Powersports Market Size, Share & COVID-19 Impact Analysis, By Vehicle Type (All-Terrain Vehicle, Side-by-Side Vehicle, Personal Watercraft, Snowmobiles, Heavyweight Motorcycle), By Application (On-Road, Off-Road), and Regional Forecast, 2020-2027

The global powersports market size was USD 9.44 billion in 2019. The global impact of COVID-19 has been unprecedented and staggering, with powersports vehicles witnessing a negative impact on demand during the first half of 2020 across all regions. Based on our analysis, the market will exhibit a decline of 7.2% in 2020 as compared to the average year-on-year growth during 2016-2019. The market is projected to grow from USD 8.76 billion in 2020 to USD 12.75 billion in 2027 at a CAGR of 5.5% in the 2020-2027 period. The rise in CAGR is attributable to this market’s demand and growth, returning to pre-pandemic levels once the pandemic is over.

Powersport vehicles are high-performance vehicles intended for off-highway and on-highway use and are designed to withstand extreme operating conditions such as shock/vibration, debris, and other environmental hazards. Growing demand among the youth for off-road adventure tourism and leisure activities, rise in disposable income, clubs and state organizations promoting powersports activities, and government policies supporting the development of recreational infrastructure are fueling the market's growth. Furthermore, to increase mass-market adoption, companies are focused on developing electric products. Hence, these factors will influence the growth of the market over the forecast period.

Reduced Sales due to Plant Closures amid COVID-19 to Restrain Growth.

The impact of COVID-19 on the market has been characterized by the shutdown of production and assembly plants and reduced parts supply. For instance, Polaris, the leading player in the market, temporarily closed its two local plants in Monticello and Roseau in Minnesota owing to the pandemic-induced lockdown. Additionally, Yamaha, which halted production at its United States plants in March 2020, resumed operations, however, with many furloughs and staff reductions. Similarly, Honda also halted powersports production during the lockdown at its South Carolina plant.

Removing a large quantity of these vehicles from the production schedule due to the pandemic-induced lockdown will reduce profitability for several key market players. This may also lead to a short to mid-term lack of funding for innovative R&D initiatives. Furthermore, the market largely operates on a dealer-based model. However, the stay-at-home measures have led to a significant drop in floor traffic. Hence, several dealers and powersport manufacturers are relaxing financing and credit criteria to support existing customers and boost new-vehicle buyers.

According to Jeremy Jansen (Head of Motorsports for Wells Fargo Commercial Distribution Finance), even though wholesale volume decreased by around 25% in March & April, year-over-year wholesale volume was flat rest of the year. This represents an exponential recovery in retail performance. Furthermore, due to the Small Business Association’s Paycheck Protection Program and surge in sales & margin levels, many dealers are financially stable. Furthermore, maintaining pricing composure aided by reducing inventory levels has enabled dealers to generate strong margin levels on new retail. Hence, these factors are influencing the growth of the market.

LATEST TRENDS

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High Demand for Additional Vehicle Accessories to Aid Market Growth

According to the Specialty Equipment Market Association (SEMA), around 82% of the powersports vehicle owners plan to purchase or purchase accessories for their vehicle within three months of purchase. These vehicles are used across diverse terrains for a wide range of activities. Hence, enhancing functionality via utility-oriented modifications is a top priority for off and on-road enthusiasts. For instance, accessory spending per vehicle has increased by 50% to 60% over the last two years, according to industry expert Steve Shankin. Hence, the increasing number of product accessories will lead to increased profitability for OEMs which will positively influence the powersports industry growth.

DRIVING FACTORS

Increasing Adoption of ATVs to Drive Market Growth

ATVs have lesser age restrictions and lower maintenance costs than other powersport vehicles and are easier to maneuver due to low vehicle weight. Therefore, these factors and their affordability have made them highly popular among younger and older adults. Additionally, government initiatives in North America and Europe to increase the number of ATV pathways in parks have also increased. For instance, in 2017, a federal grant was awarded to develop a new recreational facility, Bush Head Shoals ATV Park in Georgia, U.S. Hence, the high adoption of ATVs is expected to drive the powersports industry growth.

Economic Impact of Snowmobiling to Augment Growth

Snowmobile tourism is actively promoted via trail maps, information guides, and state and provincial travel bureaus as it has become an important active outdoor recreation economic engine. For instance, according to the International Snowmobile Manufacturers Association, around USD 36 billion is spent on snowmobiling in the US and Canada each year.

Snowmobiling generates approximately USD 350 million in terms of overall economic impact in the state of Maine. Similarly, an economic impact study conducted by the Quebec Federation of Snowmobile Clubs in 2019 revealed that the snowmobile industry generated around USD 2 billion in Quebec. Hence, these factors fuel the growth of snowmobiling, which will drive the growth of the market.

RESTRAINING FACTORS

Environmental Impact and Safety Aspects to Restrain Growth

The majority of the powersport vehicles operate on conventional fuel and highly polluting engines. Heavyweight motorcycles, in particular, consume a high quantity of fuel and emit a larger number of emissions. Regulatory norms aimed at reducing the harmful impact of such vehicles and greater consumer need for fuel-efficient vehicles lead to the reduced sales of these vehicles.

According to the Consumer Product Safety Commission (CPSC), around 81,800 people were injured in the US owing to ATV-related incidents in 2018, with children younger than 16 involved in 26% of the incidents. Lack of appropriate safety equipment while off-roading is attributed to the high number of rollover and collision incidents. Hence, increased focus on the environmental impact of these vehicles and unmanaged use by children contributing to a high number of fatalities is responsible for restraining the growth of the market.

