Last year, the UTV market experienced its first year-over-year decline since 2001, falling more than 18 percent to just under 222,000 units sold. But even with this drop in new vehicle sales, the UTV market outperformed all other powersports segments — and it’s done so for several years. Let’s get a better understanding of this industry bright spot.
When we talk about 222,000 units sold as well as other statistics, we’re talking about UTVs as Power Products Marketing defines them. There are four main types: those with beefed-up golf car chassis; industrial-type vehicles with heavy-plated steel bodies; mini pickup trucks typically imported from China; and turf-type units. This last category comprises the vast majority of the market (see graph, page below), and is the one most familiar to powersports dealers.
Based on our analysis, sales to consumers — including the owners of large-acre estates and hobby farms — represented just over 73 percent of North American UTV sales in 2009. This percentage has been fairly static for the past few years after gradually rising from about 40 percent in 2000 to 72 percent in 2007.
Recreational utility vehicles (RUVs) comprise slightly less than 28 percent of the UTV market, down from 30 percent in 2008. The economy damaged people’s ability to buy these machines. Even so, RUV sales are still the most likely to grow. With BRP’s entry and even John Deere’s venturing further into the segment, there is potential for further growth when economic conditions improve. The pure recreation application of UTVs in general has increased from 19 percent in 2008 to more than 22 percent in 2009, according to our estimates.
Based on our calculations, just over 80 percent of sales in 2009 among golf- and turf-type UTVs were 4x4, 6x4 and 6x6 configurations. That compares to what was almost 80 percent in 2008, 75 percent in 2007, 72 percent in 2006, and 66 percent in 2005. Compared to commercial buyers, a higher percentage of people opt for four-wheel drive. The consumer segment’s growth in market share, therefore, has contributed to the trend.
Diesel-powered UTVs as a percentage of internal-combustion-engine applications declined slightly in 2009, yet remains at nearly 15 percent. Diesels have declined in popularity since the heydays of the Yamaha Rhino and Polaris Ranger. The lack of a diesel model had been a glaring omission in the Polaris lineup, until July when the OEM introduced the 2011 Ranger Diesel; it’s also supplying a diesel model to Bobcat.
Consumers have shown a growing preference for AWD and EFI options in recent years. EFI engines are increasingly more popular with consumers along with 4WD, independent suspension, bench seats and speeds exceeding 25 mph. We estimate that EFI accounted for just over half of golf- and turf-type UTV sales in 2009, up from an estimated 40 percent in 2008 and 27 percent in 2007. Expect this growth to continue over the next few years.
There are roughly a half-dozen distributors targeting the hunting/outdoor market by offering 4x4 electric UTVs based off golf cart designs. This niche, which was carved out by Bad Boy Enterprises, now includes Stealth, Ruff n’Tuff and Fairplay, all with significant market shares. Now that Polaris and Tomberlin are entering the electric UTV field, it looks as if the electric hunting category has growth potential.
One factor that hindered this segment in 2009 was the emergence of heavy tax credits for low-speed vehicles, forcing many OEMs of electric vehicles with more limited production capacities to focus almost exclusively on LSVs at the expense of their utility vehicles. Most of the tax credits have since expired, so we may see a more “normal” performance this year.
Major OEM market shares
By our estimates, Polaris’ share of UTVs, including golf-type models, was at about 30 percent in 2009, up from 2008, thanks in part to the new Ranger 800 lineup and a new 400cc model. This year promises to be even better for the Minnesota-based OEM due to the Ranger EV and four-seat RZR coming on-stream and the sales boost Polaris will get from its collaboration with Bobcat. Polaris also has been able to expand market share by capitalizing on the Yamaha Rhino’s troubles over the past year.
Kawasaki claims the second position with close to a 15 percent share, benefiting from a full year with the fuel-injected Teryx products in the market.
Kubota moved ahead of Deere in 2009 into third place, with over 10 percent of the turf- and golf-type UTV market. There is a reasonable possibility that Kubota may move ahead of Kawasaki in 2010 if the initial popularity of the RTV500 continues.
Deere’s Gator sales continued to decline in 2009, although the company maintained its fourth position in the UTV market with about a 10 percent share of golf- and turf-type models (which remained static with 2008 share figures). Its new sporty XUV for 2010 may prove successful if Deere can solve the conundrum confounding all non-powersports manufacturers: that UTV buyers seeking recreation generally do not consider non-powersports dealerships as places to shop.
Yamaha’s fall from the top continued as it focused on rectifying issues with the formerly successful Rhino and redesigning its replacement. Yamaha’s sales now represent less than 10 percent of these specific segments, down from almost 15 percent in 2008. Expect to see its market share dwindle further through 2010 as it sells out its inventory. We don’t expect its performance to improve until a new vehicle emerges.
There are more than 35 other OEMs/distributors, including an increasing number of Chinese brands, competing in this market with a variety of vehicle types. Chinese and Taiwanese manufacturers accounted for more than 15,000 UTV sales in 2008. This number fell to just over 8,000 units in 2009 (not including Polaris’ Taiwan-produced Mini RZR) as distributors battled rising costs and weak demand.
The market is getting ready to welcome quite a few new entrants compared to prior years. The RUV segment is likely to be shaken up by the entry of the Can-Am Commander, while the more work-oriented segments will see vehicles from Case IH, New Holland, Gravely and Kioti/Daedong. Perhaps Polaris will have greater success this time around in the pure work segment supplying Bobcat with products than it did with the ill-fated Professional Series of a few years ago.
Increased purchases by the federal government, particularly of LSV-compliant vehicles and electric off-road vehicles as part of the Obama administration’s push for a greener government fleet, will boost sales. The incentives for more energy-efficient vehicles may filter down to state and local levels.
RUVs will increase in importance once again as the economy recovers. Perhaps we’ll see the much-rumored Honda RUV make it to market now BRP has entered the segment. There is also likely to be much interest in what Yamaha will do for the 2012 model year — will it come out with a new vehicle or a re-engineered Rhino, or will it exit the market completely?
The overarching factor, of course, is the economy and how strong the inevitable recovery will take when it eventually gets here. The loose credit conditions of the boon years appear to be a thing of the past, which will put something of a damper on the consumer side of the market for the foreseeable future, although we may see more RUV purchases being justified by consumers who want to use them for work.
This story originally appeared in the September 2010 issue of Dealernews.