It’s hard to believe we are past the mid-year point of 2022. With inflation rising and consumer confidence dropping, the second half of the year could look drastically different than the first half. However, there are some strategic opportunities for powersports dealers to build in revenue and protect gains generated to date. First, let’s take a look at the state of the market.
The early results of the Q2 2022 Powersports Business/BMO Capital Markets Dealer Survey show generally positive conditions with a few exciting bright spots. 59 percent of dealers ranked business conditions as good or very strong. Activity in the service department continued strong as did pre-owned unit sales. F&I sales gets a gold star with three out of four dealers reporting average or good movement with 15 percent the exceptional dealers reporting very strong results. However, 72 percent of dealers reported new unit sales as flat to negative and 76 percent described inventory as too low.
A new study by CDK Global Lightspeed put a positive spotlight on the personal watercraft market. Average sales price has now exceeded $20,000. Out of every 10 units sold, nine were new. Lastly, Generation X is replacing Baby Boomers as the primary consumer group for powersports and watercraft. According to Pew Research, Generation X consists of just over 65 million people, accounting for 31 percent of the total U.S. income. Looking ahead, it seems there is plenty of upside for growth and revenue in this market.
Strategic Steps Spell Success
While no one fully knows how the economy will fare for the remainder of the year, initial analysis by the US Bureau of Economic Analysis shows that consumers are continuing to spend. Personal income and disposable personal income both increased 0.5 percent in May, while personal consumption expenditures also increased by 0.2 percent. Consumers remain anxious for outdoor adventures. Dealers with off-road or personal watercraft units who have successfully implemented online sales models with supporting F&I products and suitable margins should fare well in the months ahead.
While inventory constraints continue to hamper new unit sales for powersports, the used market continues to be a bright spot. According to the BMO Dealer Survey, strength in used units – as well as the service departments who can repair those units – present a strong opportunity for dealers to counteract tight inventory issues.
While waiting for a new unit to arrive, dealership staff who are trained to effectively build in F&I during the online sales process will have an advantage over other dealers waiting for customers to walk through the door. Online sales are here to stay and dealers who have not updated their websites and trained their staff to proactively work with customers in the digital realm will continue to miss lucrative deals.
Strength in personal watercraft sales also provide a good opportunity for dealers looking to expand their product lines. However, make sure your demographics support the expansion.
Finally, training should serve as a key component of your second half plans. From compliance to F&I products, to new hybrid sales models, your team needs the right skillset for success.
Our proven team of advisors can assist you and your team with the training, tools, and resources needed for your powersports dealership. At EFG Companies, we’re more than an F&I provider, we’re your business partner with years of expertise in the powersports industry. Contact us today to learn more about winning with excellence and boost your success for the second half of 2022.