Sea-Doo cut its production by more than half entering the 2009 season and by May was in a much better position than at the same time in 2008. But even with this significant cut in production, reports are that See-Doo is sitting on considerable inventory. Yamaha is reported to be in a much better position inventorywise, and Kawasaki has very low inventory rates. As a result of the prevailing market conditions, expect all manufacturers to slash production next year to try to accommodate a forecast of weak sales and lowering of inventory levels.
Honda’s Future in PWC
In our midseason review we mentioned that Honda had temporarily closed its Timmonsville, S.C., ATV and PWC plant and had been heavily discounting units. From our research it appears very few, if any, new 2009 models were actually produced and wholesaled and nothing has been produced for 2010. Honda appears to have sufficient ’07 and ’08 units in inventory to supply PWC for another year under the current market conditions. Timmonsville appears to be exclusively focused on ATV production and PWC will in theory be manufactured at another undisclosed plant some time in the future.
While this is being presented as a “mothballing” strategy until the market conditions improve, given the costs of relocating, retraining and retooling, it certainly seems more like a graceful way for Honda to exit the market completely. Honda initially entered the PWC market as part of a strategy to appoint single-line Honda dealers who could cover all powersports market segments. But this strategy has been largely abandoned, so the rationale for Honda to have continued involvement in a PWC market representing less than 100,000 units annually would not appear to be sound.
2010 Season Projection
With projections for anemic economic growth in 2010, it seems that the best we can hope for from the PWC market is flat sales. That certainly appears to be how the OEMs are planning as they attempt to adjust production. Any return to the heights above 80,000 units where the market had been for most of this decade seems a long way away unless there are dramatic changes in the economy and credit conditions.