1. 50 SEMANewsSeptember2011
BUSINESSSEMA
ByChadSimon
Powering Through
Turbulent Times
Industry Experts Discuss the Passion
Fueling the Powersports Recovery
The powersports market is very much a lifestyle, and enthusiasts just
love to play with their toys. Comprised of several different niches, this
market took a big hit over the past few years, mostly due to a fractured
economy and escalating gas prices. The good news is that the economy
seems to be rebounding, albeit slowly, and businesses and enthusiasts
alike are withstanding the challenges through a mutual passion for the
machines that make up this fascinating industry segment.
If you were to ask nine different power-
sports experts about their perspectives
regarding the current state of the industry
and where it’s headed, chances are you’d
get nine different answers. Well, that’s
just what we did. Our interviews with
nine major industry players from various
niches uncovered many issues, including
how the recession impacted their busi-
nesses, how their customers are coping
with higher fuel prices and what must
be done to ensure the survival of not
only their own businesses, but also this
whole important market.
American Honda
Motor Co. Inc.
The powersports industry is finally level-
ing off, reported Bill Savino, manager of
motorcycle press for Torrance, California-
based American Honda Motor Co. Inc.
Honda experienced a couple years of hard
economic times, but things finally seem to
be stabilizing, and Savino expects further
improvements with the availability of two
new products—the CBR250R entry-level
motorcycle and CB1000R naked sport bike.
Further complicating an economic
recovery are fuel prices, which are on every-
one’s mind lately. When fuel prices spike,
sales of motorcycles under 750 cc also seem
to increase, which is why Honda rolled out
the 110-mpg PCX 110cc scooter last year.
“We had 14 years of straight industry
growth, and when the recession hit, we saw
a couple years of definite decline,” Savino
said. “The positive is that we cleaned up
our inventory and are now up-to-date with
our current inventory. We’re in a good
position as the industry starts to respond
and improve going forward. Business is
starting to pick up, though, it’s nowhere
near what it was a few years ago. We’re
not seeing double-digit declines anymore,
which makes it easier to plan.”
Yamaha Motor Corp.
The personal watercraft industry is
rebounding, with demand up 20% com-
pared to last year, reported Mark Speaks,
president of Kennesaw, Georgia-based
Yamaha Motor Corp.’s watercraft group,
which mostly features Wave Runners.
With a median age of about 47, the
enthusiasts in this market are a little older
than in other powersports markets, and
most buyers are married men with two
children and a household income of well
over $100,000.
During the recession, demand for per-
sonal watercraft was off by 40%. Speaks
expects sales to eventually return to pre-
recession levels, but it’s anyone’s guess as
to how many years that may take. He does
not believe that higher gas prices have had
much of an effect on business.
n The majority of motorcycles purchased
in the United States are used primarily for
recreational purposes.

2. 52 SEMANewsSeptember2011
SEMAn BUSINESS
“This is not the first time we’ve seen $4
gasoline, and it doesn’t seem to have the
same impact as it did back in 2008 when we
first saw it,” Speaks said. “However, if gas
prices were to hit $5 per gallon, we would
see a significant loss of sales. Rising fuel
prices are a complicated issue when it comes
to personal watercraft, because many of
our customers also own boats, and we find
that as gas prices go up, it can actually have
a positive impact on sales. People put off
purchasing a bigger boat to buy a personal
watercraft because they are much more fuel-
efficient, but once prices go past their toler-
ance level, then we see a negative effect.”
Since the onset of the recession, Yamaha
has experienced an increase in the portion
of value-oriented product sales. In addition
to value, customers seem to want the right
combination of style, reliability and perfor-
mance, which are the key drivers.
“Going forward, we must ensure that
we’re maximizing value for our customers,”
Speaks said. “The greatest risk to our indus-
try is that prices inflate on our products to
the point where we price more customers
out of the market. We don’t have any cus-
tomers to spare, so it’s important that we
manage prices carefully.”
BMF Wheels
The powersports industry is repairing
itself, much like other parts of the automo-
tive aftermarket, according to Brock Weld,
president/owner of Orange, California-
based BMF Wheels, which specializes in
custom wheels for trucks, side-by-sides and
UTVs. Catering mostly to men ages 14–50,
Weld said his customers are usually truck
owners who identify with the countercul-
ture. They aren’t into compact, eco-friendly
cars; they just want to drive what they want,
whether it’s on the street or off-road. The
whole side-by-side custom wheel started as
a side project and took off, which surprised
Weld because his core business revolves
around custom truck wheels.
