearly identical with the 22% ratio we compiled from our survey a year ago for the year 2001. For 2000, the ratio we derived from our survey was 29%.
This would indicate that during 2002, used motorcycle sales kept pace with new unit sales at powersports dealerships.
New/Used Motorcycle Inventory
We next asked the 120 dealers we surveyed to identify how many new and used cycles they had in inventory at December month-end.
Based upon their responses, there were over 26,500 new motorcycles in dealer inventories, which was 36% of the 2002 annual sales they reported, or about 4.3 months of product on-hand. Our survey from last year reflected a 32% ratio for year-end 2001 or 3.8 months on hand, and for year-end 2000 our dealer survey then registered a 36.5% inventory to sales ratio, or 4.4 months on-hand.
This 23% increase in new motorcycle inventory at year-end 2002, based upon our sample, would seem to be indicative of motorcycle sales slowing to an estimated increase of 10% during 2002 compared to the 18% increase from the prior year as reported by the MIC.
Used motorcycle inventory reported by our 120-dealer sample totaled nearly 3,000 units, or about 12% of new motorcycles in dealer inventories and about 20% of used cycle sales.
Compared to last year’s figures, used inventories then were running at 15% of new motorcycles in dealer inventories and 22% of dealer 2001 used cycle sales, another indication that new motorcycle inventories appear to be running at high levels.
Motorcycle Sales By Buyer Type
As with all the powersports markets we follow, we periodically track sales by customer segment, in particular the ratio of first-time buyers.
We asked our 120 sample dealer body to estimate the percent of their new unit motorcycle sales by four distinct groups of customers – first-time buyers, those customers returning to the sport after an absence, those customers adding another cycle or more to their existing number and those customers replacing an existing bike being sold or traded in. Here are the most recent averages compared to prior periods:
2/03 8/01 8/99
First-Time Buyers 25% 28.5% 21%
Returning To Sport 20% 22% 24%
Adding Bikes 20% 15% 17%
Replacing Bike 35% 34.5% 38%
According to our recent survey, it appears the percent of new cycle sales from buyers replacing an existing bike has remained fairly stable over the last year and a half while those sales coming from customers adding to their number(s) owned has increased significantly, offset by appreciable declines in first-time buyers and those previous owners returning to the sport.
Dealers increase PG&A efforts
Floor space and inventories increase; holiday sales are hot