Snow industry seeks upturn in ‘05
September 8, 2004
Filed under Features
"Consumer interest boils down to four words: ‘Show me the snow’," says Arctic Cat Marketing and Communications Manager John Tranby. "We had 62 shows this spring and had record attendance, but you didn’t see as many people actually ordering. There was lots of interest, lots of people kicking tires, but people want to see snow."
A CHANGING LANDSCAPE?
The consistent low-snow winters have taken their toll, at least in terms of units sold. In 1997, an estimated 240,000 units were retailed in North America. By 2004 that figure had dropped to around 157,000. According to numbers provided by the International Snowmobile Manufacturers Association (ISMA) for model year 2004, 109,750 snowmobiles were sold in the United States. That’s the lowest total since 1993. As reported previously in Powersports Business, the estimated 4.5% drop in North American sled sales for 2004 vs. 2003 is the seventh consecutive decline in North American units moved.
That’s the bad news. The good news is that the percentage of decline in sales slowed considerably during the past season, and the OEMs built, according to industry estimates, around 15% fewer machines than in the previous year. The end result is that inventory dropped substantially. As one factory rep says, "Everyone was responsible in terms of build."
"Our inventory is half what it was," says Polaris’ Bob Nygaard. "It’s the lowest it’s been in many, many years. Our goal was to clean out the pipeline and we did that."
"We never have the kind of carryover our competitors have," begins Adam Sylvester, Yamaha’s snowmobile product manager, "but our ending inventory was more than 30% less than it was in 2003."
While inventory was down, non-currents still number around 35,000. Though that’s more than desired, it’s more in line with what’s acceptable. "In the old days, you were happy with 15% carryover," says one industry expert. "An 85% sell-through by January was good. Now, carryover in the 20s (percent) is becoming the norm."
But will lower North American snowmobile sales also become the norm, or is the large drop in sales since the mid-1990s more a reflection of Mother Nature’s stinginess? Some dealers aren’t waiting for a weather change, instead choosing to alter their focus.
"Just as two of the snowmobile manufacturers say they’re now ATV manufacturers who also build snowmobiles, we are an ATV dealer that also sells sleds," says Larry Koch of Tousley Motorsports in White Bear Lake, Minnesota. "You have to change with the times. We sell 150 ATVs some months. How many dealers sell 150 snowmobiles in a year?
"I would love for constant great snow and the days when I had to search for machines for customers, but it’s not happening," Koch continues. "I don’t see a great deal of growth in the future, but with snow I do think the market will stabilize, and there’s no doubt people still enjoy the sport a great deal."
Koch’s certainly correct when he says people still enjoy the sport. ISMA President Ed Klim points out that even though sales are down, the number of registered snowmobiles in the United States is at an all time high. "There are more than 1.7 million snowmobiles registered now, and that’s a 50% increase during the past six years," Klim says, adding that sleds continue to help local economies. "We find that virtually every economic impact study shows increases."
As an example, Klim cites studies performed by Plymouth State University. "In New Hampshire, snowmobilers contributed $550 million to the state’s economy in 1998," Klim says. "In 2003, that number was more than a billion. That’s a bunch."
Indeed it is, but that’s not all. Klim goes on to state that snowmobiling has risen to a 20 billion dollar business annually in the United States despite the lower sales, poor snow and fewer miles ridden. "What we’re seeing is a different type of rider," Klim says. "They’re slightly older and slightly more affluent. They’re riding a little less, but they’re spending more."
GOOD START TO 2005
How much will people spend on 2005 models? If spring sales are any indication, it’ll likely be more than the year before, though it varies by manufacturer. "We’re flat with last year," says Tranby. "We were up in the U.S. but down in Canada, so it was basically a wash."
That wasn’t the case at Polaris and Yamaha. "Snow Check was up over last year," says Polaris’ Nygaard. "It was less than our expectations but still up. There were pockets of decent snow, but it was another poor year overall and that hurt."
Optimism runs high at Yamaha. "Our spring sales had a tremendous increase," says Sylvester, adding that the lighter, improved RX-1, new Vector four-stroke – which is aimed at the middle of the market – and redesigned four-stroke Venture touring machine led the charge. "We more than doubled our previous year’s sales. In the spring, Yamaha had the largest percentage increase of any OE by far according to our surveys."
Along with improved spring sales, Klim allows that the 2005 build will be up slightly for the first time in years. "We predict the industry will be flat or maybe up a little, but new sled sales will be up significantly," says Sylvester. "People will be buying ‘05s instead of non-currents. More new models will be sold this year than in any year in recent history."
In keeping with the manufacturers’ claims, dealers agreed that spring orders were up. "Spring Fever was good for us," says Bill Bickford, of Bickford’s Sport Center in Epsom, New Hampshire. "The Mach Z was great; we got rid of every one we could get our hands on – they were gone in about a week. We were predicting our spring sales would stay the same as last year because we just had no snow at all, but they were up a little so we were happy with that. I think we’re looking good for this year; the economy here is pretty good, we’ve got some good product and it can’t snow less, that’s for sure."
Out West, Utah’s Tri-City Polaris saw an increase in spring sales after two down years. "We’ve got 70 units pre-sold this year," says Tri-City’s Max Maxedon, who says he’s satisfied with that number even though it’s far off what the dealership was Snow Checking at the end of the 1990s. "We had never carried over as many machines as we did the past couple of years, but the new product [the Polaris 900 RMK] is really helping us. Our inventory is down to about 20 sleds and we’re doing pretty well overall."
"Our early season sales were up a little bit," says RV Sports’ Adamson. "It was less than we hoped for, but enough to be OK. We’ve just been plagued with less than normal snowfall.
"Snowmobilers are always optimistic, and they are again this year," Adamson concludes. "People really like the product; interest is strong. We say we need snow every year, but if there ever was a time when we truly need early season snow it’s this year, or else we’ll be in trouble." PSB
*Writer Vince Castellanos is a frequent contributor to Powersports Business.