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Feb. 9, 2009 – Dealers still face tough sledding

February 11, 2009
Filed under Features

By Matt Bolch
Contributing writer
This snowmobile season might be the best dealers have had in years — depending on where a dealership is located.
Halfway through the snowmobile season, many dealers are reporting decent sales, says Ed Klim, president of the International Snowmobile Manufacturers Association, Haslett, Mich. While that might not sound like wild enthusiasm, given the current state of the economy and sales performance in the category the past few years, dealers believe they are faring better than those in many other industries.
After suffering a few years of significant downturn that left dealers with noncurrent inventory, last year’s flat sales were a welcome sign that the worst hopefully was behind them. However, the tanking economy has tightened discretionary spending, leaving snowmobile dealers vulnerable again this year.
“In many ways, (snowmobiles) are outperforming the overall market,” said Klim. “Our guys have been doing way better than many other market segments.”
Just don’t say that to Stacey Miller, a salesman at Anchorage Yamaha in Alaska. So how are sales? “Terrible,” Miller replied. “We’ve sold three sleds in January (by Jan. 22), and we sold 28 in January last year. It’s gone from 40 (degrees) below to 40 above, and everything melted.”
Noncurrent snowmobile inventory has been selling for $2,000 off list, and the dealership has been offering a little more than that. A current Yamaha FX Nytro that normally sells for $10,500 and up is now offered for $7,995.
“A lot of (the sales decline) is weather-related, and then the economy,” Miller said. “The beginning of December we were OK, and then the weather turned. I think everyone else up here is in the same boat.”
If there’s any silver lining to be found, Miller notes ATV sales are running ahead of last year’s numbers. And then there’s the long Alaskan winter. “It’s still a little early for us weather-wise. We’ll sled until April, if Mother Nature cooperates,” Miller says.
The report from Colorado Powersports is decidedly more optimistic, as Greg Glennie, sales manager at the Boulder location, reports a 14 percent increase in new sled sales over 2008 numbers. Good powder always helps, but Glennie says the dealership decided to focus on the category several years ago and has been rewarded with a steady increase in business.
“Five years ago, we started to make a commitment to the snowmobile community, sponsoring on-trail events, demos, club rides and poker runs,” said Glennie. “Snowmobilers tend to gravitate to hard-core dealers, and we’ve seen steady (sales) increases since 2004.”
Colorado Powersports sells as many used sleds as it does new snowmobiles, says Glennie, noting up to 70 percent of buyers are die-hard enthusiasts who are trading up to newer or more powerful machines. The remaining customers, between 30-40 percent, are new to the sport and are looking for a new wintertime activity for the family or want to spend time with buddies who appreciate the sport.
The dealership advertises mostly by e-mail to its customer database of more than 4,000. A monthly e-newsletter touts upcoming events, and Glennie says Colorado Powersports plans 4-5 events during the snowmobile season.
“People in this economy definitely do more research, price-shop more and are more conscious of the money they spend,” Glennie said. “But that doesn’t mean they don’t buy the sled they want. If the sled they choose is best for their needs and happens to cost more, I’m not seeing that as a barrier to the sale.”
Sales have been helped by manufacturers’ rebates, which help increase dealer profitability while making promoted sleds more attractive to customers.
Klim, the industry representative, says the most successful snowmobile dealers are active in the local snowmobiling community and aggressive with marketing efforts like Colorado Powersports. “We’re seeing good movement of sleds, parts, accessories and clothing, depending on the region,” Klim said. “Inventory is well under control, and most dealers are selling current models.”
Business at Big Moose Yamaha in Eagle Bay, N.Y., has been as fickle as the weather. “It’s been the deadest I’ve seen in 30 some-odd years,” said Phil Martin, sales manager. “We’re having a hard time trying to pry people from their money.”
Sales of new and used snowmobiles at the dealership are down 35-40 percent. Pre-delivery of new units during October and November was down, although there was an uptick in discounted clothing the week of Thanksgiving. Snow the second weekend of December helped move sleds, a momentum that lasted until it rained the week of Christmas. Martin says the Martin Luther King Jr. holiday weekend also helped sales.
Big sellers this year include the Yamaha RS Vector and the Arctic Cat Z1 Turbo. However, the dealership carries a fair bit of noncurrent inventory, which can sell for $2,000 off retail. Martin says the sales process has been getting tougher as customers agonize over whether to spend the money for a sled. “Now it takes (giving) five demos to sell a unit, when it used to be three,” Martin said.
If there’s a bright spot, that would be the busy service department. Big Moose Yamaha is open seven days a week, and regardless of the weather, technicians are snowed under with work between Thanksgiving and the end of March, Martin says.
Delays for service have been running as much as three weeks at Northway Sports, East Bethel, Minn., says Doug Toepper, sales manager. The Polaris dealer is selling mainly current inventory at a pace to rival last year.
Toepper says sales have been slowed by competitors in the market that have noncurrent product or have bought noncurrent or auction sleds to sell.
“We had early snow and good feelings, but we can’t shake the negative feelings about the economy,” Toepper said. “People are fixing up their old stuff instead of buying new.”

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