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Nov. 29, 2010 – Examining aftermarket segment trends

November 29, 2010
Filed under Features

Signs of restored consumer confidence are appearing in the ATV and UTV aftermarket where a number of companies are reporting increasing sales.

Of course issues that relate to a smaller volume of new unit retail sales linger, but innovative engineering within this segment is bringing results, companies reported.

Some of the leaders of the ATV and UTV aftermarket industry discussed trends and growth areas for this segment with Powersports Business.

Recent Growth

David Breault, product management and marketing director for Curtis Industries, said the company, which specializes in UTV cab enclosures and other accessories, has seen about 20 percent growth this year in the aftermarket and expects it to continue to grow. “New products seem to be getting the most attention,” Breault said. “I believe the only folks that are buying right now want the latest and greatest.”

Aftermarket companies Powersports Business spoke with alluded to the popularity of customizing a machine to improve its value. Put simply, that means an ATV or UTV becoming more useful or more capable, with the addition of various accessories. “We have seen that anyone who steps up to purchase a UTV really wants to get the most of it for work and play,” Breault stated.

Team Industries representative Mark Schiffner agreed, but commented on a more specific need in his company’s niche. “We see a lot of customers buying clutch kits for big tires or mud applications. We are seeing that people are better understanding the value a good clutch kit can bring to performance — especially in the Southern states.” He expects the aftermarket to see the horsepower race continue. “More ATV/UTV owners will try to improve the performance of their vehicles, much like the snowmobile industry,” he said.

Despite increasing its aftermarket sales by 12 percent for the fiscal year of 2010, Team will phase out its straight axle business and continue its focus on UTVs. “[Our] biggest increase has been in our [Polaris] RZR wide-ratio kit. It’s a brand new product,” Schiffner said.

Strong Results

At PowerMadd, company officials have seen a considerable increase over year-ago numbers for both their ATV and snow products, said PowerMadd’s Randy Shimanski.

“We’ve seen good growth in our ATV windshield products,”?he said. “Our handguard line continues to see moderate growth, which we are happy with considering the number of competitors has increased over the last couple of years.

“We strive to offer products that are highly universal. This makes it easier for the dealer because they do not have to carry so many SKUs. We also stand behind our products with a very high level of dealer and consumer support. We are the only handguard manufacturer to offer a one-year unconditional guarantee.”

Ken Scuito, director of marketing at Warn Industries, said, “We have been pleased with our results versus the market. This business segment has decreased somewhere in the neighborhood of 15-20 percent, like last year.” He also said winches remain a popular item, but has seen the demand for tires and wheels grow year over year.

Cycle Country Accessories CEO Jeff Tetzlaff said owners are focusing more on the utility of all their vehicles. “Whether it’s putting in food plots or plowing snow or using them in place of small tractors, vehicles have to deliver value,” he said. “As machines get larger, the ability to do more work increases. Look for aftermarket accessories that help users replace small tractors and other implements.”

Breault of Curtis Industries highlights in-cab electronics as a new area of focus.

“When you have iPods, iPads, Blackberry’s, etc., in your daily life, those devices offer a lot of interesting integration possibilities on the trail or out with friends,” he explained. “There is still a lot to be learned and developed in/on/around UTVs. I look at the market size and product offerings of Jeeps, 4x4s and pick-ups, really anything that works on those vehicles could be developed to work on UTVs.”

OEM Partnerships

Some aftermarket products are linked to the sale of new units, which can make year-over-year growth difficult. However, aftermarket companies can see improved sales because consumers hold on to their older units longer and need parts and equipment to keep them going. Also, OEMs, despite slower sales, help aftermarket companies understand where the market is going and also what is coming down the pipe.

“We are a supplier to most of the ATV/UTV manufacturers, so we understand the testing procedures and approvals that ensure an excellent part or system once it comes to market,” Schiffner of Team Industries said. “Working with world-class companies also forces you to be competitive in price, quality and delivery. Every year seems to bring a new model from one of the OEMs. They are very clever at finding the next big thing.”

Breault added, “They often offer steady business and for us, help level-load our factory and production throughout the year. OEMs also demand perfection and can easily weed out a company that isn’t up to ‘factory-standards.’ It takes a lot of commitment, resources and manpower to work with an OEM.”

According to Tetzlaff, Cycle Country has grown in at least two specific areas. “The growth that we have seen has been a result of taking market share from our competitors. And the sale of our snow-related products increased last year,” he stated.

He pointed to a continued decline in new model sales for the OEMs as a struggle, but called the partnership mutually beneficial. “By understanding the direction OEMs are going with their products, aftermarket product companies can increase the usability of the machines,” he said. “Aftermarket accessories will fit better, and provide more functionality.”

Foreign territory

Foreign competition and foreign manufacturing has grown in recent years as companies, from the aftermarket to OEMs, look for ways to reduce cost. However, proven ATV and UTV aftermarket companies point to things such as quality control, innovation and both consumer and dealer relationships as key attributes.

Scuito said Warn’s high quality, durability and long-term value continue to ensure its elite status in the aftermarket. But

he also contributed Warn’s long-term success to other key business practices, which often sets premier companies apart from its competitors. “We offer exceptional customer service, global service centers, high dealer margins and easy product installation that translates to high customer demand and exceptional customer loyalty,” he said.

Breault of Curtis Industries said, “There are bound to be a ton of companies that think they can just throw their hat in the ring and be successful. Consumers are well versed in their purchasing decisions now and will only purchase from companies they know will be around to service their item.”

To remain competitive, a domestic manufacturer like Cycle Country has remained relentless in the development and production of innovative new products. “We have to be able to bring products to market faster than they can be copied by off-shore suppliers. We have to give our customers products they can’t get anywhere else,” stated Tetzlaff.

He also said the company’s quality, competitive pricing, limited-lifetime warranty on its snow plow systems and in-store merchandising materials help its dealers’ sales people communicate the competitive advantages of the company’s products.

Schiffner also mentioned foreign competition as an obstacle for Team Industries. “We have to be innovative,” he said. “The only way we can attract business to Team Industries is by having offerings that differentiate us from all others. Team is first and foremost an engineering company and our customers recognize this fact.” PSB

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