Powersports Market

A Looming Cliff for Powersports Dealers?

It’s been a fantastic year for some powersports dealers. Thanks to government stimulus checks and a burning desire to leave the house, ATV and recreational powersports sales have gone through the roof from April to June. Many dealers have already exceeded their 2020 forecasts for the year!

But will the boom times continue? Or will sales fall from these unprecedented highs? There are several factors which could impact the second half of 2020.

Government stimulus

Second quarter sales were propelled in large part by the pandemic-driven CARES Act which provided stimulus money to those who had been furloughed or lost employment. Those stimulus funds have ended and further funds are stalled in Congress until early September. If another round of stimulus is offered, chances are that powersports sales will continue, albeit not at the levels seen in Q2.

Inventory concerns

Early in the pandemic, powersports OEMs shut down manufacturing facilities – as did all of their suppliers. Even though production lines have restarted, OEMs have not replenished their product lines. As a result, dealers who cleared out their inventories are scrambling to buy units. While new units will trickle in starting in September, the pre-owned market could experience price tightening. Without new inventory on hand, auction prices are expected to rise and dealer margins to shrink.

Credit tightening

Even though interest rates remain low, lenders are largely bracing for delinquencies and repossessions to hit their loan portfolios. Securing credit for all but the super-prime customers could be tricky. Lenders who are typically hesitant to handle a powersports loan will prefer solid protection products attached to the deal. Fraud is also a cautionary element for lenders and dealers alike. Bad actors are looking for opportunities to scam.

Powersports dealers – hedge your bets

In this new realm of uncertainty, what strategic moves should a powersports dealer take?

  • Know your target customer and do your best to stock their inventory.
  • Meet that customer where they are, whether online or in the dealership.
  • Have the right protection products and know how to sell them.
  • Work with the right lenders who will support your customers.

Regardless of the economy, powersports dealers are well positioned to close out 2020 in a positive fashion. Just how positive depends on how they will navigate the choppy waters ahead.

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