Gulf Coast Disaster: Dealers lose PWC sales, but sell ATVs to cleanup workers instead

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For powersports dealers along the beleagured Gulf Coast, the oil spill disaster has had a significant impact on sales since the whole thing exploded on April 20.

But while most dealerships report a decrease in sales, some are experiencing a temporary boost, thanks to the influx of BP employees and workers into the region.

Every dealership has a story to tell, some more dramatic than others.

Coast Cycle World in Gulfport, Miss, has endured a drastic decline. “The week after it first happened was really dead,” general manager Steve Bullock told Dealernews. “It reminded me more of 9/11 than a hurricane: Everyone was just watching TV.

"That week leading up to it, we were about 30 to 40 percent ahead of last year’s numbers, then in May our numbers were off by 50 percent in watercraft,”  Bullock noted.

Coast Cycle World relies on the tourism industry because the dealership sells personal watercraft to rental operators. With the decline in tourism, rental companies have stopped buying new units.

Louisiana and Mississippi dealers were already feeling a financial strain in the aftermath of Hurricane Katrina in 2005. Even five years later, tourism has yet to fully recover. Coast Cycle World is down to 15 employees from the usual 20-plus, and Bullock noted that there may be more layoffs if the slow sales continue.

Gulf Shores Power Sports in Gulf Shores, Ala., is reporting a 50 to 80 percent decrease in sales, almost all of which stem from the PWC market. GM Morgan Kitchens said that BRP helped out by allowing the dealership to cancel an order of watercraft; existing inventory is now being moved to dealers outside the region.

Still, the outlook is bleak. “This is the summer that wasn’t, and we live for summer sales and profits,” said Kitchens. “The other concern is that we’ll have to order product [for 2011] later this year, not knowing how long all of this will last.”

Even in Florida, where tourism is king, dealerships have felt the effects of the oil spill. Greg Mackey, GM of Honda Yamaha of Fort Walton Beach, said he’s noticed a dramatic change in PWC sales, although motorcycles and utility vehicles are still selling at a normal pace. At the end of June 2009, the dealership had sold 100 more watercraft than it had sold by the same date this year. (Like Coast Cycle World, Honda Yamaha of Fort Walton Beach normally sells PWCs to rental companies catering to tourists, so they are losing significant sales in that sector.)

Making lemonade from lemons. BP has been distributing claims forms to Gulf Coast businesses so they can file for lost income caused by the disaster. While some, like Gulf Shores Power Sports, have already filed their claims, a few dealers have found that, fortunately, there is no need to do so.

One such dealer is Eastern Shore Harley-Davidson in Daphne, Ala., located on the shores of Mobile Bay -- near where BP has a corporate office. The influx of employees and additional labor into the area has been a boon for Eastern Shore Harley-Davidson, noted GM Robby Thompson. He reports that their sales at the end of June were 13 percent ahead of where they were this time last year.

“BP workers have been coming into town, and they ride Harleys,” said Thompson. “My philosophy is, ‘If you can’t get in your boat and go fishing, then get on your Harley and ride!’ Our business is still growing.”

Not every dealer is as optimistic; still, other locations are benefiting from BP’s increased presence in the area. Cycle World of Houma in Houma, La., is about three miles from a BP office. The Top 100 dealer has seen a reduction in retail sales, but it’s not all bad news: During Mother’s Day weekend, BP ordered 10 utility vehicles for use in cleanup efforts. The oil giant then bought about 50 more in the six weeks following that initial order.

Glenn Diedrich, owner and general manager of Cycle World of Houma, said the influx of people — from BP employees to the Coast Guard and even Homeland Security — has actually pumped extra money into the local economy, albeit on a temporary basis.

Diedrich is realistic about the long-term effects of the oil spill. “The reduced floor traffic shows that people are concerned with the longevity of their jobs, especially those working out in the oil fields,” he said.

How long vehicle sales will be affected by the oil spill is unclear. As dealers prepare to weather a storm far different from the “usual” hurricanes, Greg Mackey with Honda Yamaha of Fort Walton Beach gives an apt summary: “It feels like it’s bottomed out, and everybody is just waiting to see what happens.”

Gulf Coast dealers: How has the oil spill affected you this summer? Comment below or send your story to editors@dealernews.com.