UTV Sales Vary By Region, Location

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Dealers report varying levels of success with quad sales

MIDWESTERN FARMERS ARE BUYING SSVs in droves, thanks to their newfound wealth from rising food costs. Northwestern exporters are snatching up large-displacement quads and shipping them overseas. Nationwide, sport-quad riders (often young people who are more susceptible to an economic slowdown) are putting off upgrades.

That's just a portion of what we heard during conversations with several multiline dealerships. But talking with an assortment of ATV dealers across the country leads to more questions than answers.

ARE THE MARGINS BETTER?

  • A dealer in Washington state reports steady Rhino sales, but ATVs aren't moving as fast. And his profits on quad sales have been poor for some time. "If I go back to 2007, I sold mostly stuff that was discounted in utility quads," he says (he declined to be identified for this article). Sport quad sales have "died off considerably," except for the Yamaha 250.
  • Jeff Johnson, owner of MidAmerica Motoplex in Sioux Falls, S.D., says SSV sales are up 40 percent and margins have held across the board. Most of this growth is tied to increased sales of RZRs and utility Rangers. MidAmerica carries Polaris, Yamaha and Kawasaki. "Yamaha, at least in my store, has fallen off the face of the earth with [its] side-by-sides," he says. "Rhinos are not selling."
  • Don Owens, owner of Dothan Powersports in Alabama, is enduring a 21 percent YTD downturn in four-wheeler sales. Dothan sells Honda, Yamaha, Suzuki and Polaris. Margins, however, are up. "Last year our gross profit margin was running, year-to-date through May, about 15.4 percent," he says. "Up through '08 we're averaging gross profit margins on ATVs at 17.3; that's a pretty good increase." An increase in motorcycle sales is helping offset what Dothan is losing on the quad side.
  • Joe Askins, co-owner of Off-Road Express, Erie, Pa., estimates that he's discounting roughly 60 percent of his ATV sales, which is on par with last year. SSV sales, which have doubled in the last year, also are holding better margins, he says, as all are "pretty much pre-sold."
  • Star City Motor Sports owner Robert Kay reports impressive SSV sales — 64 units sold as of June 24, versus 27 units sold during the same period in 2007. ATV sales have declined to 125 from 144 last year. "But I've more than made up for it in side-by-side sales," he says. His margins YTD on ATV sales: 16.1, versus 15.3 percent in 2007.

WHO'S BUYING, AND HOW MUCH ARE THEY ACCESSORIZING?

  • The typical SSV customer at Off-Road Express has an average annual income of $75K or more. Askins estimates his SSV customers spend $1,500 to $2,000 on accessories, even for the recreational RZR. "If customers accessorize at the time of purchase, most of them end up getting a winch and plow which puts them at probably $1,500," he says. "Some of them are [buying] cabs for $3,500."
  • Heavy-duty SSV customization — suspensions, performance adds, extra seats, roll cages and stereo systems, for example — seems to be a trend in the Southwest. "You hear these stories from these guys down in Arizona or California, in the sand dunes," says Star City's Kay. "People will spend ten grand on the machine and ten grand on accessories." In comparison, back in Nebraska it's common for a customer to spend $500 to $1,000, "maybe a couple thousand over time," he says.

SHOULD YOU EXPORT USED UNITS?

  • Paul Teixeira, owner of a Polaris dealership about 100 miles north of New York City, isn't overloaded with inventory, thanks to some heavy discounting and a little help from the OEM. "Usually Polaris would back off this time of year with the promotions, [but] they're keeping them going," he says. "They realize they need to." Teixeira predicts his SSV sales are growing quickly and should outpace regular ATV sales in the future. The challenge, he says, is to get the state to open up land for riding.
  • Michael Resciniti has another approach. SSV sales at his store, Xtreme Machines in Millstone, N.J., have died. "We only probably sell five of those a year," he says. Granted, his dealership sits just 40 minutes outside the concrete canyons of Manhattan. "It's a pretty urban area; you can't just unload your ATV and go ride. You've got to find a construction site or a sand pit, or something like that." What to do? Sell the units to exporters eager to get their hands on large-displacement ATVs for overseas sales. "From what I've heard from other dealers in New Jersey, that's really what's keeping them afloat. The Can-Ams are most popular with the shippers, then the Grizzlies," he says.

WHAT'S WRONG WITH THE TERYX?

  • Our anonymous dealer in Washington state laments the weak sales of the Kawasaki SSV. "The original five I ordered? I still have them," he says. "The Teryx so far doesn't seem like an option to a Rhino. People don't even ask about them. I'm going to have to have big rebates." (Unlike other recreational vehicles on the market, the Teryx lacks electronic fuel injection; however, we hear that Kawasaki may remedy this deficiency for the '09 models.)
  • Johnson of MidAmerica Motoplex has had better luck. "We have actually sold some, and I think that's an anomaly from what I've heard from other dealers around the country," he says. What did he do to spur sales? "I had my salesmen start driving them around, in and out, every day, and all of a sudden we sold five of them. Boom — just like that."

ARE INVENTORIES GETTING BETTER?

  • Polaris is preparing to test a program that could help alleviate inventory problems for a select number of its dealers: a stocking program in which a dealer orders and receives units on a regular basis. Askins, of Off-Road Express, has been tapped for beta testing. "Basically you're going to be viewing what you sold over the last couple of weeks, and then you're ordering them every two weeks," he says. "I'm anxious to see how that's going to completely work out, mainly because of the availability of some of the models. It remains to be seen if Polaris can actually fill the orders."
  • Of course, acceptable inventory levels vary by dealership. Star City's Kay, for example, is happy with his 3.88-month supply — it's down from a 5.88-month supply last year.