Powersports Industry Offers Retailers And Restylers Increased Profit Potential

Spring is a seasonal gold mine across many aftermarket segments and an ideal opportunity for retailers and restylers to take advantage of increased foot traffic and cash in. There’s certainly no shortage of enthusiast activities to fuel a consumer spending spree.

For example:

• • Off-road racing fans are savoring the intensity of a short-course dirt track and tinkering with their own 4x4 parts in the garage
• • The Jeep® community is hitting the trails top-down style, hoping to get stuck and put that premium winch to good use
• • Open-road adventure seekers have their campers in tow, excited to explore the great outdoors
• • Gear heads are making final modifications to get their whips road ready for the summer season

But the powersports market, comprised of ATVs, side-by-sides (SxS), motorcycles, powerboats, personal watercraft (PWC), and snowmobiles, has a diehard group of recreational enthusiasts that often is overlooked as a prime target and means for diversification within the aftermarket. It’s a stable industry with healthy margins and a loyal customer base — and retailers and restylers should be tapping into this pool of increased profit potential.

“(Powersports units) need to be towed, hauled or trailered, and you need a truck in order to do that, so there’s strong customer crossover between truck-accessory shops and the powersports market. Keystone offers products for both,” said Tom Gross, a powersports industry veteran of nearly 30 years and owner of Uni Filter, a manufacturer of high-performance polyurethane foam air filters and a top brand choice among serious off-roaders.

Keystone Automotive Operations, the leading and largest wholesale distributor of automotive aftermarket parts in North America, teamed up with two of its valued partners in the powersports industry, Terracross and Uni Filter, to educate retailers and restylers about the current state of business, market trends, crossover and diversification opportunities, as well as profit potential.

Side-by-Sides Leading the Way

Glenice Wilder, VP of Powersports EFG Companies, said the first quarter of the 2016 fiscal year was off to a positive start, as unit sales, dealer profitability, and maintenance service repairs are all trending upwards. But SxS sales are the true story, taking the industry by storm and nearly cannibalizing a once-dominant ATV market. According to Motorcycle & Powersports News, UTV sales are estimated to be in the neighborhood of 400,000 units, which is significantly higher than its ATV counterpart.

“The UTV has become a popular choice among families, sportsmen and off-roaders alike,” said Joe Duncan, owner of Terracross and a 20-year veteran of the industry with extensive experience in the snowmobile and SxS market segments. “It’s an estimated two-billion dollar segment that is expected to nearly double over the next two years. Whereas ATVs are a highly individualized activity, an entire family can enjoy a UTV experience together during all 12 months of the year, and so we’ve seen a shift (in demand),” he said.

Market data suggests that powersports consumers have one of the largest discretionary budgets, spending thousands of dollars on the unit itself and then several thousand more in aftermarket upgrades — not unlike many truck or Jeep consumers who are eager to customize their rig at the point of purchase with LED lighting, side steps, recovery items or front-end protection. “And that discretionary budget doesn’t end there. It includes an increased rate of replacement parts and maintenance service repairs associated with powersports recreation,” explained Duncan.

Do you see dollar signs yet? According to Steve Nessl, Yamaha ATV/SxS group marketing manager, “The SxS market is evolving, and that’s a good thing for dealers and consumers who will have more selling and buying options.” The result: An opportunity for retailers and restylers to attract new customers, diversify their business and share in the powersports profits — from aftermarket upgrades and personal equipment to repair and maintenance products.

Know Thy Market

Duncan of Terracross offered shop owners some candid advice to consider while exploring diversification opportunities in the powersports industry. “Powersports is a specific niche, so you’ve got to know the players, be knowledgeable about the units and aftermarket products, and share a passionate appreciation for the lifestyle,” said Duncan. “First rule of thumb is to know thy market,” he added. “What kind of powersports are in demand within your immediate area? Is there a body of water, a motocross track or trails?

Next, you want to get yourself involved in the local sport — attend an event, sponsor an event, talk to consumers at the event. Pick their brains about what products they’d like to see offered in your shop. You have to know what’s sellable! This is a loyal group of enthusiasts, and if you support them, they’ll support you.” Uni Filter’s Gross also suggested a handful of core products that will always be in demand among powersports users, including maintenance items, such as tires, filters, spark plugs, chains and belts.

Tap Into Sales and Profit Potential

“On average, accessories spending is about $2,000 the minute (customers) buy the (UTV). They may spend $6,000-$7,000 in accessories over the lifetime of the unit. If it’s being used in the racing circuit, guys could be spending $50,000-$60,000 when all is said and done between the engine, tranny and differential work,” said Terracross’ Duncan. “Bottom line, there’s a lot of sales potential and strong margins on powersports products, which help offset some of the margin pressures on the aftermarket side of the business,” added Gross. “Guys are towing their toys, so it’s a natural add-on sale for truck-accessory shops.”

And it doesn’t stop there! Above and beyond accessorizing, ATVs and UTVs virtually assure consistent work for service repair shops. “The rise of SxS sales represents plenty of tire changes, service work, parts and accessories profitability for dealers to cash in on,” reported Motorcycle & Powersports News. This provides retailers and restylers an opportunity to showcase the significant range of skills its technicians have to service crossover consumers in both the aftermarket and powersports industries.

Partner with a Distributor

“We’re always looking to bring on more enthusiasts and expand our powersports network,” said Duncan. But the powersports industry has a strict distribution model, so diversification must be done appropriately. Duncan and Gross suggested that retailers and restylers identify a target segment, conduct preliminary market research to determine what lines and products will best suit the needs of local consumers, and lean on the expertise of key manufacturers within the powersports space to direct them to the right distribution partner. “Keystone is dedicated to expanding the reach of the powersports industry by getting our automotive aftermarket customer base excited about and involved in the market,” said Jason Shatrowskas, Keystone category manager. “We carry dozens of powersports lines, many of them very strong crossover brands that make it an easier transition into this space for our automotive aftermarket customers.”

Diversification doesn’t need to be drastic. It can be as simple as stocking popular maintenance parts or as complex as broad inventory and repair service. Either way, consider the impressive opportunity that awaits. Let Keystone be your go-to team, helping you explore a new market, expand your customer reach and increase your company’s profitability.