“Virtually everyone who owns a side-by-
side or UTV also owns a lifted or leveled
truck, so it seemed like a good extension for
us,” he said.
Weld believes that consumers may have
taken a break but never lost interest in the
hobby. Motorcycles have especially taken a
hit over the past few years but the power-
sports market has grown significantly as a
whole over the past year, though it hasn’t
fully recovered.
“It got so big so quick that a lot of people
started to say, ‘I don’t really care about
motorcycles that much,’ which is why it will
never recover to the stature it once was,” he
said. “Powersports is different because it’s a
lifestyle. It’s going to come back and con-
tinue to grow.”
Gas prices are definitely a factor, but
Weld believes that they only cause people to
postpone their purchases, not give them up
entirely. Consumers, he says, are not going
to spontaneously start driving an economy
car when their heart and soul is with a lifted
truck. They might have to wait or buy a
used lifted truck, but they’re going to find a
way to make it happen one way or another.
n Some of the latest industry trends for ATVs, UTVs, trucks and buggies include LED lights.
Bring in the Youth
Looking ahead, Weld sees a large gap
between the older and newer generations
in the custom wheel industry and believes
that it’s critical to lure younger buyers. He
also believes that some powersports suppli-
ers don’t necessarily understand some of the
tools available to them, such as social media
and other forms of communication technol-
ogy geared toward the younger generation.
Another method of survival is to exhibit
at the SEMA Show, which Weld does
annually. “I wouldn’t be where I’m at
today if I didn’t display at the Show,” he
said. “Especially for a guy like me, where
I’m trying to break into a new market,
such as powersports. Having that section
available opens up a whole new realm
of dealers and distributors that normally
I wouldn’t talk to.”
Baja Designs
The powersports industry is a challeng-
ing one, according to Deanne Moore, Baja
Designs’ CEO. Based in San Marcos, Cal-
ifornia, the company provides high-end
auxiliary lighting for motorcycles, ATVs,
UTVs, trucks, buggies and military vehicles.
“The Big Four manufacturers [Honda,
Kawasaki, Yamaha and Suzuki] were off by
50%–60% in off-road vehicle sales, and that
just filters down to the rest of us,” Moore
said. “The sand market is probably off about
70%–80%. As a whole, I would say the
entire industry is off about 50%.”
Males between 35 and 50 years of age
are Baja’s target demographic, and they
look for performance and value first when
evaluating product. According to Moore,
the latest industry trends include LED lights
and, unfortunately, Chinese knock-offs. To
combat the knock-offs, Baja has to con-
stantly innovate.
“Looking forward, one of the biggest
threats to our industry is regulation, such
as land-use issues, which affects our ability
to be enthusiasts and also could kill our
industry,” Moore said.
Gart Sutton & Associates
The powersports industry has suffered a
long stretch of downturn, but the past few
months have finally been positive, accord-
ing to Mike Brunken, general manager for
Gart Sutton & Associates, a provider of
motorcycle 20 Clubs, which offer clients a
blend of training opportunities, resources
and business operations support.

3. 54 SEMANewsSeptember2011
SEMAn BUSINESS
Powersports has been hit harder by the
recession than most businesses, reported
Brunken. When discretionary spending is
unavailable, the motorcycles that people have
always wanted drop from first or second on
their wish list to seventh or eighth. Higher
fuel prices always help motorcycle and scooter
sales, especially street bikes, but not off-road
vehicles, such as ATVs and motocross bikes.
“Many dealers are also getting into used
motorcycles,” Brunken said. “OEMs are short
on production due to the tsunami in Japan
earlier this year. A lot of our dealers are con-
cerned about their inventory levels, so there’s
a big push to get into the used market with
a lot of low-cc street bikes being sold now.”
Providing great customer service is critical,
and that’s what businesses in this industry
must do to gain an edge over their competi-
tors. Brunken suggests following up with cus-
tomers to ensure that you’re their place to go
to get powersports products.
