Editor's note: Power Products Marketing, a Minneapolis research firm, has been tracking the nontraditional ATV market for
more than 12 years. This market consists of distributors of ATVs manufactured in Taiwan, China and, to a lesser extent, South
Korea that don't report sales figures to the MIC. It does not include the youth models that the traditional OEMs such as Arctic
Cat, Polaris, Can-Am, Kawasaki and Suzuki source from Taiwanese manufacturers. Matthew Camp, a powersports analyst with the
firm, prepared this report.
LAST YEAR WE wondered whether spending even $1,000 on an ATV seemed out of the question given the deepening recession and
the drop in disposable income. Now that we've been able to study the entire 2008 ATV market it looks as if the answer is yes.
According to our research, sales of Chinese and Taiwanese ATVs plummeted from 465,000 units in 2007 to an estimated 235,000
units in 2008, nearly a 50 percent fall.
The current recession is the first big test for the nontraditional ATV market. It hasn't been through such bad economic conditions
since the Chinese began to enter the market in strength. We expected that as credit markets tightened last year and the more
expensive name-brand ATVs became unaffordable, a proportion of consumers would still buy Taiwanese or Chinese alternatives.
Broadly speaking, this doesn't appear to have happened. Consumers just stopped buying. This shift has caused inventories to
pile up in warehouses and on dealer's floors.
It appears that the nontraditional brands' reliance on buyers who couldn't afford a name-brand ATV has been detrimental in
tough economic times. These are the most price-sensitive consumers and are the least likely to have disposable cash. Retail
sales took a double hit when the awful economic news of October and November 2008 coincided with the annual sales surge in
the run-up to Christmas. Sales figures may also be lower than expected for some distributors because many channeled their
buying power into the red-hot scooter market and effectively gave up on ATVs and motorcycles for the short term, thereby sacrificing
potential sales. TRADITIONAL BRANDS GAIN MARKET SHARE
With the sharp decline in the nontraditionals, the traditional brands gained market share, despite their own decline of 30
percent. The MIC-reporting OEMs were able to post sales figures of about 454,000. Power Products Marketing estimates that
the total ATV market was around 689,000 units last year, down from the 1,105,000 units retailed in 2007. Chinese and Taiwanese
brands now represent 34 percent of the market, down from 42 percent in 2007, according to our research.
More than 100 distributors actively import into the U.S. Chinese and Taiwanese ATVs, but many of these are now retailing only
a few containers a year, and the bulk of the sales volume continues to be driven by a handful of distributors. However, we
expect a number of the more established distributors and many small operations to exit the market in 2009/2010. The top 10
distributors in 2008 were AIM EX, Baja Motorsports, BMX Powersports, Galaxy Motorsports, Goldenvale (aka Roketa), KMD Motorsports,
Maxtrade, Motobravo, Moto Dealer Import and SunL.
In 2007, distributors selling Taiwanese brands accounted for just over 2 percent of nontraditional ATV brand sales, but they
were able to increase that to over 3 percent in 2008. When the economy finally recovers, Taiwanese companies may be better
positioned than the Chinese to increase their sales, due to their perceived better build quality, more sophisticated understanding
of marketing, experience of working with traditional OEMs and ability to meet the new U.S. ATV certification standards.
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