BLACK BOOK – Motorcycle & Powersports Market Update August 2021
“Last month we noted that the record run of value increases we have seen over the past 18 months appeared to be slowing down and possibly ending. This month confirms that. For the first time in a long while, nearly all segments are showing declines in values. Most of these drops are very small, but nonetheless it appears the end of the COVID-19 fueled market is upon us.” – Scott Yarbrough, Senior Analyst,
Motorcycle & Powersports
The segments showing growth in values this month are both of the water-based segments, Personal Watercraft and Jet Boats, and Scooters. All three of these segments have one thing in common. They are vehicles that are in high demand as rental units in vacation and destination areas. Anyone who has tried to book travel and hotel accommodations this summer is sure to be familiar with the increase in prices and lack of availability from pre-pandemic times. It is likely these segments are seeing pricing gains for exactly this reason. Once the warm weather begins to recede, we expect these segments to more closely follow the rest of the market’s trends and begin to drop in value. All of the other segments are down in value less than one percent. While the drops are not terribly significant, that they all went down at once is. We have not seen the entire market move in a downward direction for quite a while.
Segment Spotlights & Industry News
Street Bike Performance
Street Bikes show no change in value this month. Combined with the Dual Sports and Cruisers, both of which went down, all of the on-road motorcycle segments are showing a return to more traditional seasonal pricing trends.
Polaris’ second Quarter 2021 earnings give us a good indication of where the Powersports industry finds itself as we exit the COVID-19 driven market. Sales are down 28% from last year’s pandemic highs largely due to limited product availability as supply chain issues continue to impact new unit production. However, compared to the same period in 2019, sales are up 14%. Even with the production constraints, Polaris’ gross profit margin was a healthy 26%. This was largely due to lower incentive and marketing costs, coupled with strong demand.
- Harley-Davidson Motor Company and Harley-Davidson Financial Services (HDFS) reported a 29% year over year increase in second quarter loan originations to $1.2 billion. Strong new and used unit sales helped contribute to the growth in originations. Additionally, the Motor Company noted that supply-chain issues continue to be an issue limiting new unit production and they have implemented a 2% surcharge on select models in the U.S. effective July 1 for the remainder of the 2021 model year.
ATV & Utility Vehicle Performance
Both the ATVs and the Utility Vehicles are down slightly this month after exhibiting strong value growth over the past 18 months. As you can see below, last year at this time, both of these segments saw extraordinary growth in values as were heading into the fall.
Recreational Vehicles Market Update August 2021
“The values of used RVs sold at wholesale auctions rose across the board once again last month, but the increases were less than we have been seeing recently. It’s likely that supply is finally catching up with demand, especially on the new side, where factories are producing record numbers of vehicles. Auction volume dipped once again, probably due to dealers holding on to their trade-ins.” – Eric Lawrence, Principal Analyst, Specialty Markets
Wholesale RV Values Set All Time Records, But Increases Are Slowing
For Motorhomes (including Class A, B, and C)
- Average selling price was $69,157, up $534 (0.7%) from the previous month.
- One year ago, the average selling price was $51,574.
- Auction volume was down 11.3% from the previous month.
- The average model year was 2010.
For Towables (including Travel Trailers and Fifth Wheels)
- Average selling price was $23,654, up $478 (2.1%) from the previous month.
- One year ago, the average selling price was $18,331.
- Auction volume was down 2.5% from the previous month.
- The average model year was 2015.
According to the RVIA, the total number of RVs shipped in June reached 50,706, the highest amount ever for the month, and an increase of 25% over June 2020. Towables totaled 45,689 units and motorhomes accounted for 5,017. Truck Campers came in at 419, Folding Camping Trailers reached 652, and Park Models were 285. The last four calendar quarters each saw a new shipment record set, with the second quarter of 2021 (April-May-June) representing an all-time high.
- RV megadealer RV Retailer has acquired the Blue Dog RV chain and their 12 dealerships, which are mainly on the West Coast. This brings their total number of locations to 70 and gives them a physical presence in 24 states.
