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Survey: Sled sales are sharply down – February 12, 2007

February 12, 2007
Filed under Features

The trend of new snowmobile sales falling year over year in the United States appears not only likely to continue, but increase in intensity.
That’s the conclusion from a national survey of dealers conducted for Powersports Business that shows new unit sales are down nearly 38 percent compared to the previous year.
The depressing late-season survey also reveals dealers’ profit margins are shrinking in comparison to a year ago. The average profit margin this year is 5.7 percent, the survey of 152 dealers found.
Of the dealers surveyed, 58 percent said their margins are “somewhat lower” or “substantially lower” than a year ago. Thirty-six percent said their profit margin is about the same as last year.
The survey, conducted by Irwin Broh & Associates, represents about 13 percent of the market. It also reflects a continuing trend — U.S. sales of new units have decreased for nine straight years, including a 9 percent drop in the 2006 selling season and an 8 percent fall in 2005, according to the International Snowmobile Manufacturers Association and other sources.
An oft-repeated cause for the sales slide is a lack of snow, something BRP CEO Jose Boisjoli repeated at a recent company product launch. “We just need six weeks of good snow and we’ll have a decent season,” he said.
The lack of snow was certainly borne out by the survey, which found only 9 percent of the dealers surveyed have snow in their area. That’s particularly depressing since the survey targeted dealers in rough proportion to their state’s percentage of registered snowmobiles in the United States. So states with a higher percentage of registered snowmobiles had more dealers polled than those with lower percentages.
Still, dealers said their consumers have to drive an average of 254 miles to find ridable snow.
Fewer New Buyers?
Perhaps because of the lack of snow, dealers are seeing less new sled consumers. Overall, dealers said about 9.5 percent of their new unit sales go to consumers who are buying snowmobiles for the first time.
But 55 percent of those surveyed said they believe that number is dwindling, while 8 percent believe it’s increasing. Thirty-seven percent believe the number of new consumers is staying about the same in comparison to recent years.
For the most part, dealers believe potential new sled consumers are switching segments. Seventy-six percent of the dealers said snowmobile buyers are switching to ATV or UTVs because of poor snow conditions.
Consumers who have previously bought a snowmobile and are in the market again are overwhelmingly sticking to their first brand of choice. The survey found only about 17 percent of repeat consumers are switching brands. But of that small group of buyers switching loyalty, there is little disagreement if that number is increasing. Fifty-one percent of dealers believe it’s staying about the same, while 42 percent believe it’s increasing. Only 7 percent see it decreasing.
There is also a wide disparity in how dealers view their non-current snowmobile inventory. About 41 percent believe it’s on target with last year, while 32 percent said its “somewhat higher” or “substantially higher” than 2005. About 15 percent believe it’s “somewhat lower” than last year.
Other Findings
The national survey also found:

  • Dealers largely don’t believe OEM efforts at attracting younger consumers to new freestyle models are paying off. Only 30 percent said they have seen a change in the demographic of these new unit buyers.
  • Of the dealers who have seen customers switching from snowmobile purchases to ATV or UTV purchases, about 70 percent said quads are not allowed to ride on snowmobile trails in their area.
  • Used sleds represent about 17 percent of dealers’ inventories. Fifty-five percent of dealers said that number is consistent to last year while 14 percent said it’s “somewhat lower” and 13 percent said it’s “somewhat higher.” psb
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