NADA Appraisal Guides
The powersports industry is driven by sup-
ply and demand, and it is similar to the auto-
motive industry in some respects, said Lenny
Sims, vice president of operations for Costa
Mesa-California-based NADA Appraisal
Guides, which provide used-motorcycle valu-
ations. There is currently a large demand for
used bikes, which drives dealers to auctions so
that they can put inventory on their lots. Sports
n Though color matching has become
increasingly popular, carbon-fiber black-
ened machined wheels for side-by-sides
and UTVs are still strong sellers.
bikesaleshaveincreased3%–6%over
the last quarter; side-by-sides,
ATVs and cruisers are hold-
ing steady; and dirt bikes are
down 3%–5%, according
to Sims.
In late 2009 and early
2010, the powersports
segment was hit par-
ticularly hard, but the
good news is that Q4 of
2010 and Q1 of 2011
showed steady increases,
including a 7% increase
in Q1 of 2011, which
was the first quarterly mar-
ket increase in a couple years,
reported Sims. However, drivers
still have to contend with higher fuel
prices, which are sending some into motor-
cycle dealerships. It happened in 2008, as well,
which led to an increase in sales of scooters and
road bikes that can get 35–45 mpg.
Purchasing Factors
Because the market is divided into various
segments, consumers are motivated by differ-
ent purchasing factors.
“For instance, V-Twin enthusiasts want
comfort, performance and fuel economy,”
Sims said. “Some bikes offer affordable alterna-
tives for power, comfort, technology and per-
formance, while others may be more expensive
and not have the same features. But those folks
aren’t looking for the same thing. At the end of
the day, it all comes down to value.”
MARSHALL MOTOART LLC
Despite a sluggish economy, it’s business
as usual at West Haven, Utah-based MAR-
SHALL MOTOART LLC, which specializes
in aftermarket accessories for the POLARIS
Ranger and RZR and in custom side-by-sides
using existing powertrain components. As
a partner to POLARIS Industries, MAR-
SHALL MOTOART’s 5.5 Cage Kit for the
crew and midsize POLARIS Ranger allows
three more people to ride—two with full
legroom—in a safer fashion. New this past
summer was a full line of RZR accessories,
particularly the Gull Wing Doors and Stinger
Bumper. The side-by-side and UTV busi-
ness is family-oriented; from kids 16–18 to
baby boomers, but the main demographic is
males 30–60.
Another way consumers are saving money
is by downsizing their equipment, said Chris
Burke, MARSHALL MOTOART president.
“Because of the recession, a lot of guys
used to have a Jeep and a boat. Now they are
looking for one vehicle that they can do a lot
of different activities with, and that’s where
the side-by-sides are awesome,” said Burke.
“You can take them to the dunes, you can
take them to the rocks, and some states, such
as Arizona, have made them street-legal, so
you can buzz down the road in them. In some
ways, the recession has helped our business
because people are now looking to do more
with less.”
Side-by-sides are also popular because they
take up less space in the trailer, use less
fuel, cost less to insure and are cheaper to
run and maintain. During the recession,
MARSHALL MOTOART experienced just
a slight dip in sales.
“We weren’t selling the big, wild machines
that we used to sell,” Burke said. “Now it’s
more of the bolt-on accessories and guys
doing just one thing here and there versus
just dropping off a machine and saying, ‘This
is what I want.’ You have to adapt and be
flexible and just roll with the punches. We
used to build high-end sand rails, but if I
was just doing that at this point, I’d be out
of business.”
Quality is the most important factor for
consumers when making a purchasing deci-
sion. “We’re not the cheapest company,
largely due to in-house designing and manu-
facturing,” Burke said. “We offer good value
for what you buy, but our main thing is qual-
ity and customer service. Five years ago, the
n Amsoil Quickshot won the award for Best
New Powersports Product in last year’s
SEMA Show New Products Showcase.

4. 56 SEMANewsSeptember2011
SEMAn BUSINESS
industry was flooded with everyone and their
brother building something. There was a lot
of junk out there. The recession took down
some of the big guys that were good, but it
also got rid of some of the guys who shouldn’t
have been doing it in the first place.”
Listen to Your Customers
To ensure your business’ survival, Burke
suggests listening to what customers want,
what their issues are, and what they’re look-
ing for, and not just doing what you think
is cool. Offer suggestions, though, because
sometimes people don’t know what is best
for their use and design until you show them.