- KOA (Kampgrounds of America) projects that 53.5 million households will take a camping trip in 2021.
- Lazydays announced they have teamed up with M&T Bank to increase their floorplan capacity from $175 million to $327 million.
- Statistical Surveys reported that there were 65,303 retail RV registrations in May, the 12th month in a row of record setting performance.
- The U.S. economy grew at a rate of 6.5% in Q2. Consumer spending was up 11.8% (annualized).
- Lazydays reported second quarter earnings of $322 million, up $108 million from the same period last year.
Collectible Cars Market Update August 2021
“Excitement is building for the Pebble Beach Concours d’Elegance coming up in a few weeks, and the collector car community is looking forward to the associated auctions held in Monterey by RM Sotheby’s, Mecum, Gooding, Bonhams, and Russo and Steele. This is where the ‘best of the best’ are sent to be run across the block, and these auction results set the tone for the upper end of the hobby for the rest of the year.” – Eric Lawrence, Principal Analyst, Specialty Markets
- RM Sotheby’s Online Only: Open Roads June auction was on the smaller side, but still successful, with 60 of the 76 offered lots being declared sold for a total of roughly $3.5 million with a sell through ratio of 79%. Mixed in with the 52 vehicle lots were a very interesting selection of vintage automotive posters and a handful of tools and rare parts. Company spokesmen commented that there were over 260 separate bidders who hailed from 29 countries, and that 27% were first time RM Sotheby’s clients.
- GAA’s most recent Classic Cars auction was held at their dedicated venue in Greensboro, North Carolina, The Automotive Palace. This sale was limited to buyers, sellers, and invited guests; due to Covid concerns the general public was not admitted. Total sales came in right around $20 million, with over 600 cars being run through the lanes and a sell through percentage of over 90%. Two of the featured offerings were collections from George Shinn and Don Bunch, both of which had nearly 100% sell throughs.
- Mecum’s Orlando, Florida auction was held the last weekend in July at the Orange County Convention Center. Final numbers are not yet available, but of the roughly 1150 vehicles offered, close to 75% were assumed to be sold for a total approaching $35 million. It’s likely that post block transactions will add to the final numbers, but observers said that bidding was strong and attendees were enthusiastic.
- Bonhams’ Goodwood Festival of Speed auction, held on the Duke of Richmond’s namesake estate near London, is always one of the high points of the year for the collectible car world. This year did not disappoint, with 35 of the 62 vehicles selling for a total of approximately $9 million with a nearly 60% sell through rate. The majority of the vehicles on offer were vintage European sports cars and later model exotics.
1970 Ford Mustang Boss 429 Courtesy of Mecum
Notable Recent Auction Sales Include:
1970 Ford Mustang Boss 429 Hardtop $352,000 (Mecum)
1961 Chevrolet Corvette Custom Roadster $352,000 (Mecum)
1987 Porsche 930 Turbo Slantnose Coupe $286,000 (Mecum)
1967 Chevrolet Corvette L89 Convertible $264,000 (Mecum)
2017 Dodge Viper SRT GTC Coupe (222 miles) $247.500 (Mecum)
1970 Chevrolet Chevelle SS454 LS6 Coupe $250,000 (GAA)
1993 Porsche 911 RS America Coupe $181,500 (RM Sotheby’s)
1980 Clenet Cabriolet $39,600 (RM Sotheby’s)
1990 De Tomaso Pantera GT5-S Coupe $217,250 (Bonhams)
2007 Mercedes-Benz SLR 722 Coupe $399,357 (Bonhams)
The Vintage Pony Car segment represents sporty vehicles from American Motors, Ford, General Motors, Dodge, and Plymouth produced from the mid-1960s through the early 1970s. A few representative examples would include its namesake Ford Mustang, Chevrolet Camaro, Pontiac Firebird, Plymouth Barracuda, Dodge Challenger, and AMC Javelin. These vehicles dipped in late 2017 but have been on the rebound ever since. They are typically less expensive than those in the Muscle Car segment, and their generally high production numbers (over 1,000,000 Mustangs in 1965-66 alone) make them a popular choice for collectors, especially those new to the hobby. Parts availability is generally pretty good, especially for Ford and GM products, and many of these cars represent their owner’s first attempt at a restoration.
