Are customers trained to wait for clearance sales? Maybe, say analysts

Publish Date: 
Aug 16, 2012
By Holly J. Wagner

INDEPENDENCE, Ohio - Side-by-side vehicles continue to lead the off-road market, but sales are slowing across the board as the year goes on, according to an analyst report.

After a weak July, sales have ticked up in August and appear to be strong for the third quarter, Longbow Research analysts James Hardiman and Phil Anderson have announced. Their conclusions were made based on a survey of more than 35 Polaris and Arctic Cat dealers in the United States.

After gains in the middle 20-percentage-point range in the first quarter, growth slowed to the mid teens in the second quarter, and seem to be trending steady or up slightly for the third quarter, compared to the timeframes last year.

“We believe July was disproportionally hurt by drought-like conditions in much of the country and in anticipation of the factory-authorized clearance sale,” they wrote. “Conversely, the first 10 days of August have much trended better than July on a year-over-year basis, returning to mid-teens levels in aggregate.”

OEMs may have inadvertently trained consumers to wait for the August factory-authorized clearance sales, so they can take advantage of promotions like $1,000 rebates and/or low interest rates.

“We appear to be seeing larger and larger discrepancies between July and August sales levels with each passing year as a result of this well-telegraphed event,” the analysts stated.

Sales of traditional ATVs were trending down somewhat for the second and third quarters, with percentage growth estimated in the low- to mid- single digits. That may be hurting Arctic Cat, compared to Polaris.

“Although we spoke to relatively small number of Arctic Cat contacts, it appears that sales momentum among these dealers is noticeably weaker than among Polaris dealers, with much of this likely due to ACAT’s overreliance on the slower core ATV segment,” the analysts stated. “In general, ACAT dealers were less aware/excited about their own upcoming ‘Open Season’ sale, which was beginning during the first week of August, although many of them were just receiving their in-store promotional materials as we were conducting our survey.”

The analysts were nonplussed at Polaris’ 2013 lineup, commenting that “we would have hoped to see more “game changers” such as the new co-developed Bobcat commercial vehicle, a first look at a Polaris-developed Indian motorcycle, or even a long-rumored three wheeler (similar to the Can-Am Spyder).”

But they heaped praise on the new XP 900 side-by-side and its potential for Polaris’ market share. “The introduction of the Ranger XP 900 should help Polaris’ share in the big-bore segment, allowing the company to grow its share from about 30 percent to a more dominant share position that the company enjoys in other sub-segments. If recent history is any indication, it is that powersports enthusiasts appear more than willing to pay up for the most advanced vehicles, and the Ranger XP 900 seems to fit the bill.” (story continues)