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U.S. snowmobile sales flat, inventory reduced

July 21, 2008
Filed under Uncategorized

By many dealer reports, the 2007-‘08 selling season was a success. December snows spurred early season sales, and some dealers felt like they were reliving the “good old days” when inventory was sold out by the end of January.
“It was the way it used to work, when the time to sell was from October to the beginning of January,” said John Chaikowski, co-owner of JC Powersports in Crivitz, Wis. “Recently, it’s been more like December to March.” He says this past season is the best the dealership has had since it opened three years ago.
It might have seemed like a return to normalcy, but the numbers for U.S. unit sales say otherwise. The 2007-08 season sales, in units, remained flat with a 250-sled sale decrease from 79,802 to 79,552, a change of less than 1 percent. The statistics include sales of new model year 2007 and 2008 units that were sold between Sept. 1, 2007, and March 31.
In terms of dollars, U.S. sales registered a 7.7 percent drop: from $685.5 million to $632.3 million. The average unit price was $7,947 — down $500 from 2006-07 figures.
Ski-Doo spokesman Steve Cowing isn’t complaining. He called the most recent selling season “exceptional.” The XP-chassis models, introduced in model year 2008, sold especially well, he says.
Ed Klim, president of the Haslett, Mich.-based International Snowmobile Manufacturers Association (ISMA), says the story behind the flat sales figures goes back to March 2007.
“That was a really strong month. Between March 2006 and March 2007, sales were up 30 percent, and it was because of late snow,” he said. “Then, in March of ’08, we expected a slight increase, but we forgot just how big the previous March was.” He says March sales in 2008 matched that of 2007.
Klim also pointed to Michigan’s economy as a contributor to flat U.S. sales. “The purchasing power in Michigan has dramatically diminished,” he said. Back in the mid-1990s, 27,000-28,000 snowmobiles were sold in the state. “It was 7,000-8,000 this year. If you took Michigan out of the picture, national sales were actually pretty strong,” he said.
He sees potential for traditionally smaller markets to make up ground Michigan lost. He pointed to strong sales in the Northeast, as well as in Canada.
In Canada, the numbers are all-around more encouraging. Unit sales increased 10 percent season-over-season, from 45,477 to 50,556. Dollar sales went up nearly 34 percent, from $358.6 million-$541 million. Unit price increased from an average price of $8,900 to $10,700.
“The Canadian economy is out-performing ours,” Klim said. “The confidence level of the American consumer is not as high as the Canadians’. Right now, the Canadians are pretty darn confident.”
Scandinavian sales statistics, which include Russia, dropped 4 percent this past selling season, from 35,026 units to 33,645 units. Klim says this was primarily a result of decreased sales in Finland; the other reporting countries were up slightly year-over-year.

Shrinking Inventory
The issue of noncurrent inventory overload, which has been a serious problem for many dealers in recent years, might now be an excuse of the past.
Lonnie Luce, a salesman at Arctic Cat dealership Waconia Powersports in Waconia, Minn., says that the dealership was able to clean out its stash of noncurrent units this past selling season.
ISMA statistics don’t include used or non-current inventory, but Klim says that dealer inventory is way down.
“Inventory now is much more manageable,” he said.
Cowing agrees. “Staying flat really was a benefit. It allowed us to be able to clear out inventory,” he said.
Neither does Klim think that lower manufacturer build numbers affected overall sales. “There is still some inventory, but it is manageable, for sure,” he said “Some dealers may have cut orders, sold out and couldn’t get more product on a timely basis, but it was their management decision.”

Will one good winter cure all?
“It certainly cures a lot,” Klim said of the effect of a nationwide snowy season, “but we could use one more.”
An ISMA survey showed the average snowmobiler rode 100 miles more this past season than the year before.
“That’s a good thing, because the more they ride their snowmobile, the happier they are,” he said “We know they’re still involved in snowmobiling, a few more miles means that they’re closer to trading it in.” A follow-up season that includes ride-able snow is the clincher, he adds, to a better and faster snow-market recovery.
“One good year is a good start,” Yamaha spokesman Wade West said. “Obviously, it’s going to take repeated and sustained winters to bring the industry back to a position close to where it was in the late ’90s, but one year is a good start.“
One indicator of optimism is spring sales. West says Yamaha had good spring sales; Chaikowski’s small dealership sold two units during the spring program.
Luce says he had one of his best preseasons unit sales in five years; he sold in the low 20s — which is a large percentage for a dealership that on average sells 100 units annually. More recently, he notes, he’s been selling about 10 units in the preseason.
The number of registered snowmobiles rose in Canada last year, and while U.S. numbers are not official, Klim says he expects to see a bump up from 1.59 registered snowmobiles to an estimated 1.7 million.
“That’s because we had snow,” he said. “What people did is took sleds out of the garage and registered them, and then they went out riding, they had fun and that’s why [the market] needs a second year. If it snows, they’ll ride again, have more fun and buy a new machine sooner.”

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