Dealer Sentiment Index: New vehicle intros drive optimism

Publish Date: 
Nov 5, 2013
By Mary Green Slepicka

Harley dealers were especially revved up over the 2014 models (see image below). “Both new and core like the new features,” said one dealer. “This has spiked great customer interest, especially the infotainment, the bag lids and liquid cooling on the heads.”

Other dealers reported a struggle with balancing inventory levels. “We sat on a lot of inventory through the spring and summer,” said a Polaris/Yamaha dealer. “Many units were on lot six to 10 months at least. We dealer-traded to others more than we were retailing. Just in August/September we picked up, and we’re selling more. And now, due to not ordering as many, inventory is low.”

It wasn’t yet clear what an early fall cold snap and snowfalls in the Upper Midwest would have on Q4 sales, as many dealers were banking on a long autumn and extended riding season to help move inventory that they couldn’t sell during the cold, wet spring.

Responses in the Q3 survey also pointed to a challenge in securing customer loyalty. “Impulse buying is way down,” said one Polaris dealer. “Seems like [customers] are making at least two trips to the store now, where it used to be one.”

Inventory outlook mixed
Inventory is another matter, especially when it comes to getting the new models on the floor. Many dealers commented that OEMs need to provide them with more ordering flexibility to adjust as market conditions fluctuate.

“Ordering once a season with the ability to change items only before the true season starts is of little help,” noted a BRP dealer.

“The problem has been twofold [with Honda]: lack of availability, and due to lower price points there are lower profit margins. Volume is needed to offset the profit margins, but due to availability, weather, economy, volume is not at the levels that make the new product profitable at this point,” said a Honda multiline.

“The introduction of the Spark PWC is great, but the dealerships are still stuck with unrealistic numbers of units to sell,” said a BRP dealer. “The Spark units don’t have great profit margins, but the POP advertising kit is very expensive and is mandatory. Dealerships won’t be able to cover the cost of the POP with the margins on the Spark.”

Aggressive product introductions in the SxS category have kept stock turning and balanced, dealers said, but they added that inventory is still a bit high in other categories. Still most categories improved from the Q2 report.

“Dealers generally reported they were more comfortable with inventory levels of Polaris products, except for Indian, where dealers can’t get enough bikes,” Kennison said. “Honda dealers want more SxS inventory [because] they can’t keep the Pioneer in stock. Solid retail trends for BMW scooters have dealers looking for more inventory.”

Retail financing stable
Dealers reported that the overall financing environment appears positive. More dealers this quarter indicated that the financing environment had become “less difficult”: 25 percent of respondents vs. 11 percent in Q2.

The majority of respondents indicated no change in the availability of retail or wholesale financing: 55 percent of dealers said availability was “about the same” for retail financing vs. our last report in July, and 76 percent of dealers said wholesale financing was “about the same” vs. last summer.