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Nov. 10, 2008 – September slump deepens 2008 new unit sales decrease

November 10, 2008
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A rough September interrupted a year-long pattern in industry new unit sales that had seen significant year-over-year declines in off-road segments but healthy gains in some on-road arenas.
That shift was evident in the Motorcycle Industry Council’s third-quarter retail sales report, which reported a near 11 percent decline in overall new unit sales compared to the year-ago period. That overall retail sales drop was worse than in the first half due primarily because of the poor September. Retail sales in that month fell more than 23 percent compared to the previous year month.
Not surprisingly, industry executives, in reporting their most recent quarter financials, expressed caution about what the final quarter could bring in wake of the unprecedented changes happening in the U.S. financial sectors. More than a few OEMs are looking closely at production cutbacks heading into the fourth quarter.
Dealer traffic, meanwhile, also has decreased through much of the year, according to data from the RPM Group, the industry’s largest dealer 20 group provider.
Metric dealers have reported 14 percent less traffic this year and V-twin dealers have seen 7 percent less store traffic through August compared to the year-ago period.
Looking ahead, consumer spending appears to be tightening in the fourth quarter.
In a survey of more than 8,000 consumers, U.S. shoppers said they would spend about 2 percent more this year on holiday-related shopping than the prior year, according to the National Retail Federation. That increase represents the lowest rise in planned consumer spending since the group began doing the survey in 2002.
Sales by segment
Through the end of September, on-road new unit sales remained either close to last year’s retail sales or even above it in some arenas. Scooters, up 50 percent over last year, and dual-purpose bikes, up nearly 30 percent, both remain industry highlights. Scooter sales also increased in September, up 2 percent over the previous year.
The much-larger on-road retail segment, motorcycles, dipped after the troubling September. That month’s sales fell 14.5 percent compared to the year-ago period. As a result, for the first three quarters of the year, the industry’s on-road bike sales are 2.1 percent below last year’s level.
The off-road segments, however, show much larger decreases. On-road motorcycles and ATVs are down approximately 25 percent compared to the first three quarters in 2007. Those retail sales numbers do not reflect UTV or new entry OEM ATV sales numbers.
Again, September was even worse. ATV sales slumped more than 31 percent and off-road bike sales dropped 33.6 percent from the year-ago period.
Even with the double-digit drop in ATV sales, industry officials remain confident about the long term for quad sales.
“Overall I do not think there is a fundamental problem with the core ATV market other than the poor economy and low consumer confidence,” Christopher Twomey, Arctic Cat’s CEO, said in a recent conference call regarding the manufacturer’s recent quarterly financial report.

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