The changes by vehicle segment type were mixed last year. Muscle Cars, Pony Cars, and Classic Trucks and SUVs all increased, while American Classics, European Sports Cars, and Vintage Exotics declined. As we are coming out of COVID and things have been getting back to normal (hopefully) there has been a lot of pent-up consumer demand. All of the “fun vehicle” categories are seeing increases, including Boats, Motorcycles/Powersports, RVs, and of course collectible cars and light trucks. European Sports Cars had skyrocketed during the past several years, so a slight correction is to be expected as the market settles. The Vintage Exotic segment is only down slightly, but is always well represented at the Monterey auctions a few weeks from now at Pebble Beach, so we’ll be keeping a close eye on them to see which way that segment is moving.
Medium and Heavy-Duty Truck & Commercial Trailer Market Update August 2021
“With an increase of physical attendance and onsite bidding, auctions around the country are returning to normal operations. Overall, the market has stabilized and begun to slow down following months of consistent increases to new and used values. Since January of this year, prices have been on an increasing trend with the exception of some light duty models; however, buyer and price fatigue mixed with chip and other equipment shortages is helping contribute to a leveling out of price and demand. Many businesses and consumers are choosing to wait until the market cools down before purchasing more inventory. Based on conversations with OEMs and remarketers, we expect to see continued stability through the remainder of 2021 and the majority of 2022.” – Josh Giles, Principal Automotive Analyst, Vehicle Valuations & Residuals
Commercial Truck Market Update
- The chart above shows the monthly adjustment trends for each segment within the Heavy-Duty market.
- We are seeing continued stabilization in most segments with Heavy-Duty Regional and Over the Road trucks and tractors preforming better than Construction units.
- From July to August, Heavy-Duty Construction values fell an overall weighted average of 0.5%, Heavy-Duty Over-the-Road units fell 3.4%, and Heavy-Duty Regional Tractors fell 0.5%.
- The chart above illustrates the monthly adjustment trend for Medium Duty trucks.
- Dry vans and box trucks have grown in demand as production delays continue to limit the number of new trucks being delivered.
- Due to the chip shortage and other production delays, fleets are keeping their units in service longer, which equates to higher mileage, worse conditioned units being sold at auction.
- From July to August, Medium Duty Trucks have only depreciated an overall weighted average of 0.1%
- According to the Federal Reserve Economic Data (FRED), new retail sales grew 10.4% from May to June. The month prior (April 2021 -May 2021) new retail sales dropped 1.08%.
- Three months in a row of stable retail sales is encouraging and could be a sign that OEMs and their venders have corrected any issues of equipment and parts not being consistently being delivered.
- In addition, the ATA Truck Tonnage Index is reporting consistent numbers over the past few months, indicating that freight demand is now on a stable and positive trend.
- These are all very positive signs for the overall market and the US Economy. We expect retail sales and freight figures to continue a slow increase as suppliers and OEMs continue to work together to produce enough inventory to satisfy current demand.
- New and Used truck values will continue to slowly rise through the rest of this year. We a expecting a slow recovery, so prices will remain stable through the first half of 2022.
Commercial Trailer Market Update
- Commercial Trailer values have been relatively stable since August of 2020 due to production shortages and strong freight demand.
- In January of this year prices began to increase as new and used volumes became more scarce.
- Our team is currently analyzing the most recent auction and retail transactions to make another round of value increases heading into October.
- Since the beginning of the year, Dry Vans have increased 16.1%, Refrigerated Vans have increased 8.4%, Lowboys have increased 3.2%, and Dump Trailers have increased 2.8%.
- These numbers are amazing when you consider by this time last year Dry Vans had depreciated 9.0%, Refrigerated Vans were down 13.1%, Lowboys down 2.7%, and Dump Trailers had depreciated 9.1%.
- Recent auction and retail sales figures indicate that this market will continue on an upward trend through the reminder of this calendar year as commercial trailer production remains idled and freight demand grows.