Now Arctic Cat

I follow a few power sports business sites and groups and things are not good.

Harley dealers are closing like crazy and everybody is struggling, none more than KTM. Yamaha is exiting the snowmobile business and now Arctic Cat is in trouble

Is all this economy driven or something else?

I can't help but scratch my head at seemingly all of the OEM powersports manufacturers NOT seeing this coming...  The covid boom was unrealistic and absolutely unsustainable, yet they all seemed to double down on production with no plans to either idle or recede back to more realistic production numbers.  It baffles my mind that highly paid executives couldn't see this coming, when I think every one of us and the general public could see this coming from years away. 

It's happened across all leisure sports-  cycling, golf/disc golf, etc.  I feel for the employees, I really do.  I just wish some pre-planning and realistic forecasting were undertaken to soften the blow from balls-out to completely idling factories. 

In reply to golfduke :

The pandemic probably pulled demand forward, so not only is there a drop back to normal levels of demand, but it's likely lower than normal for the next few years.

Add much higher interest rates to that, which challenge affordability for toys and the picture is probably pretty bleak.

golfduke said:

I can't help but scratch my head at seemingly all of the OEM powersports manufacturers NOT seeing this coming...  The covid boom was unrealistic and absolutely unsustainable, yet they all seemed to double down on production with no plans to either idle or recede back to more realistic production numbers.  It baffles my mind that highly paid executives couldn't see this coming, when I think every one of us and the general public could see this coming from years away. 

 

It's happened across all leisure sports-  cycling, golf/disc golf, etc.  I feel for the employees, I really do.  I just wish some pre-planning and realistic forecasting were undertaken to soften the blow from balls-out to completely idling factories. 

 

*cough*Private Equity*cough*

It's not that the individual OEM powersports guys didn't see it coming, it's just that PE means you focus on this quarters profit above all else, and cut off/sell off/kill a debt loaded company off as soon as things looks shaky because the individual brand doesn't have any savings/investments of its own to buffer any downs. 

It's hot potato, don't get stuck holding the not-enough-profit-generating-brand, unless you're too big to fail!

WonkoTheSane said:

golfduke said:

I can't help but scratch my head at seemingly all of the OEM powersports manufacturers NOT seeing this coming...  The covid boom was unrealistic and absolutely unsustainable, yet they all seemed to double down on production with no plans to either idle or recede back to more realistic production numbers.  It baffles my mind that highly paid executives couldn't see this coming, when I think every one of us and the general public could see this coming from years away. 

 

It's happened across all leisure sports-  cycling, golf/disc golf, etc.  I feel for the employees, I really do.  I just wish some pre-planning and realistic forecasting were undertaken to soften the blow from balls-out to completely idling factories. 

 

*cough*Private Equity*cough*

It's not that the individual OEM powersports guys didn't see it coming, it's just that PE means you focus on this quarters profit above all else, and cut off/sell off/kill a debt loaded company off as soon as things looks shaky because the individual brand doesn't have any savings/investments of its own to buffer any downs. 

It's hot potato, don't get stuck holding the not-enough-profit-generating-brand, unless you're too big to fail!

You're probably right,and if that's the case, I want absolutely zero part of that game... yikes.  I fully admit I'm ignorant to the goings on of high-level corporations... But it just seems so reckless to destroy a legacy brand due to ridiculous and unsustainable short-term market trends.  It's sad really...

I'm in most of the local dealerships once a week or so for parts.

The amount of inventory sitting on their floors from all brands is incredible. Surely they can't be moving that much stuff, can they? Do people just have money falling out of their butts?

The prices are nutty too, on all brands. 

There's a Cat in my shop right now. Whoever writes their service manuals can suck it. "Resistance between the two wires should be X" Where might I find the connector? Where on the engine is the temp sender? Parts breakdown just shows the sender, separate from the engine, rather than where it goes. Which connector in the bundle? Why can't you print the resistance / temp chart on the same page as the diagnostic instructions like Polaris does?

What Wonkothesane said above.  

We are seeing our business as flat this year but were constantly pushed and challenged as to why my territory is flat.  Harley Davidson, John Deere, Mercury Marine........

Datsun240ZGuy said:

What Wonkothesane said above.  

We are seeing our business as flat this year but were constantly pushed and challenged as to why my territory is flat.  Harley Davidson, John Deere, Mercury Marine........

I feel like flat is a massive win in that market segment, and in this financial/economic landscape. 

golfduke said:

You're probably right,and if that's the case, I want absolutely zero part of that game... yikes.  I fully admit I'm ignorant to the goings on of high-level corporations... But it just seems so reckless to destroy a legacy brand due to ridiculous and unsustainable short-term market trends.  It's sad really...

It's pretty much how private equity takeovers work. They strip mine the assets of any company they can, shift debt and liability to it while still making it look shiny and viable, then drop it. 
It's like a spider sucking an insect caught in it's web dry, or those fungus that take over the brains of ants.


 

STM317 said:

In reply to golfduke :

The pandemic probably pulled demand forward, so not only is there a drop back to normal levels of demand, but it's likely lower than normal for the next few years.

