FOCUS – PG&A Business Steady Despite Unit Sales
November 28, 2005
Filed under Features
Despite the fact that new snowmobile sales continue to slide, many aftermarket companies in the sledding world are still making money. In addition, OEM parts, garments and accessories (PG&A) departments are staying strong, with one factory representative estimating his company's PG&A division may be up as much as 15%, while another says they expect to climb 4% to 5%.
“Our PG&A was up last year,” begins Scott Swenson, Polaris' general manager for PG&A. “People aren't spending as much on new machines, so they're spending more on their existing sled. We were up across the board - everything from apparel to performance products to things that make their sleds look different.”
For dealers, PG&A remains a crucial part of their snowmobile business, even if new units - and often the margins on those units - are down. And while burgeoning ATV sales have kept many dealers in business, quads don't inspire PG&A like snowmobiles. “We'll do $115 worth of PG&A for every ATV sold,” says one major Midwestern dealer. “But we'll sell $450 in PG&A with each sled.”
Established aftermarket companies like Sportech and Erlandson Performance are succeeding by continuing their snowmobile innovation while also tapping into the huge ATV market. “Business is just tremendous for us right now,” says Glenn Erlandson. “We're up 20% over last year; this year is our best ever. The ATV market is just recognizing the potential of clutching, so it's growing huge.”
“The snowmobile business is steady, but it's not growing in proportion to the rest of our business,” says Sportech's Chris Carlson, whose company has exploded from three employees in 1998 to 55 currently. “It was 77%of our business in 2002, but it'll be less than 20% this year.”
To help complement their usual snowmobile-related sales, aftermarket companies are increasingly developing strong relationships with the OEMs. While the private labeling of aftermarket-provided stock components is certainly nothing new, more and more businesses are getting involved.
At Polaris, Erlandson Performance will now provide clutch kits for the manufacturer, and Starting Line Products will also work closely with the OEM. “They have a lot of knowledge in certain niches,” explains Swenson. “Working with leaders of mountain performance [SLP] and clutching technology can help grow their businesses as well as ours.”
“We've had a good relationship with Polaris for many years and we're very fortunate to be working with them,” says Erlandson. “This is a team effort, and I think we can do something positive for them. We've been around a long time and bring credibility; we've paid our dues under fire.”
“Some of these aftermarket companies are experts in their field,” says Tim Benedict, Arctic Cat's accessories and apparel manager. “There can be barriers to entering development, like tooling or technology or capital expense. Sometimes the aftermarket company has already done that work and it doesn't make financial sense to do it yourself.”
While both the aftermarket and OEMs are becoming more open about their dealings with each other, there's no doubt such relationships remain sensitive. In fact, several aftermarket company representatives declined to speak for attribution in this story.
“Maintaining your own brand while providing a factory with product can be touchy,” says one aftermarket rep. His company has their own popular brand, but it has also worked with multiple OEMs. “When we make something for a factory it becomes theirs, and we're OK with that. But in a way we're almost competing against ourselves, and you have to make a decision regarding the benefits.”
“It's a delicate balance,” says Carlson, whose company has worked with each of the factories. “We value the relationships we have with both our distributors and the OEs, and you have to have an operating philosophy grounded in integrity to make it work. psb