Our most recent survey of powersports dealers indicates that that the off-road vehicle market improved in November following a relatively flattish October. More specifically, our survey work shows that improvement in the SxS market was driven mainly by continued strength in the Polaris RGR (1000 Crew especially) and Can-Am Defender lines — both of which were helped by more robust dealer rebates and spiffs during the month.
The ATV market also saw noticeable improvement in November with Polaris’ 450 and 570 Sportsman models once again leading the charge (also helped by stronger-than-usual manufacturer rebates).
Despite the uncertainties that continue to loom over the industry as a whole — namely, tariffs in 2019 and rising interest rates, among other macroeconomic concerns — dealer sentiment remained positive in November. All in, we believe that Polaris’s current momentum is poised to continue, although Honda’s introduction of the Talon could present a meaningful competitive headwind to Polaris on the recreational end of the SxS market, according to some dealers.
Conversely, the motorcycle market continued its downward trajectory in November as many of the dealers in our study once again opined on continued weakness in the heavyweight segment of the motorcycle market, as well as concerns relating to interest rate increases and tariffs in 2019. All in, our opinion on the industry hasn’t changed much since last month — that is, in addition to many of the concerns present in the ORV industry at this time (tariffs, interest rates, macroeconomic conditions), the motorcycle industry continues to face demographic headwinds that we do not believe can be adequately addressed in the near-term. Consequently, we believe that 2019 will likely be a difficult year for the motorcycle market.
Seth Woolf, a research analyst with Northcoast Research Partners, covers the powersports sector within his consumer sector coverage list. Northcoast Research Partners is an institutional equity research firm located in Cleveland, OH.