Issue link: https://read.dmtmag.com/i/626951
6 • January 25, 2016 • Powersports Business NEWS www.PowersportsBusiness.com WINNING DEALERS The following dealerships that completed the Q4 2015 Powersports Business/RBC Capital Markets Dealer Survey each were selected at random to win a $100 Best Buy gift card, courtesy of RBC Capital Markets. St. Paul Harley-Davidson, St. Paul, MN Star City Motor Sports, Lincoln, NE Leone's, Peru, IL Northway Sports, East Bethel, MN Logan Motorcycle Sales, Logan, WV All dealers who complete the survey receive a PDF analysis of the results from RBC Capital Markets and are eligible for $100 Best Buy gift cards. Less than $1 million 7% $1-$3 million 20% $3-$5 million 22% $5-$10 million 27% More than $10 million 24% Approximately how much revenue does your dealership generate in a typical year? characterize customer traffic in the last three months compared to the same period last year? Significantly better 2% Somewhat better 18% About the same 27% Somewhat worse 38% Significantly worse 15% characterize customer buying interest in the last three months compared to the same period last year? Significantly better 2% Somewhat better 19% About the same 24% Somewhat worse 37% Significantly worse 18% In general, to what extent has your business outlook changed compared to six months ago? Significantly better 1% Somewhat better 14% About the same 31% Somewhat worse 45% Significantly worse 9% Where applicable, what type of growth are you expecting by line of business (new products only, measured in units) over the next 12 months? 1% 4% 2% 5% 5% 4% 3% 8% 23% 13% 15% 9% 9% 4% 10% 2% 29% 21% 21% 19% 17% 6% 18% 11% 26% 38% 29% 33% 55% 61% 46% 7% 4% 12% 10% 15% 6% 10% 10% 16% 7% 7% 10% 7% 6% 9% 5% 24% 4% 4% 4% 4% 1% 4% 3% 18% 1% 2% 5% 9% 1% 3% 22% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Side-by-Sides ATVs Heavyweight motorcycles Sport bikes Off-road bikes Scooters PWC Snowmobiles +30% or better +20% +10% +5% Flat -5% -10% -20% -30% or worse How would you characterize your current inventory levels by line of business? 40% 30% 46% 38% 14% 26% 33% 85% 53% 65% 53% 58% 82% 72% 67% 13% 7% 5% 1% 4% 4% 1% 2% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Side-by-sides ATVs Heavyweight Motorcycles Sport Bikes Off-road bikes Scooters PWC Snowmobiles Too heavy About right Too low APPROXIMATELY HOW MUCH REVENUE DOES YOUR DEALERSHIP GENERATE IN A TYPICAL YEAR? HOW WOULD YOU CHARACTERIZE CUSTOMER TRAFFIC IN THE LAST THREE MONTHS COMPARED TO THE SAME PERIOD LAST YEAR? HOW WOULD YOU CHARACTERIZE CUSTOMER BUYING INTEREST IN THE LAST THREE MONTHS COMPARED TO THE SAME PERIOD LAST YEAR? WHERE APPLICABLE, WHAT TYPE OF GROWTH ARE YOU EXPECTING BY LINE OF BUSINESS (NEW PRODUCTS ONLY, MEASURED IN UNITS) OVER THE NEXT 12 MONTHS? HOW WOULD YOU CHARACTERIZE YOUR CURRENT INVENTORY LEVELS BY LINE OF BUSINESS? IN GENERAL, TO WHAT EXTENT HAS YOUR BUSINESS OUTLOOK CHANGED COMPARED TO SIX MONTHS AGO? and scooter sales. Fifty-seven percent of sport bike dealers saw those units drop 5 percent or more in the quarter, while 56 percent of heavy- weight motorcycle dealers reported the same. Half of the scooter dealers who participated in the survey saw scooter sales drop 5 percent or more. The only group of dealers where more were up than down were side-by-side dealers, of which 49 percent reported Q4 sales were up 5 percent or more. With snowmobile unit sales down, invento- ries are up. Eighty-five percent of snowmobile dealers report their sled inventory is too heavy. Heavyweight motorcycle dealers were almost all split between having too much or about right amount of inventory of those units, with 46 per- cent saying they have too much, and 53 report- ing inventory is about right. While 53 percent of side-by-side dealers reported inventory is about right, 40 percent said it's too heavy. The rough quarter has disheartened many dealers. Fifty-four percent of dealers polled said their business outlook has become somewhat or significantly worse when compared to the past six months. However, many are optimistic about the next 12 months in a variety of segments. Fifty- seven percent of side-by-side dealers expect those unit sales to grow by 5 percent or more in the next year. Of the heavyweight motorcycle dealers, 41 percent expect an increase in 2016, while 29 think they'll be flat. Close to one-third of ATV, PWC, sport bike and off-road bike dealers expect those sales will increase this year. Not surprisingly, 80 percent of snowmobile dealers expect their sled sales will decrease in 2016. The following are anonymous com- ments left by dealers about their quarterly performance: "Slowly crawling back except snow- mobiles." "Saw a slight increase in interest this fall, but most of those looking had credit scores that couldn't be financed without kicking back almost half of the profits." "I think the market is in a good place here in our area. Excited with the future. Hoping that the manufacturers can continue to introduce exciting product and new seg- ments for growth." "Lack of snowfall is hurtful!" "Traffic is very low; inventory and pricing are too high. [Capital] One is a serious concern. Not looking good." "Starting point for new bike sales is $1k below MSRP. Good for consumers, bad for dealers. If we could only agree to compete based on everything but price, we'd all get enough business, and margins would be vastly improved. But that's collusion, so we know that we must start at $1k below and make up missing dollars/margin elsewhere. It's best that we simply forget all years before 2008 even existed. Looking back on dealership performance pre-financial meltdown has zero relevance today." "I see a slight glimmer of hope for motor- cycle sales in 2016. Unfortunately, most companies are trying to offer price incen- tives instead of using fun, adventure, free- dom or other emotional reasons for owning a motorcycle." "There are too many players in the heavy- weight/cruiser segment." "OEMs need to reduce dealer inventory instead of forcing dealers to order more than they need just to qualify for rebates and pro- motions." "We are in a pre-election holding pattern. I do not see much, if any growth next year. For us to see growth, it is going to take a large push from the OEMs. We are preparing for a flat year ahead. No new hires and may reduce staffing levels by 5-10 percent early in Q1. PSB POWERSPORTS BUSINESS/RBC CAPITAL MARKETS Q4 2015 DEALER SURVEY SURVEY CONTINUED FROM COVER Source: Powersports Business/RBC Capital Markets Q4 2015 dealer survey