The powersports industry hasn't felt stable since before the COVID epidemic. There was a feast a few years ago when overlanding and general powersports activities exploded in popularity. And now, it appears the famine is upon us, well, actually, it has been for a while.
Back in 2020 and 2021, brands like Polaris and BRP couldn't produce UTVs, ATVs, and PWCs fast enough. You had to get on a waiting list or buy one secondhand, and the secondhand market was outrageously over-inflated. But that bubble has burst, as is hinted by Polaris' recent financial cuts.
Last year, Polaris cut its workforce by 10% in an effort to cut its costs by $250 million. But the cuts haven't come to an end, as Chief Executive Mike Speetzen said the company is aiming to cut a further $40 million in costs this year.
I hope for the employees' sake that these cuts aren't directed at them, and that the feast and famine we see in powersport vehicle sales were as simple as a massive influx during the pandemic that needs to right itself. But, unfortunately, there are macro and micro factors at play here—the macro being inflation.
“Consumers still are carrying a lot of debt,” Speetzen said. “Inflation is kind of stalling out in the mid-2s, which would signal that there may not be that many interest rate cuts this year.”
As for micro factors, well, that literally comes down to how much snow fell during winter. Since it was another mild winter, snowmobile impulse buys were down, which didn't help Polaris's already bad fourth quarter.
The brand's fourth-quarter results came out recently and showed that earnings dropped by 90% to $10.6 million, and sales dipped by 23% to $1.8 billion. Yamaha recently put an end to its snowmobile production and Textron, which owns Arctic Cat, did the same. The question is, will we see another major snowmobile manufacturer cease production within the next year?
Let us know your thoughts in the comments.
