Finding a ‘bright spot’ outdoors during COVID-19
With many people taking to the outdoors to explore socially distant tracks and trails, powersports companies are experiencing a surprising sales boom.
While much of the U.S. economy slowed to a crawl after the COVID-19 shutdown hit, the powersports industry went into high gear. Many customers, weary of staying at home, found a cure for cabin fever while riding an off-road vehicle in the wide-open, socially distant spaces of tracks and trails. By all indications, the sales boom in ATVs, side by sides, and dirt bikes has been one of the few bright spots in an otherwise grim COVID-19 economic landscape, as many businesses have shuttered and unemployment has soared during the pandemic.
Bob Brewster, owner of a powersports dealership in South Florida, saw the sales boom firsthand.
“When the virus came, it shocked us for sure, but we really didn’t miss a beat,” said Brewster, owner of WMR Competition Performance, a KTM North America dealership in Stuart, Florida. “We didn’t shut down, and we didn’t lose anybody. We saw families come in together, parents buying bikes for their kids, baby boomer retirees wanting to ride again or for the first time. All of that is what drove the market where it is now.”
The unexpected surge in demand created welcome challenges for big powersports companies such as Polaris Inc. and KTM North America. They worked rapidly to gauge, finance, and stock inventories at dealerships across the U.S. and other countries. They also prepared contingency plans in case the sales boom proved to be temporary.
But the wave proved to be anything but temporary, said Jeremy Jansen, senior vice president of Wells Fargo Commercial Banking’s distribution financing business. He leads the bank’s powersports finance team, which counts Polaris and KTM among its largest clients. Wells Fargo provides inventory finance for more than 6,000 dealerships across North America.
After plummeting briefly in mid-March amid the initial shutdown, powersports sales skyrocketed in the ensuing months, according to Jansen, whose team also tracks vehicle sales data nationwide to help clients manage their inventories.
“What started out as a slight uptick has just taken off to record sales levels,” he said. “Dirt bikes, ATVs, side by sides, personal transport vehicles — everything in the book is retailing well above prior year.”
For Gabe Solomon, a customer of WMR in South Florida, dirt bike riding during COVID-19 has brought him closer to his son, Gabe Jr., 13, who races on a teen circuit in South Florida. Just weeks before the shutdown occurred in March, Solomon bought a dirt bike and joined his son’s training rides. During the shutdown, they were continually at home — Solomon for his marketing business and Gabe Jr. for his online schooling — so they would schedule a ride together every day.
“We just took the opportunity to ride as much as we could and follow this thing through to see where it would lead,” said Solomon, whose business sponsors Gabe Jr. “I’ve gone into it pretty deep now. But it’s just a great thing to me, because when I grew up, I didn’t have a connection like this with my father. He was always too busy working. So now it’s something that my son and I have grown to have a passion for.”
Buoyed by that kind of enthusiasm, the powersports sales boom has touched every segment, led by off-road motorcycles (dirt bikes), ATVs, and other off-road vehicles, but also including, to a lesser extent, on-road motorcycles, which have been in a decade-long slump.
“During the pandemic, there’s been a strong trend of people spending their money on powersports vehicles, instead of airline tickets and cruises,” said Mike Speetzen, chief financial officer of Polaris, based in Medina, Minnesota. “It’s all about families looking for a safe way to do things together outside, and our vehicles allow them to do that.”
With customers flocking into many of their dealerships, Polaris’ biggest challenge was keeping them stocked with the right amount of inventory, he said. That’s where Wells Fargo’s financing resources and sales data tracking services played a key role.
“Over the years, Wells Fargo has done a great job with managing the information on our dealer base,” he said. “This includes monitoring and tracking the dealership operations to help us ensure the dealers are financially healthy, which is incredibly important in times like these.”
KTM North America also credited Wells Fargo for helping them navigate the challenges of the pandemic, providing crucial financing and payment deferrals to many of their dealerships. The Murrieta, California-based company also received key perspective from its parent company, which is based in Austria.
“Since we do business globally, we received a lot of insight into how COVID-19 was affecting business abroad by the time it hit the U.S.,” said John Hinz, KTM North America’s CEO. “For example, we saw a resurgence and rebound in demand for powersports in China when COVID-19 began to decline there. So we were able to establish some best practices and took action quickly to be ready for that to happen in North America.”
For Jansen of Wells Fargo, the success of powersports during COVID-19 is a welcomed bit of good news at a time that is so difficult for so many.
“In this time of economic and social uncertainty it is amazing to witness the consumer response to the powersports industry,” he said. “Hopefully, that translates into more life-long enthusiasts.”