Special Report: Mid-year snowmobile sales climb slightly

Publish Date: 
Jan 24, 2012

EDITOR’S NOTE: Power Products Marketing is a Minneapolis research firm that specializes in analyzing retail sales of power equipment in markets around the world. This report was prepared by PPM staff.

Snowmobile sales are weather related; it’s as simple as that. Good snow in December generally leads to a good sales season, and lousy snowfall in December and January means inventory piles up on dealer show floors.

Good snow in December doesn't guarantee a solid snowmobile season, but poor snow virtually guarantees a weak season, and that's what's happening this year. Good riding snow is spotty across the northern United States this year, virtually neutralizing strong, double-digit pre-season sales for the industry, according to reports from the major snowmobile manufacturers.

Industry sales through November following spring programs and pre-season promotions were estimated to be about 25 percent over the same time last year. However, a brown December dropped the sales gains across the industry to less than 10 percent in January 2012.

Snowfall in Minneapolis, the center of the very important Midwest region, in December was only 10 inches, down from 48 inches in December 2010. Last year, the snow in Minneapolis was so heavy that it collapsed the roof of the Metrodome stadium, home of the Minnesota Vikings football team.

This year, it’s a different story. In fact there was so little snow that the Minnesota Department of Natural Resources in December issued a warning of grass fire danger because of a lack of snow across the state.

However, there has been riding snow in the West and Northeast, as well as portions of Canada. There was snow in Newfoundland, Alaska, Labrador, parts of Quebec, British Columbia and the Mountain States. Yellowstone opened before Christmas and people were riding in the mountains in southern Colorado and elsewhere.

Fortunately, spring sales and pre-season sales in August, September and October were fairly strong, and industry retail sales through November were chugging along at strong double-digit rates — close to 25 percent — according to snowmobile manufacturers. Things slowed down in December, however, and estimated sales rates through mid-January showed only single digit growth over those of last year.

Sales for the total season will depend upon snow in the first quarter of 2012, the number of aggressive promotions by OEMs and the enthusiasm of consumers. Consumers seem to be doing their part, if assessments by OEM representatives are accurate.

Snowmobile registration figures from the International Snowmobile Manufacturers Association (ISMA) through last season indicate that interest in snowmobiling in North America has held fairly solid over the last decade even though sales have declined.

Registrations in Canada have held steady, even though there have been annual movements, since 1998. Registrations in 2011 were 5,000 more than in 1998. Last year, registrations grew by 10,000 units, climbing from 592,301 in 2010 to 602,902.

By comparison, U.S. registrations grew about 8 percent between 1998 and 2011, climbing from 1,437,000 to 1,550,158 last year. U.S. registrations climbed three percent last year from 1,504,678 in 2010.

“The customer base is really fired up,” says Ed Klim, president of ISMA. “The clubs are holding their own and trails are more defined and in better shape than ever.” Wade West, Yamaha’s snowmobile manager says that there is still enthusiast passion for snowmobiling, adding that, “[Sales for] the whole industry was up [about] 20 percent through end of November, and that’s the enthusiast base.”

Bob Lumley, vice president of sales and marketing for BRP Ski-Doo, says “sales were exceptional through early December, but December was a tough month and we were no exception.”

Brad Darling, vice president and general manager of Arctic Cat’s snowmobile division, agrees. “December really hurt the industry. Everybody was down but us; we had a good December,” he says. “Some dealers were getting MSRP and more on some models, but that absolutely stopped after Christmas.”

Aside from the December weather, two other factors affected sales to some degree. Arctic Cat ran out of some product. “We were unable to meet the full demand of our dealers,” said Darling. “We couldn’t build what they wanted. We’re sold out, and I don’t remember that for a long time. We didn’t want to do that, but we did want to control what we built. We didn’t want to have stuff in our backyard in January.”

Clean Pipelines
In general, it appears that inventories of current models at the dealer level are in good shape, the best in several years, say many industry observers. And there aren’t many non-currents or used machines in dealerships, either. This could change, however, if there’s no new snow and if consumers don’t respond to the aggressive promotions that OEMs are expected to run in the next month or so to help dealers clean out the pipeline.

