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Business Management

ATV-UTV Market Update

In the opening line of his breakout song, “Mama Said Knock You Out,” LL Cool J says, “Don’t Call it a comeback. We’ve been here for years.” As we start to return to normal in this (at least partially) vaccinated country and new cases of Covid-19 are falling faster than a Mike Tyson TKO, the question facing powersports dealers and OEMs is: are we going back to pre-pandemic sales levels, or are we going to continue where we left off in 2020? 

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According to Scott Yarbrough, Senior Analyst for Black Book’s Powersports segment, powersports values were “on fire” in the first quarter, as strong consumer demand, combined with inventory shortages of both new and used vehicles, created “one of the most exceptional markets we have seen in decades.” He says the rise in prices that started last year in response to the COVID-19 pandemic “shows no signs of stopping anytime soon.”

Aside from some supply chain bottlenecks that have affected most industries in the first part of the year, ATV/UTV manufacturers are sitting in a pretty good position right now. Most OEMs report that they’ve had positive growth in the first quarter of 2021, led by Polaris and BRP.

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Polaris saw strong growth in North American retail sales for the first quarter of 2021. Sales of $1.95 billion were up 39% from year-ago sales of $1.41 billion. Off-road vehicle sales were up 50% year over year. 

Much like the street bike segment, ATVs and UTVs did not see any drop in values during the winter months, leaving their prices elevated well beyond normal levels as we enter the spring selling season. In this case, values rose faster than “normal” spring. Notably, the ATVs have kept pace with UTVs, as they had been relative underperformers in recent years.

“We had an exceptional start of the year, building on our momentum of growth from prior quarters. Our first-quarter results were driven by ongoing robust demand for our products with North American Powersports retail up 39%. We were also lapping a quarter in which our manufacturing operations were partly shut down,” said José Boisjoli, President and CEO of BRP/Can-Am.

Industry experts say that a combination of extreme demand, an improving economy, and product shortages across the board is powering one of the hottest powersports markets in memory. Acquiring both new and used inventory has been a concern for virtually all dealers.

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ATVs and UTVs are having a much better 2021 than 2020. These vehicles, and the off-road bikes, were some of the first to show pandemic fueled increases in value last year, while the on-road bikes following a few months later.

New-model sales among leading brands increased more than 37.2 percent in the first quarter of 2021. And, according to MIC, Q1 sales compared to the same period last year, were up by double digits in every category, including off-highway and dual-purpose.

“This is the fourth straight quarter of strong sales numbers, indicating a continued and growing interest in riding among new and returning riders,” said Erik Pritchard, MIC president and CEO. “Combine the new unit sales performance with the pace of tire sales, and we know that more riders are putting on more miles. We hope that indicates that riding is becoming a larger part of consumers’ lives.”

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The MIC Retail Sales Reporting System gathers retail sales data from 14 leading manufacturers and distributors in the U.S., providing a strong indicator of total sales trends. So far, year-to-date, off-highway sales were up 45.4 percent, which was only topped by the dual-sport segment at 47 percent. 

MPN spoke with BRP’s Jeff Proctor on a recent Zoom call after releasing their Q1 report to look a little behind the numbers. Proctor is Vice President and Regional General Manager, North American Powersports Group for BRP.

Proctor says they are “pleased” with the results from Q1, which saw Can-Am make significant gains in the off-road segment. “The beginning of the year was a bit of a worry for all of us. It was a special moment, though, for our dealers and us, as we came together during a tough period (last year). And then when we turned things around, the business came to us at the same time.” 

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We’ve heard of supply chain issues hampering some OEMs, and BRP was no different in the first part of 2021. “You hear it in the news with the automotive world and everything with a computer chip. These types of supply chain bottlenecks on all products globally are causing some concerns and some issues,” explains Proctor.

“We’re working through all of it,” he says. “Everything that our dealers have placed on order we’re committing to delivering. We aren’t missing anything, and our manufacturing, our procurement teams, are using a lot of ingenuity to work through the issues to keep production going at the pace that we’re making it. We’re delighted with where we’re at, to be honest.”

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Proctor adds that both ATVs and UTVs are going very well, and the issue is keeping up with demand. “Obviously, like every other manufacturer out there, we’re still catching up to the demand. But it’s a great place for our dealers and it’s a great place for everybody to a certain extent. There’s still nothing but upside.”

The demand is driven by the pandemic and riders reconnecting with powersports and new riders discovering the sport. 

“What we’re seeing is a lack of availability across the industry. Overall, people are pulling old vehicles out of the barn and fixing them up and using them. And then we have existing customers that have been in the sport for a while upgrading and doing all of those things. But the new entrants that are coming into our sport are really big. And it’s continuing to grow on a monthly basis. We’re seeing that throughout the pandemic, it’s not slowing down; it’s actually accelerating, which is a very healthy indication for the business.”

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OEMs such as BRP and others are seeing growth everywhere. “We are growing in every segment at a rapid pace. The launch of the new Commander has been well received by customers and dealers. So we’re excited about what the future holds because we’re still in that place where we are ramping up on that plan. And of course, the utility business, the Defender platform, has been going fantastic.”

The ATV segment is a little bit different than side-by-side, according to Proctor. “The mid-displacement category continues to grow, and then our top CC segments in the ATV lineup doesn’t seem to be slowing down either.”

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Proctor concludes that the ATV-UTV market is one of the most important segments for BRP. And their challenge is to continue building supply. “Demand far exceeds supply, so right now, the measurement of what that looks like, and the opportunities that we see moving forward, is there’s still a ton of runway. And we owe it to our dealers to catch up with the production and get them the product to see where the limits can be. But right now, we see nothing but the upside.”

In some respects, the demand outweighing supply is a good thing for the ATV-UTV segment. It is pushing pre-owned prices up and making availability slim. Let’s hope we continue the ride on this long runway.

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