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Business Growth

Looking Forward to Success in 2021

I’ve never been one to dwell on the past but this year demands some reflection as we prepare for success in the upcoming year. While we as a country have endured some tremendous challenges, there also have been many notable events that have given me hope for the future.

As I write this, the first doses of the COVID-19 vaccine are making their way across the country to our well-deserving front line healthcare workers. The presidential election is now behind us and we can move forward – hopefully with a stimulus package to ease the burden shouldered by individuals and small business owners. The Federal Reserve has indicated that interest rates will remain at or near zero at least into 2023. And while we have all been forced to pivot in our ways of doing business, business has continued for the most part. These positive data points tell me that there is much to look forward to as we approach 2021.

Many aspects of the powersports industry experienced a tremendous year in terms of sales, revenue, and overall success metrics. Although fourth quarter data will not be available until the end of January, early indications reflect another strong quarter. According to CDK Lightspeed DMS, new and used unit revenue growth in October clocked in at 33.2 percent. Service has also seen an uptick as riders pull those older bikes out of the garage for a trip down the road. According to Jeremy Jansen, Head of Motorsports at Wells Fargo Commercial Distribution Finance, “North American powersports retail has seen unprecedented activity…resulting in the collective industry entering 2021 with a strong tailwind.”

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Business Growth

The Outcome Is In Your Hands

The third quarter of this year ended with a bang for both new and used powersports dealers, with unit sales growth up 27.3 percent. The 3Q Powersports Business/BMO Capital Markets dealer survey showed 69 percent of dealers were above plan for the year. Of the survey respondents, 83 percent are single-store operators and the majority carry a wide variety of powersports products. Both new and pre-owned unit sales were strong, with 1 in 5 dealers reporting that F&I sales were very strong.

What happens when those strong sales aren’t so strong? According to the survey results, 84 percent of respondents were concerned about the US political climate and another 63 percent were most concerned about the pandemic. When asked specifically about the presidential election, write-in comments reflected that dealers believe a Democratic win would negatively affect business.

So let’s take a quick check on our current situation. The US continues to suffer from the coronavirus. In fact, the number of new cases recorded each day has ballooned from fewer than 40,000 in September to over 100,000 in early November. And scientists are cautioning against a larger winter surge, as people are forced inside due to cold weather. Clearly, COVID-19 is not going away anytime soon.

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Business Growth

Protecting Those Gains

This year has certainly brought a lot of positive gains to the powersports industry. The government stimulus coupled with “stay at home” orders early in the year propelled buyers to snatch up ATVs and other recreational units in record numbers. According to CDK, Lightspeed DMS same-store sales for June were up 48.6 percent in the U.S., down slightly from May’s phenomenal 60.7 percent increase in sales.

Anecdotally, the third quarter has continued to be strong regardless of the fact that OEMs simply cannot move fast enough for dealers to capture all the opportunity available. While many dealers are reporting inventory shortages on both new and used bikes, they are also reporting significant gains in pre-order sales, especially within the off-road sector. However, PWC pre-orders are starting to back off because of the season change into fall. Overall, revenue has grown 51.2 percent.

This sales cycle has certainly been a windfall for powersports dealers. However, there are still challenges ahead as we wait to see if and when a second stimulus bill will be passed, as well as the progression of the COVID-19 pandemic in the fall. In light of these factors, how can you protect those gains you received in the second and third quarter?