Inventories of non-current machines going into the season seemed to be in good shape, the result of aggressive actions taken by OEMs last year. That means that more sales this year are coming from new machines, another good step in keeping the pipeline clean for next year. The dealer margins on new machines obviously are better, as well.

“The last four yours we’ve been driving down inventory,” says Arctic’s Darling, “and it’s got us in good shape.” With Arctic’s non-current inventory way down, sales have shifted to new machines, pushing sales up double digits, he adds.

“Polaris inventory on non-currents is in pretty solid shape. We’re probably in the best shape with the lowest percentage of non-current sleds (in dealer inventories) compared to competitors,” says Mike Jonikas, who heads the Polaris snowmobile operations.

Best Sellers
The hottest machines this year were crossover models for trail and off-trail riding and deep snow models. Sleds with performance and convenience features, such as power steering and other conveniences for casual riders, also appeared to sell well.

At BRP, the MX Z cross-country model and the Summit mountain model were the best sellers. “The MX Z business was up significantly in the spring,” Lumley says, “due in large part because of our new rMotion rear suspension.”

Unfortunately for BRP, it was not able to include the new suspension in its Renegade crossover. “As a result, there consumers in that segment who are probably anticipating rMotion in the Renegade next year and delayed their purchase,” he adds.

Arctic’s Brad Darling says the company’s hottest sleds have been ones ridden in the deep snow in the West. “Quantity-wise, it’s the mountain stuff, and, now that we’ve seen some snow in the East, we’ve even sold some flatland stuff.” The crossover segment also has been good for Arctic.

PG&A also has been strong this year for the OEM because 75 percent of its models are new this year. “Everything related to that, accessories and parts, were extremely strong,” Darling says.

Polaris’ Pro RMK deep snow sled is the number one seller across the industry, says Polaris’ Jonikas, adding that the OEM is market share leader in this segment. “We’ve got several new models this year, and we’re just burning it up,” he says. The Switchback Adventure and the Switchback Assault are selling the best. The Adventure is more for flatland, on-trail and off-trail, and the Assault is for deeper snow.

Yamaha’s hottest seller this year is the RS Vector LTX cross-country model, followed closely by the Nitro RTX trail sled and the RS Venture GT for touring. All three are new this year and two of three have power steering.

Venture and Vector buyers are more casual riders. “They aren’t the hard charging type of guy,” says Yamaha’s West. “They are looking for a sled that fires up without any hassle and is easy to ride.” For those looking for a cross-over sled, there’s the Nitro, which features a 144-inch trackline and a longer suspension.

West notes that it’s been a very good season for Yamaha, in part because the company was aggressive in its spring season marketing. “We went to more key snowmobile shows, more outdoor shows; we were much more visible,” he says. Yamaha also is getting back into grassroots racing in the West as well as in cross-country racing in the Midwest and East.

Market Share
It’s difficult to identify the market share held by each OEM because there are no retail sales reports by manufacturer. But Power Products Marketing estimates that there are some significant changes developing a mid-season.

BRP continues to be the segment leader with about 40 percent share, about what it had last year, although it may have slipped a point or two because of lost sales on its Renegade crossover machines.

It looks as though Arctic Cat’s very strong December sales could help it gain a few points, if its sales hold up through the end of the season. If Cat’s sales hold strong, it could move into second place ahead of Polaris, with about 28 percent market share.

Last year, Power Products Marketing estimated that Arctic Cat and Polaris were tied for second place with about 24 percent share. It looks as though Polaris picked up share, but we don’t think it grabbed as much as Arctic through December, and so it slipped to third place. It’s still up in the air as to who is going to hold second place at the end of the season.

Yamaha continued to have a tough time although it’s having a good season, according to West, head of its snowmobile marketing operation.

The silver lining to this year’s snowmobile season at the mid-point is that consumer interest remains high. Consumers seem to remain excited about snowmobiling, and they seem willing to buy new sleds when there’s snow on the ground.

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