When people have problems and machines
have certain flaws, address those issues. In
this business, customer service is the key.
Also, exhibiting at the SEMA Show last
year for the first time enabled Burke to make
several new contacts he wouldn’t have made
otherwise. “The Show gave us great exposure
and credibility,” he said. “When people hear
that you’ve done the SEMA Show, they
know you’re a serious player in the game. We
had a positive experience, and we’ll probably
double our booth size this year.”
KTM North America
The overall motorcycle business is 65%–
70% less than it was at its peak in 2008,
according to Jon-Erik Burleson, president
of Murrieta, California-based KTM North
America, which is the largest European
motorcycle manufacturer doing business in
the United States. The company specializes
in off-road bikes and is a developing brand in
the travel and sport street segments. Burleson
said that the industry is bottoming out but
n When fuel prices spike, sales of motorcycles under 750 cc also increase.
that there are growth opportunities in some
segments, especially lower-cc bikes, though
performance and luxury segments are still
having some tough times.
“The businesses we know and talk with
have figured out how to make a living at
this level, but times are still pretty tight,”
Burleson said. “I don’t think we’re going to
see any material increases in the next three
years because motorcycles have not devel-
oped as a solid transportation choice among
consumers. We’re getting there, but still, the
majority of motorcycles sold in this country
are used for entertainment or as a secondary
leisure vehicle.”
KTM is doing some R&D with elec-
tric motorcycles. According to Burleson,
the technology is already there and priced
competitively. Unfortunately, the technol-
ogy for batteries is not. Batteries seem to be
about half the cost of the vehicle, and there
are a number of issues with range and how
battery performance affects the performance
of the bike at the end of the charge cycle.
Burleson estimates that the technology is
about 5–10 years to being fully accepted in
the U.S. market as a viable option for the
broad motorcycle consumer base.
Burleson believes that most sales increases
will be on the transportation side due to
more commuters coming out of cars and
into motorcycles for economic reasons. The
U.S. motorcycle business has two funda-
mental issues behind it. The first is that they
are a luxury item, unlike in other countries,
such as Brazil and India, where they are
the primary source of transportation. Sec-
ondly, the average customer is getting older
and, with Harley-Davidson capturing such
a large piece of the pie, demographics come
into play.
“From a KTM perspective, we’re always
looking to see where the young kids are
coming into the business, because overall,
we have an aging demographic that’s not
being replaced by the younger generation
as the older people are stepping out or even
sideways into other types of entertainment
that are the next step after a motorcycle,”
Burleson said.
Amsoil
The powersports industry is on the
rebound, said Len Groom, technical prod-
uct manager of powersports for Amsoil, a
Superior, Wisconsin-based provider of high-
quality lubrication products. However, con-
sumers are still not buying as much new
equipment. But there’s a flipside for Amsoil.
People are keeping their equipment longer,
so they’re spending more money on main-
taining their current equipment and trying
to get the most life possible.
“To do that, they need an oil that will
provide protection,” Groom said. “A lot of
times people will say, ‘As long as it makes
it until the end of the warranty, I really
don’t care.’ This is changing drastically. Now
they’re saying, ‘I just spent $15,000 on this
Harley, and I want to make it last; tell me
how to do that.’ So while the industry itself is
down, our side of it, in certain areas, seems to
be up.”
According to Groom, the industry is
currently experiencing an age-group shift.
Amsoil owns a large chunk of the baby-
boomer market, and the company’s Har-
ley-Davidson oil sales reflect that. Harley
owners are still buying, but they’re retiring,
so the spotlight should move to Gen-Y. The
number of riders in the 20–34 age group
is increasing, and they communicate in a
completely different way. Target them using
various channels, such as social media and
through sponsorships and advertising.
“Don’t get stuck in a rut by catering
to only the baby boomers,” Groom said.
“Look at who’s coming up; start market-
ing toward the Gen-Y’ers and the grow-
ing female demographic. Don’t forget your
roots, but branch out. If a company can
do that, they’re going to grow. We’ve had
double-digit growth for the past several years.
Look at the market and provide not only for
the application, but also for who is using the
stuff. Keep an open mind and change with
the times.”