WARMER WEATHER seems to be bolstering everyone's moods, according to the Q1 Dealer Sentiment Index survey produced by Baird Research and Dealernews.
While dealer sentiment declined in first quarter – due to the winter keeping customers out of showrooms and ongoing challenges with discounters – dealers reported they were more optimistic about the long-term picture than they were in Q4 or even one year ago.
Dealer Sentiment Index Q1 2014
Why? New model rollouts. Dealers for Arctic Cat, BRP, Harley-Davidson, Honda and Polaris all said that new models were successfully overriding the winter blues. Brands that have failed to innovate struggle with sagging retail demand, researchers noted.
With weather woes pressuring the short-term mood but new model excitement bolstering the long term, the Baird/Dealernews Dealer Sentiment Index current outlook dropped three points (49 to 46) from the Q4 survey, but the three-to-five-year index rose five points, to 59.
The challenges. Weather reactions were across the board, and simply depended on what types of vehicles a dealer carries, and where the store is located. "We had a record February followed by a great March – best first quarter since 2006,” said one multiline. But another lamented, “the county morgue had more business than we did for the first two months of the year!”
Discounting continues to be a major challenge: "The Japanese market is very soft, with incredible discounting," said one survey respondent. A BRP dealer stated, "It is very hard to hold close to retail pricing and be competitive with other dealers, as they are discounting at or below cost."
Others expressed frustration with countering what may be unwise customer decisions: “I had a snowmobile customer buy a machine 200 miles away to save $50. Then he brought the unit here for warranty service and then complained because he wasn’t moved to the front of the service line," commented a BRP/Yamaha dealer.
A three-brand dealer added that “fewer parts and accessories [are] sold over the counter. More customers each year are buying on the Internet. Physical brick-and-mortar presence and service don’t mean much anymore. Customers say they will take their chances with a successful deal over the Internet, and deal with problems later, should they occur.”
Sales update. Store traffic is still down, but it has improved over the last year, researchers noted. Dealers reported that, overall, new retail sales were almost flat during Q1. Pre-owned unit sales struggled somewhat while dealers reported a sales pickup in parts, accessories, gear and services. The highest amount of concern over inventory came from primarily ORV dealers, while Harley and Indian stores reported particularly lean inventories.
Dealer comments and more: continued on next page