Maximizing Potential in the Powersports Market

They may not all have wheels, but the world of the marine, personal watercraft, snowmobile and ATV markets–what is collectively known as powersports–has some real parallels with the automotive aftermarket, and some jobbers are finding it an interesting new business niche.

The market for new vehicles does have its distinct segments. The snowmobile market is probably the oldest of the land-going markets and has a long-standing popularity in Canada, for obvious reasons.

Of course, getting into a thorough discussion of the snowmobile market while the snow is melting away seems inappropriate. More to the point at this time of the year is the marine market, which also has a well-developed set of aftermarket suppliers.

“We source from all over the U.S. and Canada,” says Howard Michaelis, general manager, Lou Dennis Automotive and Marine in Huntsville, Ont., part of the Muskoka Auto Parts group. Booking orders in the fall and a great deal of U.S. sourcing characterizes the market.

“We are big in steering wheels and steering systems, and control cables for boats by Uflex USA. They are a very well-accepted supplier. Other major lines includes Atwood Marine Products, which is a full line of accessories such as fittings, lighting, cleats, etc.–anything that bolts onto the boat.”

He says that there are well-established competitors like any business, but that it can be a strong niche for a jobber in the right location.

“It would completely depend on the trading area as to how well it meshes with a traditional automotive business,” he says. “Where there’s water or boats there is some type of a market; but it is a tough call, because we are always faced with issue of whether you sell wholesale or retail.”

The marine business, particularly where engines are concerned, has become a tidy niche that his company’s 10 stores have carved out for themselves over the years. This has been helped in no small part by the services they can provide.

“We’re just one of 10 locations; we can send in engine blocks and we have a full machine shop service at our head office.”

Even there, though, parts have to be sourced for rebuilding from an U.S. aftermarket supplier specializing in outboard and inboard/outboard motor parts.

The market has, however, been changing of late. Driven by the need to reduce emissions, the market has been shifting away from the more traditional two-stroke engine technology. The term “new technology” has been used to describe direct injection, low-emissions two-stroke engines making their way into the powersports market, but Michaelis says that the marine market has generally taken another route.

“The big thing in the marine [market] is that most of them are going four-cycle. Even on [two strokes we do see though] it is not impossible to have a 100-to-one mix, to create less pollution.”

The shift in technology is expected to have an impact, though not all at once.

“You’re going to sell less oil of course. It will affect it a bit and as time goes on things will change, though the old two-strokes never die–unless you use them as an anchor that is.”

The entire discussion on emissions is mitigated by conflicting reports on just how much impact outboard motors and personal watercraft have on air and water quality.

In August 1997, a three-day PWC race was held on an artificial lake constructed in Anaheim, Calif. The man-made lake was filled with 14 million U.S. gallons of Orange County drinking water. In order to use the water, a $250,000 U.S. bond was placed to guarantee that the water would be returned unspoiled. After an intense regimen of water testing, all the water was returned and the bond money was refunded. The water showed no trace of fuel.

Studies such as this are common in the market, even as industry associations continue to fight limiting bylaws.

According to the Personal Watercraft Industry Association, modern PWCs have evolved into one of the most environmentally friendly motorized vessels on the water today. The larger models are among the cleanest, quietest motorized vehicles on public waterways today (with a 70% sound reduction and 75% reduction in hydrocarbon and NOx emissions since 1998). Current personal watercraft models already meet the U.S. EPA’s 2006 marine engine standards, achieving these emission reduction guidelines years ahead of schedule.

The ATV market also fights an image battle, even though industry associations say that the median age of owners is over 40 and that some 70% ride as a family recreation activity. Still, the image of the ATV rider as having a rebellious streak and a reckless bent, similar to the equally cliched image of his two-wheeled counterparts, persists.

In an announcement on the ATV Nature Watch program, Bill Steer, director of education for the Canadian Ecology Centre, noted that “Most ATV owners are environmentally conscious of their riding behaviour. Utilizing Crown land forest trails that are well mapped and signed is a long-term solution to the challenge of ‘Where can I ride?’”

The ATV business, though still young, is a market with some aftermarket aspects. Web sites are filled with young riders looking for ways to improve the performance of their vehicles. Talk of tires, chips, and other go-fast accessories fill Internet forums.

Regardless of which avenue a jobber chooses to look for opportunities, Michaelis says there are some caveats.

“The one key thing that you have to realize is that it is strictly seasonal. The marine dries up a lot in the winter, but some of the lines that we do have can tie through the winter months.”

Engine parts, for example, see their demand peak after the season, as maintenance during the boating season is strictly on a catastrophic failure basis.

It isn’t all different from the automotive industry though, he says.

“The one similarity is that you try to book orders with your customers, though in the automotive there is not quite the attention to booking the way it used to be.”

There are other similarities.

“It is tough to compete with the dedicated businesses. The automotive jobber has to be prepared that it will take a commitment to carve a niche. You are dealing with professionals who have been at it for years.

“It is tough to dual-line anything,” he adds. “In a lot of ways, even though there are not so many of the automotive products that are used in marine, there is an overlap in areas like chemicals, ignition products, hardware”–virtually every major spark plug manufacturer has dedicated products for this market–“and that is why it is kind of neat.”