Getting Down and Dirty With ATVs

For many Canadians, nothing signals the start of summer more than the first sunny-weather trip to the cottage. Although often greeted by insect life that threatens to carry away the young, the first real dock-sit of the season is glorious. Taking time to enjoy the natural sounds of water lapping the rocks, the birds in the trees, and the ATVs on the trails is an absolute tradition.

Now, that last may not be a welcome racket to everyone who hears it, but jobbers are quickly starting to associate the noise of those small engines with big opportunities.

“We’ve been in the ATV market for a few years now, and there remains quite a lot of interest, especially in rural areas,” says Canadian Tire’s Lisa Gibson. “Last year, sales were sort of flat, but that was after several years of consecutive growth, and also, our stats don’t report on any non-branded product.” Other players in the market have also noted a levelling of sales, but “there are still very steady sales in the plug category, because our plugs are cross-platform, so they can be used in ATVs and PWCs (personal watercraft),” says Jeff Deveau of NGK Spark Plugs. “It is a bit tough to tell for sure how the ATV market in particular is doing because of that cross-platform capability, but our own unsubstantiated research suggests that ATVs are still doing well.”

Despite some indications of a current softness in the category, there are still plenty of reasons to have a piece of the action. In fact, the Motorcycle and Moped Industry Council of Canada reports that more than 171,000 new units of motorcycles and OHVs (off-highway vehicles) were sold during 2006, with an estimated retail value of approximately CAN$2.2 billion. ATVs accounted for 52.04% of total new units sold, while motorcycles made up the remaining 47.96%. By dollar value, new motorcycle sales accounted for 49.05% of the total retail value of sales, while new ATV sales accounted for 50.95%. In 2006, 82.8% of new motorcycle retail sales occurred in the spring and summer (between March and August), with 17.2% in the fall and winter combined. New retail sales for ATVs in 2006 broke down by season as follows: 23.4% fall, 14.4% winter, 36.1% spring, and 26.1% summer.

Manufacturers and retailers agree that the ATV market is simply too lucrative to ignore, particularly when one factors in all of the required gear.

“In terms of demographics they (ATVs) are primarily being used for utility, like farming or for recreation and sport. Whichever the use, our focus is providing not only the machine, but also safety accessories and an understanding of basic safety,” Gibson says.

Breaking In

The ATV market is one that even manufacturers admit is not easy to break into. The nature of the individuals who buy them, as well as generally accepted assumptions about the business, both work against the jobber who is trying to increase his profile. “It’s a tough market to crack for the jobber, because it is a big DIY crowd,” says Deveau. “However, what is done in terms of service is often the small engine repair guys, and so talking to those guys, the dealers and the bike guys, and starting to establish a relationship would probably be your best bet,” he says. By reaching out to the small engine repair set, as well as the bike dealerships, particularly before your competition gets the chance to approach them, you’ll increase your chances of establishing yourself as the go-to source for your local market.

A second model being employed by Canadian Tire is training, in this case for the end user. The company has been running consumer riding and safety courses with a great deal of success. “We organized our courses through the Canada Safety Council, after noticing an increase in popularity with youth riders,” Gibson says. “Reports of accidents had increased, and so we felt we had to offer a way of trying to keep our customers safe.

“The clinics are very hands-on, on top of having a lot of POP material to take home. In the end, there was lots of interest from all ages.” Gibson has also noted the accessories sales advantage to hosting the clinics. “The laws differ all over the country, and so one of the focuses of the clinic was to direct people to the appropriate websites,” she says. The laws governing accessories requirements differ from place to place, so Gibson says her company is a big player in sales not only of the bikes themselves, but also their accoutrements. “Accessories are doing well,” she says. “More and more young people are entering the market, and so parents want to make sure they are properly outfitted.”

Obviously a massive national training program is not something that most jobbers are willing, or even capable, of throwing together. However, would it be impossible for you, as a member of the community, and in association with other local groups, to organize a training program of your own? The Canada Safety Council has plenty of resources for companies willing to take such an initiative, and one Saturday, one parking lot and a bunch of eager ATV customers flocking to you could pay off in both goodwill and bottom line benefits.

Challenges

There are other major challenges associated with the ATV business aside from the difficulties of making that initial foray into the niche. “What can be noticed in the newer models is that there is lots of parts proliferation,” says Deveau–an issue that plagues this market as much as it does the automotive world. “We’re developing more precious metal-based plugs for the segment. These replacement plugs are really aimed at the performance-oriented consumer, and they are designed as a premium upgrade for the enthusiast.”

Unfortunately, not every company is flooding the market with high-return and profitable performance upgrades. A second challenge has been the appearance of inexpensive full-unit ATVs on North American trails. However, as consumer and government watchdogs have noted, some of these machines are not up to standard, and may even in fact be dangerous. One example was cited by the staff of the U. S. Consumer Product Safety Commission (CPSC) in a warning to consumers who own a particular Youth ATV. According to a Commission report, these ATVs, which were imported by a company out of Texas, were found to have several serious safety defects; owners of these bikes, designed for kids between six and 11 years old, could potentially be putting their children at risk. CPSC staff determined that the machine lacks front brakes, has no parking brake, is missing a neutral indicator light, and can be started in gear. Additionally, the commission noted that the owner’s manual does not contain complete information on safe operation and maintenance of the ATV.

However, despite the understandably negative press surrounding the prevalence of cheap ATVs, some industry insiders have also noted a clear advantage in having them as competition.

“There has been a lot of talk in terms of the intrusion of off-shore product. The initial fear was that these cheaper bikes would eat into market share,” says Deveau. “In fact, they’ve done really well and sold a lot of bikes, but I think what has happened is that they simply got more people interested in buying an ATV, and then those people have quickly moved on to one of the more traditional quality brands.” When it comes to dealing in cheap product, the lesson is similar to that found in other market categories: don’t look at the economy product as competition that needs to be matched on price. Many ATV rookies are learning through the purchase of poor product that they love the sport, but they need to get serious by equipping their new high-end bike with the right parts and accessories. And that’s where you come in.