‘07 U.S. PWC Sales Almost Flat Thru May
Submitted by Matthew Camp on July 1, 2007 - 1:00am.
Despite warm weather, concerns over mortgages and economy dampen sales After three consecutive years of flat sales, it appeared that the U.S. PWC market was finally undergoing a significant turnaround in 2005 but the 2006 year end sales figures indicated that the market had leveled off. May year-to-date sales for the 2007 season have confirmed that the market continues to inch along and may actually be up less than 1% on the same period last year. However, a strong summer could see sales increase around 2-3% over the 2006 volume. 2007 Year-To-Date PWC SalesBased upon our research, May year-to-date U.S. PWC retail sales were up slightly, including our estimate for Honda’s unreported sales. There is some optimism for a good summer although the May year-to-date numbers have demonstrated that the market has not yet been able to replicate the impressive growth rate of the 2005 season and has barely been increasing this season, much like the 2006 season. The market seemed headed for steady growth through the first seven months of the year but a disappointing month of May, with some industry sources saying the decline was as much as 6%, appears to have slowed the market. However, this May monthly figure appears to be misleading as several industry sources have indicated to us that See Doo’s figures were significantly down in this month for some reason. This may have artificially depressed the growth rate in the May year-to-date figures and we expect See Doo in particular to post significant sales growth in June. Most analysts expected the market to be up nearer to a 2-3% growth rate. As it currently stands the May year-to-date sales for 2007 were up by less than 1% over 2006, when taking into consideration the final inventory sales of Polaris watercraft which occurred in that season. Regional Sales MixedRegionally, PWC sales in the Midwest have recovered somewhat from the bleak situation of last year where the depressed automotive and component sectors were affecting the market. The Chicago area and Michigan in particular have posted significant improvements. On the other hand, the Northeast U.S. is now struggling, with industry sources citing New York and New England as performing poorly. 3-Passenger PWC PenetrationThree-passenger PWC still dominate the overall PWC market. Back in 1999, about 55% of all PWC were three-passenger. By 2002, this percent had increased to 74%, peaking at 79% in 2003, including estimated unreported Honda sales. During 2004, however, the percentage dipped slightly as a result of Sea-Doo’s new supercharged 4-stroke RXP 2-seater sales to around 77%. In 2005 three-passenger sales extended their dominance over the market to over 80% of all sales and for 2006 this segment of the market rose to 84%. The 2007 May year-to-date sales have dropped slightly with the estimated market share for 3-Passenger PWC sales now at 83%, although they are up from the 2006 May year-to-date sales of 82%, which indicates that the three-passenger segment should continue to increase its dominance during the remainder of the season. Four-Stroke PWC Four-stroke PWC have continued surging in sales during the May year-to-date ’07 season to where they currently account for just under 92% of sales compared to three years ago when the ratio was tracking at about 57% through mid-‘04, including estimates for Honda’s models. For the ’02 model year, four-stroke model sales represented less than 20% of total U.S. PWC sales. Introductory Models Increased PopularityThe introductory four-stroke models continue to be one of the fastest growing segments. About 43% of sales in the 2007 season up to the end of May have been on models with an MSRP below $9,000, compared with over 35% at the same time in the 2006 season. This does not take into account the effect of discounting. Highlights of the 2007 SeasonOne of the big stories of the ’07 season has been the successful introduction of Kawasaki’s Ultra 250X. This model is doing extremely well and is one of the main reasons for Kawasaki’s sales increases so far this season, with the STX-12F also performing well. Yamaha is continuing the trend of the last few years and increasing its market share at the expense of See Doo and Honda. Yamaha are now dominating the rankings of the top ten selling models, with 6 of these units Yamaha-built. The VX110 Deluxe and Sport models continue to have a large impact on the market with their competitive pricing, and have now been joined by the slightly more expensive VX Cruiser. New Entrants in the WingsIncreasing numbers of U.S.-based distributors of Chinese powersports products are beginning to show an interest in importing PWC. To date there have only been a handful of units making their way to these shores but it is inevitable that Chinese OEMs will attempt to secure a foothold in the market, particularly in light of the popularity of the introductory level models produced by the traditional OEMs. 2007 ProjectionAccording to our calculations, if sales for the final four months of the season average a 5% growth rate, given the near 1% growth May year-to date, we could expect to see the year finish at around 3% over 2006, including estimates for Honda’s activity. This could put ’07 U.S. sales at just over 90,000 units with some possibility in 2008 of getting within striking range of the elusive 100,000 unit barrier. The last time that mark was surpassed was back in the ’99 season (106,000 units). Arlo- Here’s some data you can use for a few graphs. Four-Stroke PWC Model Two-Stroke Carb PWC Model Editor’s note: Power Products Marketing, a Minneapolis research firm, has been tracking the PWC market for nearly 10 years. This report was prepared by Matthew Camp, a powersports analyst with the firm. |