GE Capital Sees Positive Trends in Canadian Recreational Industries

GE Capital’s Commercial Distribution Finance (CDF) business sees positive trends in the Canadian motorsports and recreational vehicle (RV) industries through the first half of the year, while the marine industry is experiencing a slight slowdown after last year’s accelerated growth.

“Weather once again has had an impact on the recreational industries in Canada, but the RV and motorsports industries are experiencing healthy growth,” said Howard Shiebler, president of CDF in Canada. “We are seeing marine dealers proactively adjusting their ordering patterns to maintain a healthy level of inventory.”

As a leading inventory financing provider to the Canadian recreational products market, CDF periodically provides market intelligence that may help companies throughout the supply chain manage their businesses.

Marine

After a 17 percent increase in wholesale volume financed by CDF in 2013, many dealers decreased their orders of new inventory during the first half of the year to focus on sound inventory management. Regionally, the Western provinces of British Columbia and Alberta continued with robust ordering, while orders in the Prairies, Ontario and Quebec declined.

“Dealers ordered a lot of product last year, and the long winter this year has shortened the selling season fairly significantly,” Shiebler noted. “Dealers are being prudent by focusing on selling their current inventory in order to keep their businesses healthy.”

Although aging has increased slightly to 18%, it is still within the acceptable level that is considered healthy. “We consider aged inventory under 20% healthy, so we work closely with our customers to help them maintain the right balance of inventory,” said Shiebler.

Motorsports

All regions showed strong growth, contributing to a 13 percent rise in wholesale volume financed by CDF through June. Growth is attributed to a longer winter selling season, where many dealers sold through their snowmobile inventory. The increase in ordering was strongest in Alberta and the Atlantic regions, which are up 23 and 18 percent respectively. The national level of aged inventory has decreased to 10 percent, from last year’s already strong 13 percent.

“The cold winter had a positive impact on snowmobiles, and this should carry into next year’s ordering,” Shiebler said. “Although we have a shorter summer, liquidations are just slightly below last year’s levels. Because of this, we feel the industry will remain vibrant through the end of the year.”

Recreational vehicles

A revitalized customer base continues to benefit the RV industry, which is evident in a double-digit increase in wholesale volume financed by CDF through the first half of the year. Ontario and the Atlantic provinces helped drive the 13 percent increase nationally, while Quebec’s slower growth is in concert with the province’s marginal GDP growth.

The aging rate has stayed flat at 16%, with the highest rates in Quebec and in the Maritimes.

“The RV industry is solid in Canada, and dealers have done an excellent job of managing their inventory,” said Shiebler. “With RV demand higher than we have seen since before the downturn, we expect this positive trend to continue through the rest of the year.”

About this analysis

Inventory aging represents the number of days it takes for a dealer to sell a product that it’s holding as inventory. Limiting older inventory ensures that dealers have capacity to take advantage of new product launches and promotions. It’s important for dealers to have an adequate mix of products on hand for retail buyers so some level of aging is expected; however, excessive aging will tend to increase the cost of carrying inventory which, in turn, may mean lower profit margins for dealers.

CDF provides inventory financing, also known as floorplan financing, which allows dealers to stock, market and sell a wide variety of products from manufacturers, including those in the marine, motorsports and RV industries. It’s an important element of a successful manufacturer-dealer business model; manufacturers benefit from enhanced product flow and increased sales opportunities, while dealers obtain improved credit availability and terms.

About GE Capital, Commercial Distribution Finance

GE Capital, Commercial Distribution Finance provided $34 billion in financing for more than 30,000 dealers and more than 3,000 distributors and manufacturers in the U.S. and Canada in 2013. Programs include inventory and accounts receivable financing, asset-based lending, private label financing, collateral management and related financial products. For more information, visit http://www.gecdf.com/ or follow company news via Twitter (http://twitter.com/GEInventoryFin).

GE Capital offers consumers and businesses around the globe an array of financial products and services. For more information, visit www.gecapital.com or follow company news via Twitter (http://twitter.com/GECapital).

GE (NYSE: GE) works on things that matter. The best people and the best technologies taking on the toughest challenges. Finding solutions in energy, health and home, transportation and finance. Building, powering, moving and curing the world. Not just imagining. Doing. GE works. For more information, visit the company's website at www.ge.com.