Apr. 21, 2008 – Signs point to positive U.S. sales
April 22, 2008
Filed under Features
By Lisa Young
There is a glimmer of hope on the snowmobile sales horizon: A possible sales increase in the United States after several years of downturn.
Early reports indicate things could end well for the segment, which has battled unfavorable snowfall in much of the country for the past several years and seen new unit sales slump as a result.
Although final numbers from the International Snowmobile Manufacturers Association, which collects figures from the four major snowmobile makers (Arctic Cat, Polaris, Ski-Doo and Yamaha), won’t be available until July or August, association President Ed Klim has a strong feeling things are looking up for the entire North American market.
“It looks like (sales) will be up between 7-10 percent in the U.S. and 15-18 percent in Canada,” Klim said. He cautions these are very preliminary figures for the selling season that ended March 31.
Sales in the United States in terms of volume have been down six straight years and nine of the past 10 years.
If Klim’s prediction holds true, it will be the first time since 2001 the industry has posted a unit volume increase in the United States, according to International Snowmobile Manufacturers Association figures.
United States snowmobile retail sales haven’t had an up year since 2005. That year, sales hit $825.7 million. In 2007, sales were at a 13-year low, $685.5 million.
Canadian sales have historically fared better than those in the U.S. Last year, sales totaled $385.6 million, a 6 percent rise over the previous year and a new high for the industry in the country.
Another possible indicator for a positive end for this year comes from dealers. Powersports Business spoke with 20 dealers in 11 states in early April. Twelve of the dealers indicated the season’s snowmobile sales had improved over the prior year period, with four dealers indicating sales would be about the same. Only four others said they expected a sales decline for the season.
These results are an improvement over already positive leanings early in the season. Earlier polls indicated there was an upswing in the works. A Powersports Business survey of 150 snowmobile dealers taken in December found one in two dealers were up in unit sales compared to a year ago. About 25 percent reported sales were about the same, with the remaining 25 percent posting sales declines for the period.
So just what kicked off and then sustained the season for a possible sales increase? The right amount of snow at the right time in the right places, for once.
“We did our snow dance properly, that’s for sure,” Klim joked.
He might have been kidding, but snowfall for 2007-’08 was a stark contrast with the year or two before. For December-February, the entire Northeast and much of the Midwest saw mostly above normal precipitation, according to the National Climatic Data Center. The Mountain states also saw above normal precipitation. By contrast, it was below normal for much of the country for the 2006-’07 and 2005-’06 winters.
Dealers are in agreement that snowfall was the beacon that drew people back into their stores.
“We basically tripled our snowmobile sales from last year, both new and used,” said Mike Catlin, vice president and general manager at Appleton Powersports in Appleton, Wis. “We got early snow and it stuck around all year.”
Record snowfall in some places helped boost snowmobile sales. Maine was one such place. The northern part of the state accumulated more than 182 inches of powder for the winter. Thanks in part to that snowfall, Bangor Motor Sports in Bangor, Maine, was able to double its sales over the previous season’s levels. Sales still aren’t back to 2002 or 2003 levels, says Kurt Thomas, owner.
“In our area, we had a couple of thaws that slowed sales down,” Thomas said. “A couple hours north of us, they didn’t have any. And we had snow right up until (the last week in March), which is later than normal.”
Nearby in Vermont, things were much the same. Snowfall, which was still ridable into the first days of April, drove sales up 30 percent over 2007, says Ed Jenness, owner of Walt’s Sales & Service in Derby, Vt.
“Snow, that’s it,” Jenness said. “It sure wasn’t the economy. If there was no snow, we wouldn’t have sold a thing.”
The economy seems to be the one dark spot hovering over new unit sales. Though customers weren’t deterred from buying in many markets, areas that have been the hardest hit economically have seen a corresponding drop off in snowmobile sales.
“You certainly have some markets where (snowmobile sales are) a little softer than others because of the economic downturn,” said Klim of the International Snowmobile Manufacturers Association. “Michigan would have fared better if everyone were working.”
While its economy is likely suffering the most, there are still positive stories coming out of Michigan. One of the Michigan dealers Powersports Business talked to was able to increase sales 15 percent over 2007, though two others reported decreases greater than 20 percent.
Sales in other markets, both in the United States and internationally, were able to balance out decreases in select areas to create an overall rosy picture, Klim says.
Manufacturer incentives also helped bring snowmobile sales up, some dealers say.
“(Yamaha) came out with these discount programs, and we managed to move some more,” said Tracy Weeks, owner of Dick’s Boat Shop in Clearfield, Utah.
Sometimes dealers created their own incentives to move sleds off the floor. At times this was to make space for other machines, but often it was to avoid holding on to inventory during the off-season.
Just because sales were up doesn’t mean dealers came out ahead. Low margins at times lead to lost profitability.
“We ended up about the same as last year, but we probably lost money,” Weeks said.
One way to counteract that is through increases in PG&A sales. Along with the service department, this was another area that boded well for dealers during the 2008 season, Klim says. In large part, increases in these departments can be attributed to more people fixing up old snowmobiles, Klim adds.
“We had a lot of people with snowmobiles that rode them many miles this year,” Klim said. “If it starts to snow early next year, we’re going to have a very good year. (Customers) just need to have that confidence level.”