Some dealers said they must discount to survive. “November and December were terrible compared to last year,” said one such retailer. “Bikes that were sold were done at large discounts to move the units off of flooring. Apparel and accessory sales were also at discount to compete against Internet sales.”
Motorcycle sales, after rising slightly among surveyed dealers in the third quarter, were flat in the fourth quarter. Decreasing year-over-year Japanese-brand sales offset increases for Harley and BMW. Dealers of struggling brands cited a lack of innovative product and also noted concerns over long-term customer interest in riding.
“In the early summer, it was rising gas prices and fear of a bad economy," a dealer said. "Then it shift to the election negativity. After the election, it is now the fear of future financial crisis looming. Why can’t we just have old standard of ‘I have to check with the wife/significant other first’”?
INVENTORY LEVELS: NOT BAD FOR MOST
Limited snowfall in many areas held back snowmobile demand and has left sled stocks heavy. Many dealers expressed frustration with pressure to take on inventory.
“I’ve got news for my OEMs this year,” a multiline dealer said. “I’m not ordering to get terms on some program. If your product isn’t selling and sitting on my floor, why do I want to order more? Help me move my dated inventory first, and then we’ll talk about orders.”
Side-by-side inventory was reportedly lean in the third quarter, but dealers indicated stocks were more balanced in the fourth. Many OEMs had shipped more units in the off-season, and dealers are now waiting for spring retail sales to kick in.
Still, one dealer said: “The BRP ordering system needs an overhaul. We’re sitting in January with [many] ATVs and SSVs when in October we could not get any product. We are just burning free floorplan days.”
Other BRP dealers complained about not being allowed to carry Commander side-by-sides. “I go to their “Club” [dealer meeting] and get to listen to the ‘rah-rah’ stuff on how much the segments I’m not allowed to sell are growing,” said a disgruntled retailer.
ATV inventory remains just slightly high across all brands after retail sales slowed in the fourth quarter. Some dealers complained about too much variety in ATV offerings. “With ATV sales in the toilet, we have too many model/options/color choices for the number of units sold,” one dealer said. “This causes confusion for the customer and an inventory nightmare for the dealer.”
Harley dealers were the only ones who wanted more bikes, while Suzuki and Honda dealers overall reported they were comfortable with current inventory levels. Motorcycle inventory overall remains balanced.
Honda dealers’ feelings were mixed on the company’s move toward smaller motorcycles. “Dealers are not going to survive on these ‘value-added’ units,” said one dealer, while another dealer said, “I think Honda is on track with the new CB500s and the NC700X. Simply building a better Harley-Davidson won’t be our salvation.”
Several Yamaha and Suzuki dealers said those OEMs needed to update their vehicles, especially the Rhino line. “We have too many carryover units from Yamaha. Their product has been stale the last few years, but they are supposed to be changing that this year,” a multiline dealer said.
After shooting up in the third quarter, scooter inventory returned to more reasonable levels. Dealers reported that they were leaner in brands such as Honda and BMW, but Piaggio/Vespa product remained heavy.
DESPITE COMPLAINTS, MOOD IMPROVES
Compared to the third quarter, slightly more dealers are satisfied with current conditions. Many dealers expressed relief that the election had been decided, though many still voiced concerns about the overall business climate. Those with a more negative view cited difficult relationships with OEMs, slim margins and lackluster products that won’t draw in customers.
Of the respondents, 20 percent said they were “unsatisfied,” down from 26 percent in the third quarter. Twenty-six percent said they were “satisfied,” and 54 percent were neutral.
Looking ahead three to five years, the “unsatisfied” group increased to 22 percent, but “satisfied” also rose to 31 percent while “neutral” dropped to 48 percent.
Despite overall industry sentiment trends, dealers of certain brands reported they are significantly more satisfied than others. “Based on comments and other survey results, this likely due to the combination of better retail trends, more balanced inventory, fresh products, and good relationships between the OEM and dealers,” said Baird’s Kennison.
Polaris dealers indicated more optimism than other dealers, and Honda dealers reported a more favorable view of current conditions than they did in the third quarter. Harley dealers previously had the highest levels of satisfaction, but many dealers cited frustration with product availability, which may have dampened sentiment in the fourth quarter.
Suzuki dealers had mixed feelings. One dealer was “very worried” about the OEM’s future in the U.S. after the bankruptcy filing, while another dealer said, “I am betting on Suzuki’s rebound.” (Story continues.)