Power Products Marketing is a Minneapolis research firm that has been tracking the utility vehicle market for more than 10 years. This report was prepared by Dave Crocker, a senior partner, and Michael Brugioni, a market analyst.

Over the last six years, the most impressive-performing U.S. market in powersports retail sales has been side-by-sides such as the Polaris Ranger series and the Yamaha Rhino.

In 2007, the market hit 265,000 units, an 11 percent increase over the previous year. However, sales appear to have flattened out in 2008.

As a result, UTV sales in the fourth quarter of 2008 may have dropped as much as 20 percent overall, causing sales to be virtually flat with 2007. Since then, UTV sales have been on a steady decline and aren't likely to improve until late this year, if at all.

HISTORY LESSON

Between 2000 and 2002, the UTV market struggled just to maintain its overall 100,000-unit level — whatever gains were made in the consumer segments of the market during 2001 and 2002 were offset by declines in the commercial segments such as golf, resorts and industrial applications that were severely impacted by the existing recession. In 2003, the UTV market jumped to about 121,500 units from 103,000 units the previous year after the U.S. economy bounced back from a prolonged slump. This growth pushed sales to nearly 165,500 units in 2004, 200,000 units in 2005 and 238,000 units in 2006.

Based upon our analysis, consumer sales — which include farmers, ranchers and homeowners segments — represented about 40 percent of North American UTV sales in 2000. By 2002, consumers accounted for just fewer than half of sales and by the next year, they had surpassed commercial applications with a 55 percent penetration. Over the next six years this percentage continued to climb to 72 percent of sales in 2007. They remained about the same in 2008. Over a seven-year period the consumer segment has contributed to nearly 90 percent in the overall growth in UTV sales.

This trend was largely the result of the development of the recreational utility vehicle (RUV) that began when Polaris introduced Rangers that exceeded the conventional 25 mph speed limit. The trend gained momentum with a surge in popularity of the Yamaha Rhino and more recently evolved with the introduction of the Polaris RZR.

Over the last few years, a new category of recreational riders has emerged as a growing customer niche, stimulated by older ATV riders who seem to be switching from ATVs to UTVs. We estimate that in 2005, this category accounted for as much as 15 percent of total consumer sales. This grew to 26 percent in 2008.

UTVs generally are unable to negotiate many of the same public trails ATVs are able to travel because of size restrictions. This presents somewhat of an obstacle, although there is less of a problem in more open riding areas such as the Southwest. In developing the RZR, Polaris appears to have studied the states' trail systems and discovered an opportunity for a vehicle with a 50-inch width that could be ridden on many ATV trails with these restrictions.