Dealer Sentiment Index: Sled sales warm up a chilly Q4

Publish Date: 
Feb 7, 2014
By David Kopf

A BALANCING ACT 

While dealers responded that high-performance and differentiated products continued to fuel demand for certain brands, others were suffering from a lack of notable new offerings. Brands that dealers noted were enjoying an uptick in consumer interest included BRP, Polaris, Harley-Davidson and Honda. Meanwhile, dealers of Japan’s other key brands voiced some frustration over what they perceived to be stale offerings.

  • “Suzuki needs to determine if they are going to compete in the U.S. marketplace,” a Suzuki dealer observed. “They make good product, but need to update their lineup and remarket their company.”
  • “Kawasaki has been the same for years,” a Kawasaki dealer stated. “Very slow to change.”
  • “Yamaha needs a complete overhaul,” a Yamaha dealer responded. “The new Bolt is nice, but the Stryker and Raider need infusion.”

When it comes to new offerings driving consumer demand, price appears to be a pivotal issue. There was general concern over new product affordability. Sea-Doo Spark PWC and Harley Street model introductions were examples of new offerings with attainable price tags, but overall the survey suggested that affordability and its relationship to sales is a trend that could be worth monitoring.

  • “New products are all aimed at peak performance and high dollar sales — as are competitors,” replied a Polaris dealer. “I feel that this is because the market is reaching growth peak and the only way to sustain revenues is to pursue the wealthy enthusiast. I believe the SxS market is approaching peak and will begin to fall off sharply like ATV. Without opening new product segments, I question the validity of Polaris and other manufacturers in both short and long term.”
  • “BRP is the same as Polaris on ATV and SxS — looking to sell primarily high-performance, premium units to the most financially capable consumer,” a BRP dealer noted. “BRP made a bold move with Spark PWC to re-invigorate the market for PWC product. We have seen tremendous upswing in inquiries for the new Spark product in a time of year that normally receives extremely little activity in this product segment.”

That said, another BRP dealer quipped that the Spark “will sell, but [it] won't make the dealer any money.” So consensus on price’s relation to demand wasn’t necessarily uniform among dealer responses.

TRENDS FOR 2014

As dealers closed out 2013, the Q4 survey, conducted in January, gave them an opportunity to cite trends that would impact their businesses in the year to come. While powersports participation, governmental activities and dealer margins were submitted as key trends for 2013 in the last year-end survey, the top three trends for 2014 were government regulations and policies, product range and affordability, and customer interest and participation. 

When it comes to government regulation, the implementation of the Affordable Care Act was a key concern among many respondents. How healthcare reform would impact dealers was still coming into focus, and many owners and managers were trying to make sense of its true impact. Some were polarized, saying they would no longer have healthcare at their businesses, with others saying they received more affordable policies with better coverage. Still others were trying to pin down the ACA’s impact on not just the benefits they offered employees, but also their customers’ buying power.

  • “The future looks like the consumers will have less money to work with,” one dealer replied, “and I still don't know how my health insurance for my employees will be fully impacted.”
  • “It will have some negative impact, but we don't feel that it will be very detrimental to sales for our business — at least not this year,” another dealer stated.

Another key challenge for 2014 that dealers highlighted is trying to get younger customers into the market.

  • “Where are the new riders?” one dealer asked. “Baby boomers are hanging up the sport and no new riders are lining up to take their place.”

In a still-marginal economy, one dealer noted that the goal was “competition for the youth of America; to pry them away from their electronics and coax them into spending their expendable dollars in the powersports world.”

Ultimately, the close of 2013 showed that dealers will continue to hurdle many obstacles and have challenges left to face.

“I think 2014 will be just like 2013: more of the same roller coaster ride,” one dealer summarized. “I think the 2014 year in the powersports industry will take more planning and even more careful watching what we do.”


READ THE PAST REPORTS:

Dealer Sentiment Index Q3 2013: New vehicle intros drive optimism

Dealer Sentiment Index Q2 2013: Foul weather, high inventory dampen the mood

Dealer Sentiment Index Q1 2013: Long winter blamed for lower sales

Dealer Sentiment Index Q4 2012: Shaky spending, eroding margins fuel concerns

Dealer Sentiment Index Q3 2012: Dealers optimistic, but sales too volatile

Dealer Sentiment Index Q2 2012: Dealer optimism? Depends on the brand

 

The Baird/Dealernews Powersports Dealer Survey provides a quarterly snapshot of overall dealer health in North America. It is a joint research venture between Dealernews and Robert W. Baird & Co. Dealers in the U.S. and Canada are surveyed to provide insight into traffic, retail, inventory, credit and sentiment, providing hard data and field commentary behind current business trends. “Our goal is to provide the powersports industry with honest views from the people that make it happen every day – the dealers,” Baird stated.