SEGMENTATION

By Vehicle Type Analysis

Heavyweight Motorcycle Segment to Dominate

By vehicle type, the market is segmented into all-terrain vehicles (ATV), side-by-side vehicles, personal watercraft, snowmobiles, and heavyweight motorcycles.

The heavyweight motorcycles segment held the largest powersports market share in 2019 owing to increased adoption among younger buyers and low-interest rates. However, over the last few years, registrations of motorcycles with large engines (600cc and above) have decreased due to a shift in consumer preference (largely attributed to younger buyers) towards more accessible, light, cheaper fuel-efficient motorcycles. Hence, the heavy motorcycle segment is anticipated to show steady growth in the market.

Personal watercraft are highly popular for recreational use as they are extremely environmentally friendly yet provide high power to weight ratio. Additionally, they also ensure rider safety with features such as an engine cutoff lanyard that cuts off engine power if the rider falls off the personal watercraft. Hence, these are some of the factors fueling the growth of this segment.

The side-by-side vehicle segment is expected to exhibit a higher CAGR due to features such as multiple seating configurations, enhanced roll-over protection, and versatility in off-road use, including forestry, agriculture, utility and, luxury tasks.

By Application Analysis

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Off-Road Segment to Grow at a Significant Pace Owing to Increasing Versatility of Vehicles

Based on application, the market is segmented into on-road and off-road.

The off-road segment held the largest market share in 2019. Power sport vehicles can drive on uneven & rocky surfaces and steep trails and provide versatility across all terrains. They provide impressive handling with compact size and can maneuver in tight spaces like crowded forests (ATVs and Side by Side) and snowmobile trails (snowmobiles). Hence, these are some of the factors fueling the growth of this segment.

The on-road segment is expected to exhibit steady growth in the market that can be attributed to the increasing demand for personal transport vehicles and especially on-road motorcycles.

REGIONAL INSIGHTS

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North America stood at USD 7.26 billion in 2019 and is likely to hold the largest share of the global market during the forecast period. This is owing to favorable weather conditions and the availability of a large number of recreational facilities in the region. Moreover, the presence of established players, including Arctic Cat and Yamaha Motor Corporation (headquartered in Canada) and BRP and Polaris (headquartered in the US), will favor adopting the product. Furthermore, the state and federal governments in the US and Canada also provide extensive support (for example, surveying & designing trails) owing to the high economic impact of powersport activities. Hence, these factors are expected to fuel the dominance of this region in the market.

Europe is expected to showcase significant growth in the market due to the rise of recreational clubs and provincial organizations that heavily promote off-road & recreational leisure activities.

Asia Pacific is expected to experience considerable growth in the market. This is owing to a rise in disposable income and greater consumer awareness regarding recreational activities. There is a greater demand for heavyweight motorcycles and side-by-side's in particular in this region. Hence, these factors are propelling the growth of the market in the region.

KEY INDUSTRY PLAYERS

Polaris Inc., Arctic Cat Inc., and Textron Inc. Invest in Business Expansion to Brighten Their Market Prospects

Key players in the market include BRP, Arctic Cat Inc., Honda Motor Co., Ltd, Polaris Inc., and Kawasaki Heavy Industries, Ltd. These players are investing heavily in expanding their digital footprint that can enable more seamless powersport ownership.

For instance, in July 2020, Polaris launched RideReady, a new digital platform, which will make servicing & maintaining motorcycles, off-road vehicles, and snowmobiles easier and convenient. RideReady provides transparent service pricing, personalized vehicle & maintenance information, and easy online customer services scheduling options, as well as how-to-content for owners preferring a do-it-yourself approach. Hence, a greater focus on digital outreach to customers by key players in the market will positively influence the growth of the market.

LIST OF KEY COMPANIES PROFILED:

• Polaris Inc. (Minnesota, U.S.)


• Textron Inc. (Rhode Island, U.S.)


• Arctic Cat Inc. (Minnesota, U.S.)


• Honda Motor Co., Ltd. (Tokyo, Japan)


• BRP (Quebec, Canada)


• Harley Davidson (Wisconsin, U.S.)


• Kawasaki Heavy Industries, Ltd. (Tokyo, Japan)


• KYMCO (Kaohsiung City, Taiwan)


• Suzuki Motor Corporation (Shizuoka, Japan)


• Yamaha Motor Co., Ltd. (Shizuoka, Japan)

KEY INDUSTRY DEVELOPMENTS:

• March 2021 – RumbleOn Inc. entered into an agreement to acquire RideNow, the largest powersports dealer in North America. The acquisition is valued at USD 575.4 million and will integrate RumbleOn’s technology with RideNow’s extensive footprint and retail brand.


• December 2020 – Polaris has been awarded the three national master standing offers (NMSOs) by Public Services and Procurement Canada (a Canadian federal department) to sell snowmobiles, all-terrain vehicles (ATVs), and side-by-side utility vehicles (SSVs).

REPORT COVERAGE

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The market research report covers a detailed analysis of the market and focuses on key aspects such as leading companies, product types, and leading product applications. Besides this, the report offers insights into the market trends and highlights key industry developments. In addition to the above factors, the report delivers an in-depth market insight of several factors contributing to its growth over recent years.

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