GE Capital's Commercial Distribution Finance (CDF) business said it has seen positive trends in the Canadian marine, motorsports and recreational vehicle (RV) industries through the first half of the year. It expects favourable conditions to continue into 2014.
CDF found that dealers' inventory orders were up in all three categories. Aging of inventory has dropped in marine and motorsports, while staying flat year-over-year in RVs.
"Cool weather in May and June resulted in a late start to the already short Canadian selling season but, surprisingly, liquidations are only slightly below last year's levels,' said Howard Shiebler, president and CEO of CDF in Canada. "Overall, the macro-economic environment has stabilized and the Canadian economy continues to respond favourably.'
CDF's report notes that a 17-percent increase over last year's marine industry volume is within striking distance of pre-downturn figures nationwide. It also mentioned that there has been considerable growth year-over-year in the prairies and in the Atlantic region, although Ontario and Quebec still account for the most volume by province.
"We saw a lot of excitement at last year's boat shows,' Shiebler noted. "Canadian marine dealers continued to fill orders from those shows into the first half of this year.'
This strong performance can be seen in inventory aging levels added the report.
The national level of inventory aged one year or more has decreased to nearly 16 percent from just below 19 percent in 2012.
A six percent increase in wholesale shipments of motorsports products through the first half of 2013 was driven largely by the Atlantic region and the west, up 18 percent and 11 percent respectively. Quebec increased by five percent, while Ontario and the prairies both showed decreases of one percent.
The national level of inventory over one year old has decreased to about 12.5 percent from last year's already healthy rate of 15.5 percent.
"We know that weather conditions can have an extraordinary impact on dealers so we're working with those who've been impacted by the severe flooding in southern Alberta,' Shiebler said. "We want to do our part to foster a strong Canadian motorsports industry.'
According to CDF's report, the RV industry's nine-percent increase in wholesale volume shows that dealers are effectively selling through any product they had remaining in inventory from 2012. CDF also says it reflects continued strong consumer demand.
So far this year, these growth figures are being driven by the Western provinces, while Ontario and Quebec remain slower markets.
"The country's inventory aging past the one-year mark has stayed flat year-over-year but we view it as an acceptable level,' noted Shiebler. "Of course, we actively monitor the Canadian market and work collaboratively with our customers to mitigate situations where the levels become a concern.'
About CDF's 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.
GE Capital, Commercial Distribution Finance 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. Manufacturers benefit from enhanced product flow and increased sales opportunities, while dealers obtain improved credit availability and terms. GE Capital CDF provided nearly US $31 billion in financing for more than 33,000 dealers and 2,000 distributors and manufacturers in Canada and the US in 2012.