It was an interesting year for the powersports industry. Lenders adapted some important technology, off-road-vehicle sales climbed and OEMs turned to new markets to generate revenue. What follows are PSF editors’ picks for the top trends of 2018.
Lenders Offer E-Contracting
This year, several lenders, including American Credit Acceptance, American Cycle Finance, and ThunderRoad Financial, made the push to offer e-contracting, which allows dealers to digital forward contracts to finance companies.
Off-Road Market Grows
Motorcycle sales are still down, with Harley-Davidson reporting a 13% year-over-year decline in U.S. sales. However, the off-road market has been steadily growing in its place. OEMs such as Polaris have reported growth in the off-road segment, with year-over-year, third-quarter sales rising 3%. According to a research report by Global Market Insights Inc., the off-road market will be worth $24 billion in 2024, driven by advancements in the technology and performance of the vehicles, and growing interest in outdoor activities from millennials.
Synthetic Fraud Rises
Fraud is a concern for any financial company and powersports lenders should be on the lookout for synthetic fraud, a type of fraud where a fraudster fabricates a new identity, acquires a vehicle, and then disappears with it. According to Sandra Giron, collateral manager of the risk and strategy department of Yamaha Motor Finance Corp. USA, 60% of first payment defaults could be synthetic fraud.
The Federal Reserve Raises Interest Rates
The Federal Reserve raised interest rates four times this year, with the most recent hike raising rates a quarter point to 2.5%. The Fed is widely expected to continue raising rates in 2019. A rising rate environment typically affects powersports sales as consumers are less likely to purchase a new vehicle as interest rises. Zero-percent financing deals are also likely to drop, giving lenders one less tool to rely on.
OEMs Enter The Marine Market
2018 saw a number of OEMs either enter or increase their presence in the marine sector. Polaris officially entered the segment when it bought boat manufacturer Boat Holdings in an all-cash deal valued at about $805 million. Additionally, BRP, a manufacturer of off-road vehicles, snowmobiles, and jet skis, earlier this year announced the acquisition of two boat makers, Alumacraft Boat and Triton Industries. The terms of the two deals were not announced. The Alumacraft deal closed and the acquisition of Triton is expected to be done in the third quarter of next year. Jaime Katz, an equity analyst at Morningstar Credit Ratings, previously told Powersports Finance that OEMs were turning toward the marine sector as the motorcycle market stalls.