2002 utility vehicle sales remain flat

Each year about this time we briefly analyze a particular market that has grown to significant size in recent years and is being mentioned as possibly the fifth major powersports market…namely, utility vehicles or UVs. After experiencing double-digit growth between 1995 and 2000, UV sales have generally leveled off to about 100,000 units over the last three years.
2002 Sales By Application
UV sales followed a very similar pattern during 2002 as had occurred during 2001. Indications were 2002 sales overall were essentially flat compared to 2001, at about 100,000 units including all applications — commercial and consumer.
Two markets that continued to experience sluggish sales of UVs last year were golf and industrial. Overall, the commercial segment was believed to be relatively flat compared to 2001 and perhaps even slightly down compared to the consumer segment that was believed to have increased 3%-5%.
The following are estimates we compiled of UV sales for 2002 by primary application from various dealer surveys.
Golf courses once comprised the largest percentage of sales of UVs used for course maintenance, driving ranges, personnel carriers and beverage cars. In 1995, golf courses represented over a quarter of all UV sales when the market was less than half that today.
According to our recent analysis, golf is ranked number three now, having been displaced by homeowners and farmers, both of which comprise the consumer segment of the market. Golf now accounts for an estimated 16% of North American UV sales in 2002.
Homeowners are Number One
Homeowners are comprised of both hobby farmers, primarily, and hunters and is clearly the number one customer segment for UV sales. Some homeowners also purchase UVs for pure recreational use or for that second homestead for weekend getaways. By our calculation, homeowners accounted for nearly a quarter of all UV sales in 2002. The number of small hobby farms has significantly increased over the last five years.
Most of hobby farmers own a variety of small equipment such as a compact tractor and skid-steer loader. Compact tractors, or under 40 hp tractors, is another product whose sales have surged in recent years, now exceeding 100,000 units annually. Nearly 70% of its sales are estimated to go to hobby farmers.
Other Applications
Farmers and ranchers are mostly large-acre traditional farmers that we have attempted to separate from hobby farmers, otherwise known as gentlemen farmers or weekend farmers.
By our calculation, this consumer application is now ranked Number Two just ahead of golf courses, accounting for an estimated 17% of North American UV sales. Some of these farmers prefer an ungoverned vehicle capable of going faster than 25 mph in order to cover long distances over their property. Others, however, prefer the lower gear ratios a speed-governed UV provides for transporting heavy work loads.
Other commercial turf markets, we calculate, amounted to about 20% of UV sales last year, but it is comprised of numerous miscellaneous applications such as schools and universities, municipalities, parks and rec, sports facilities, nurseries, cemeteries and private campgrounds.
Commercial non-turf markets, most of which tend to use electric UVs, are estimated to comprise about 5% of all North American utility vehicle sales. Some of these applications include airports, hospitals and clinics, hotels and resorts and large shopping malls.
Industrial amounted to about 10% of sales last year. These vehicles can include turf type vehicles and personnel carriers in addition to many of the heavy-plated often yellow-colored industrial type UVs. Besides manufacturing plants and warehouses, other industrial applications include construction sites, survey and site crews, utilities and pipelines, railroads, mining, logging mills and local businesses.
Government sales were estimated to be about 7% of total UV sales in 2001, comprised of both federal and state segments. Besides the numerous federal agencies, such as the forestry service, most federal government UV sales are believed to go to military bases.
Only a very small number of UVs, less than 1%, are sold each year for on-road applications such as meter maids for local authorities and garbage haulers for refuse companies. These are three-wheel vehicles that are registered with DOT as motorcycles.
Some sales of UVs can be ambiguous in that they may appear to cross over between two applications. Examples are sportsfields and colleges and universities, golf courses and some resorts and parks and rec and municipalities.
Major OEM Shares
As has been the case in recent years, four OEMs have long dominated the UV market, although Polaris has made huge strides in this market over the last two years with its new Ranger and Professional series. Together the five total 85-90% of the total North American UV market.
Deere is still considered the leading manufacturer of UVs with their Gator product line that includes 6×4 and 4×2 gas and diesel models as well as electric and heavy-duty Pro Gator models. Deere Gators sells across all applications and estimates are that their share may have slipped to about 28% of the market last year. Reports are a new product launch is in the offering.
Kawasaki has been marketing its popular Mule brand longer than anyone, with the possible exception of Cushman. The company introduced its new look 3000 series in the spring of 2001 but, along with Deere, appears to have lost significant sales last year to Polaris. Our best estimate is that they accounted for perhaps 19% of 2002 North American utility vehicle sales. Mules are most popular among farmers and ranchers and homeowners.
Textron’s E-Z-Go subsidiary has been successful with their WorkHorse and ST UV series, which E-Z-Go produces for other Textron divisions Cushman, Jacobsen, Brouwer and Steiner. In addition, E-Z-Go sells a line of industrial vehicles and personnel carriers. We calculate Textron altogether has about a 16% share of the UV market from all divisions. Cushman sales dropped significantly as E-Z-Go reorganized the operation, closing the Lincoln, NB facility in mid-2002 and delaying startup until 2003 with rumors of a new Turf Truckster and Haulster product line.
Club Car, a subsidiary of Ingersoll-Rand, continues to be the leading supplier of golf cars in the U.S. and we estimate they represent between 10-12% of the UV market. Their product mix continues to shift away from golf to consumers as the new Pioneer series pick up. Both E-Z-Go and Club Car continue to be hurt by the lack of a 4×4 product in their lineups in addition to the declines in the golf and industrial markets in more recent years.
Polaris’ major move in the market last year more than doubling sales and we estimate they are at 12% of the market. Their Ranger II series has been very successful in penetrating the competitive consumer markets where Deere and Kawasaki have been competing head to head.
Watch out for Polaris in 2003 as sales of both its Ranger and Professional series are expected to continue to climb. In fact, it would not surprise us to see Polaris in the number two slot by the end of this year, having leap-frogged ahead of Kawasaki. One interesting trend we noticed from our surveys is the popularity of Polaris Professional Series UVs among Farmers & Ranchers and hobby farmers, both of which include certain buyers that want a speed-governed vehicle, as earlier indicated. It appears industrial accounts may actually represent a small number of PPS sales.
All other OEMs comprise about 10-15% of the remaining UV market. They primarily include Taylor-Dunn, Motrec and Toro. Pug Power, which sold over 2,000 utility vehicles in 2000 but was forced to shut down in the first quarter of 2001, was acquired by a financial institution. Although limited production resumed in 2002, production was again halted earlier this year and the company may be for sale.
Other Trends To Watch
One new OEM that appears could make a significant impact on future UV sales is Yerf-Dog, owned by Flexible Flyer, the leading supplier of go-karts and a supplier of youth ATVs. Their light-duty CUV Rover was introduced this last spring and sells in Sam’s Club stores for $3,995. Estimates are sales could number in the thousands this initial launch year.
Another trend that seems to be growing is the practice by some retail outlets of refurbishing used golf carts and installing lift kits, knobby tires and a rear cargo box and selling these vehicles on the open UV market. Given the huge glut of inexpensive used golf carts, this could pose a problem in the light-duty segment of the market under 1,000 lbs. payload capacity.
Finally, there is growing speculation that new generation hydrostatic UVs with hydraulic functions will soon start appearing. One example is Bobcat’s introduction of its Toolcat 5600 UV with its hydrostatic transmission and steering that can handle heavy-duty front-end attachments.
Kubota is another OEM known to be soon entering the market with at least one diesel-driven model. It may be that such a vehicle can perform the job of both UV and compact tractor around the farm, which would help justify the hefty prices these vehicles would demand given the larger engines that would be required.