Add much higher interest rates to that, which challenge affordability for toys and the picture is probably pretty bleak.

Not only that, but with housing costs soaring, even the upper middle class income folks are hurting if they've had to move recently. Property taxes in wealthy areas are also way up. That's going to put a serious dent in their ability to afford luxury toys at 9% interest.

The last few years around here (SE Michigan) there hasn't been enough snow to bother with a sled. After buying multiple units for your family, you have to book a weekend up north to use them. I haven't been in the the local powersports shop in a half dozen years , but prices back then were scary. Can't imagine what they're like today. 

DeadSkunk (Warren) said:

The last few years around here (SE Michigan) there hasn't been enough snow to bother with a sled. After buying multiple units for your family, you have to book a weekend up north to use them. I haven't been in the the local powersports shop in a half dozen years , but prices back then were scary. Can't imagine what they're like today. 

Same here in Central NY. Lots of dealers were slashing prices at the end of last season trying to move stuff because there just hasn't been the snow, and this year hasn't been much better. The poor auto ice lakes racing club hasn't had an actual season in a couple years. But, oh, the state keeps building more and more trails and trying to cash in on the snowmobile rider tourist market, even though the season gets shorter and shorter every year.

914Driver said:

Is all this economy driven or something else?

You may have noticed a lack of snow lately...

The CPI/inflation has gone up 21.6% over the last 4 years (Covid, war on the petroleum industry, fed raising interest rates in an attempt to curb inflation etc). 

The end result is a lot people just don't have money for toys. 

Ice fishing is also seriously impacted. Around us you barely get an inch of ice on the reservoirs, not even enough to walk around on to explore for fishing spots much less drag a sled out onto and drill holes, etc.

dculberson said:

Ice fishing is also seriously impacted. Around us you barely get an inch of ice on the reservoirs, not even enough to walk around on to explore for fishing spots much less drag a sled out onto and drill holes, etc.

Yeah, over here in CT, our ice skating seasons have been pretty spotty too :(

Peabody mentioned Harley at the beginning, but that's a whole different issue. Too many years of cornering a single market and catering to an aging demographic, while making a product that is obsolete, more expensive, and worse-performing than the competition. Buell could have been their future, but they fundamentally misunderstood how to run the company and closed it. And the LiveWire electric bike may as well have been named the MisFire for how badly it was received; traditional Harley buyers hated the concept out of hand, and H-D's reputation wasn' going to draw in new buyers. Harley is the two-wheeled Mopar.

pres589 (djronnebaum) said:

914Driver said:

Is all this economy driven or something else?

You may have noticed a lack of snow lately...

The lack of snow isn't helping, but the entire power sports industry is in trouble not just snowmobiles. 
 

There were bad decisions made everywhere. I know of bike shops that still have 2021's in the crate, they bought so many, and shops with 22's and 23's that are still holding out for MSRP. 
 

Part of the skillset of the modern CEO (And to be fair, many businesspersons) is their  ability to spout sheer nonsense while being paid vast amounts to drive their companies off the cliff. I remember watching an interview  with the CEO of GM who was talking about how they were all in on carsharing as the future of transportation. Yeah, maybe about 20 years after you die, but probably not even then. Think of all the things that you hear that don't pass the simplest test of common sense. What do CEOs, venture capitalists, politicians, car salesmen and carnival barkers have in common?  Everything.

NickD said:

Peabody mentioned Harley at the beginning, but that's a whole different issue. Too many years of cornering a single market and catering to an aging demographic, while making a product that is obsolete, more expensive, and worse-performing than the competition. Buell could have been their future, but they fundamentally misunderstood how to run the company and closed it. And the LiveWire electric bike may as well have been named the MisFire for how badly it was received; traditional Harley buyers hated the concept out of hand, and H-D's reputation wasn' going to draw in new buyers. Harley is the two-wheeled Mopar.

It is and it isn't. You aren't wrong about H-D's slow adoption of new markets and an even slower development process but they were hit just as hard on the simple economic factors at play here. Traditional Harley Cruisers and Grand American Touring sales were down huge this year because of all of the factors dculberson and Tom1200 mentioned.  As a result H-D did roughly a 15% salary reduction 2 days before the end of Q2 this year. That was really fun to be a part of.

In reply to 914Driver :

I would think the distinct lake of winter for most areas the last few yrs is making it an easy decision

No worries. Whether it's cheap EVs, scooters or snowmobiles, whenever all the other manufacturers go away, the Chinese will step in. Sometimes with a design stolen from the old manufacturer.

https://www.snowtechmagazine.com/chinese-snowmobiles/

In reply to Snowdoggie (Forum Supporter) :

Just like the Japanese did 

Lotta factors at play, to a point though I wonder when we get to the pointy end of the stick how much demand is there for new sleds, utvs, motorcycles, etc when a few years old model is very slightly different.  Is a 5 or 10 year old sled in good condition noticeably subpar to an ameteur rider than a brand new one?  Is a 2024 Hayabusa vastly superior to a 2008 model?  Comparing the same year delta on bikes, the improvement from 1992 to 2008 was a lot more than the difference from 2008 to 2024.