State of the Off Road Industry 2024

STATE OF THE OFF ROAD INDUSTRY 2024


Welcome to my second State of the Off Road Industry report. I'm Joel from Wheeled Lyfe Off-Road and I love the off road industry. I just love business and financial reports. This report is a compilation of data from various companies that report and release sales, revenue, and expected sales.

Last year, it was my first ever State of the Industry report and I made some bold predictions based on the reports I received and research from industry leaders in business and finance. You can read my full report HERE in the 2023 State of the Off Road Industry report.

How did I do?

Financial Report 2024

An important part of the off-road industry discussion is based on interest rates because so much money is based on debt and liabilities, we can directly compare how well the aftermarket industry will do based on those interest rates. By 2023, we saw a freeze in growth and spending because of the fear-based reports that the media is pushing on our culture. Many companies stopped hiring and at the beginning of the year we saw layoffs. People were saying that home prices and the stock market would go down, along with the economy. In my research, I didn't find that to be true and in fact we didn't see that at all. Most Americans didn't lose their jobs, the housing market didn't crash, and the stock market didn't crash either. There is a lot of research on those big topics, but this is not the subject of such a long article. However, major tech company layoffs in late 2022 and early 2023 created fear and panic and people stopped spending money, in a general sense. However, they did not stop using when it comes to dining and restaurants. Major purchases however, such as suspension lifts, wheel and tire packages, and bumper upgrades were largely shelved. Additionally, we've seen more Americans stop by when they buy their cars.

The Feds ref. 1 raised interest rates four times through 2023 at 25 bps (Basis Points) each time. However, relief came when we started to see inflation numbers slow down and the Fed stopped raising rates in the second half of the year. ref. 2

Looking ahead, many industry experts say that rates will hold steady in the first half of the year and then starting in July or August we could start to see the Fed cut rates two to four times in 2024. The 10-year treasury yield has already started to decline, and it will be difficult for the Fed to justify higher interest rates.

There is speculation as to how much interest rates will drop, but I believe we could see mortgage rates above 5% by the end of 2024. And the country will be in the bottom 5% by 2025. At the time of this writing, a local credit union has a 30 year mortgage rate of 6.5% with no points and I have found other rates posted online around 6.94%. With a new car purchase rate of 6.74% with a loan of up to 78 months.

That means we could see new car sales in the 5% range by the end of 2024.

Will you be buying a new or new car in 2024? What about side-by-side?

Two hundred

Ford and Stellantis had a wild year, as you might expect with a brutal union strike. However, the Ford Bronco is still out to make 2022 sales up 32% YoY. This may be due to the fact that Ford's production was finally being followed by previous orders of the epidemic period. Ref. 3

The Ford Bronco is a great looking rig, and I'd love to get one eventually. We actually had one order and it was delivered to the store last year, however, Mrs. Wheeled was going to change jobs and we weren't sure if it would fit our budget so we declined to pick it up. However, with the IFS, and the higher price tag, I don't think the Bronco makes a rock crawler. A perfect all around show-piece of the city!

I Jeep Wrangler not good with a YoY sales decline of 12%. We estimated sales for the past three months and the numbers remain low. We'll have to see how the numbers pan out, but they don't look good. All in all, the Jeep Wrangler is the perfect rock crawler rig, the only SUV I can think of with a straight front axle. But it's part of the market that wants it improved tire it's probably too small which is why Ford went with IFS. It should be interesting to see how sales of the 2024 model year fare for the Jeep Wrangler. In my opinion, the new style of the front grille would hinder the new sales, and the central infotainment screen needs to be bigger, not taller. The screen size has been a step in the right direction and I will admit it has a cool look to it. Adding creature comforts to the adventure machine has been great for the Wrangler. Although, It would be nice to see a new base 4 dr Jeep come out on offer for $30,000. A Jeep with no electric locks or windows, no digital screen. Just a 4 dr hardtop 4×4. A blank canvas for someone to customize. The young man could only dream! Ref. 4

2024 Jeep Wrangler (Photo Credit: by MICHAEL SIMARI AND JEEP)

Tacoma // 4Runner

Tacoma sales were down YoY, and 4Runner sales took a hit. I'm not sure why, however, Americans prefer to fix their current cars instead of buying new ones. It played a major role in that figure. Ref. 5/6

In total, there were an estimated 586,000 Broncos, Wranglers, Tacomas, and 4Runners sold by 2023. (Tabled so far. Final total to come.) By comparison there are 680,000 Ford F-Series vans sold by 2023. In addition, Tundras, Silverados, Sierras, and Rams were not counted in these figures but if you add them up, there were about 2 million off-road vehicles sold. 2023. Ref. 7

What to Expect – Car Overview

I would still expect about 30% of those new SUVs and trucks to be available in 2024, and as I mentioned above, vehicle purchases and access will really start in the second half of 2024 just in time for the show season. A basic access with wheels and tires are often the first things to be customized.

2023 SXS Industry Results

BRP Inc. and Polaris are two major sports companies. BRP owns Can-Am among others and Polaris makes the RZR. In the latest Q3 release the BRP company as a whole was down 8.9% YoY. Their press release revealed a particularly soft industry internationally, which I believe outside of the US has been hit hard by inflation and economic times. And Polaris is down 4% YoY. However, their off-road sales are up: “Polaris North America ORV retail unit sales are up 5 percent.” Their press release identified high financial interest as one of the major economic influences in slowing sales. Ref. 8/9

With low interest rates on the way, they may have a good second half of 2024.

I was also able to review the Q3 release from Yamaha Motorsports and its global net sales were up 9.4%. Although the side market was softer than their motorcycle sales. They cited the competitive pricing of their off-road vehicles. Ref. 10

rzr my24 b6c9 promo block lg opt polaris rzr
Photo Credit: Polaris RZR

Another Point to Consider

I talked a little about this in last year's report. But it's still specific to this year. I still believe the industry will grow slowly in 2024, however, I think the days of 20-30% industry growth are gone. People are back to work, back to routine, and have a little more money (Thanks Inflation) and a lot less time to spend on the road. We are seeing the normalization of the offroad sector returning to pre-cvd levels. (I don't even want to say the word taboo!)

Summary

In summary, I believe we will see a small to moderate increase in street sales in 2024 with most sales coming in the second half of the year. The increase will likely be around 3-4% for vehicles, SSV, upgrades, and PG&A (Parts, Apparel, and Accessories).

How will you prepare for this sale? Comment below or on social media and let us know if you found this report helpful.

If you use this information and data in this report, please give us credit. Link to this report. We appreciate it!

STATE OF THE OFF ROAD INDUSTRY 2024 tall banner

References

(The Federal Open Market Committee (FOMC) has twelve members—seven members of the Board of Governors of the Federal Reserve System; the president of the Federal Reserve Bank of New York; and four of the remaining eleven Reserve Bank presidents, who serve one-year terms in rotation)



Source link