The cost to borrow money is essentially 0. Other than risk, there is little to prevent powersports dealers resuming their poor inventory management practices. The only thing stopping them from returning to the old days of full showrooms/warehouses and stacks of old inventory is that OEMs are currently unable to supply those vehicles.
From what I’m seeing, most OEMs are taking a conservative approach to the next 12 months. 2021 production looks like it will be up about 10% over 2019 levels, but they aren’t going crazy. Most seem to recognize that the U.S. still has significant downside risks.
I am starting to think that the OEMs don’t want to return to the old way of doing business. Free flooring is an expense for the OEM, and with low inventory levels and interest rates, that cost has gone away for them. They have also been able to scale back on programs and rebates. I expect that OEM profitability has increased dramatically. Why would they want to go back?
Dealers keep talking about business getting back to normal, with full showrooms and warehouses. I don’t think the OEMs want that, and I’m not sure it’s going to happen at any point in the near future.
What do you think?
#Powersports #Inventory #Risk #Flooring #Stocking #RV