For the last couple of seasons, you needed to order a snow check to get a new snowmobile. Dealer floor stock was nonexistent outside of the rare cancellation. Many riders who used to take advantage of in-season and end-of-season deals have had no opportunity to buy at a discount. Is this the new normal for now, or is it just a temporary period?
This is temporary, and while some things may permanently change, we will likely see a return to normal in a season or two, and here are the reasons why.
There are a couple of things to keep in mind on snowmobile deals. Any significant discount on a snowmobile will come from a manufacturer rebate. Dealer’s margins on snowmobiles are very slim and have a small amount of wiggle room. Manufacturers will only issue rebates if there is a need to move slow-moving inventory from the dealer floor.
1.Supply is constrained
One reason the costs of sleds have remained high and deal-free is due to a constricted supply with high demand. The OEMs would love to sell more units but want to avoid the letdown many experienced in 2022. For 2023, Snowmobile manufacturers put allocations on specific models and limited the amount of floor stock available. With limited stock, supply will remain tight for this year. As bottlenecks disappear, the supply pressure from the lack of new units will be alleviated.
2. Manufacturers are public companies that need to continue to grow sales.
If you worked for a public company, you know the irrational sales growth or else mentality regardless of market conditions. The manufacturers have faced a tremendous last few years and will face continued pressure to grow unit sales. There is a good chance in the near future, excess sales goals and demand drops will occur, resulting in excess stock that needs rebates to clear.
3. Higher demand models likely to stay spring check
For brands like Ski-Doo, the spring check models were the only option to get a high-end suspension package. That has not changed, and I doubt it will. Getting a high-end Polaris outside of snow check dates used to be pretty easy, but they have shifted closer towards a Ski-Doo spring check model with the highest suspension packages only available during snow check. They were probably working towards this, and they took the opportunity to make higher-end models more exclusive.
4. Used prices becoming softer
There are a couple of factors at play that determine used prices. The cost of a new snowmobile (replacement cost) and demand. In the past few years, we’ve seen prices of new sleds go up and the supply of the new machines go down. Many buyers that would typically buy a new snowmobile in season were forced to enter the used market, driving up the prices. Used prices are less than last year, and as supply returns to normal next season, there should be even less pressure on the used market. The only concern is the prices of new sleds remain higher.
The good news is we are closer to being back to normal. We see this as the last season where OEMs had to limit snow check sales and dealer floor stock. Chip shortages and lack of container shipping were big reasons for all the supply chain chaos. Container shipping is back to normal, and the chip supply is returning. Last year was peak problems. This year will be the progress year, and next year will be the back-to-normal year.