Analyst's Dealer Checks Finds ORV Market Flattish in July-August
John Healy from Northcoast Research shares findings from recent dealer channel checks on the side-by-side and ATV market, noting flat to negative retail trends with some encouraging signs heading into 2027.
John Healy from Northcoast Research has provided Powersports Dealer Showcase readers with the following research note after calls with side-by-side and ATV dealers.
"As part of our ongoing ORV channel work, we recently caught up with dealer contacts in the ORV space as well as assessed promotional and inventory dynamics across the industry. At a high level, we feel the industry is holding up well in terms of momentum, with contacts noting flat to negative retail trends in recent weeks. While some were down, we note this is at the margin firmer than our Q2 industry checks, which suggested unit sales levels of low-mid-single digit declines. While dealer responses always are unique, we feel that the cadence of dynamics holding up is important to note, especially given ongoing stress on the consumer. That said, we see some interesting things to be mindful of as we enter a period of new models entering showrooms. Those items being that inventories might be a bit less lean than a few months ago compared to the prior year periods and some increased promotional activity out of Polaris.
"All things considered, we view the state of the ORV market as likely more durable than some other areas of the powersport category. While our channel work suggests some additional promos out of Polaris and inventories that might be drifting a touch, we still feel the category remains one of the healthier in the recreation sports space from a supply/demand standpoint as well as being well positioned with new product launches. Despite some selling momentum as well as our enthusiasm about new product entering 2027, we are maintaining our NEUTRAL rating given visibility into competitive dynamics associated with how 2027 products and ongoing tariff dynamics play into dealer behavior and preferred partner status.
Retail: Looking at retail activity for July and trends through roughly mid-August, dealer feedback was mixed. Altogether, we would describe retail as being flat to down low-single-digits y/y, with the hope of a strong finish to the calendar quarter. From a retail standpoint, dealers noted demand trends remain bifurcated with each transaction rather unique. With some consumers buying, shopping, and waiting, while others continue to oscillate between new/used. Contacts indicated that many customers are still seeking used units at attractive price points. However, dealers also highlighted the price gap between new and used units as having tightened, causing some customers to choose to buy new units instead. From a category standpoint, we believe that utility and PWC could potentially be winners in terms of performance for summer 2026. As MY27 models are being introduced through dealer events, we see reasons to be encouraged. More power and performance combined with a focus on value, in our opinion, will be essential ingredients to retail success in 2027.
Outlook/Inventory: As part of our checks, we look at dealer inventory levels and age. Altogether, we would say the inventory picture is improved compared to a year ago, but perhaps with some modest erosion sequentially at some more secondary manufacturers. As it relates to unit levels, we think the industry is in a better position as total inventory levels are down 5% y/y, which compares to our previous checks where we saw them at a decline of roughly 9%. Of this mix, we note Polaris inventory down 1% y/y, and BRP down 3% y/y. We estimate 82% of new inventory is MY26 and a growing 10% is MY27, with Polaris and BRP staying ahead of the industry at 86% and 94% respectively."
Contact Dave at 612-226-8904.
