www. PowersportsBusiness. com

Powersports Business • October 2026 • 17

BY PAULINA MATEL AND BRAD STANEK

• CONTRIBUTORS

Powersports is an aspirational industry. Customers buy motorcycles, side-by-sides, ATVs, personal watercraft and snowmobiles because those products represent freedom, utility, recreation, and lifestyle. But for many buyers, the final purchase decision comes down to practical financial questions: Can I afford the payment? Do I feel secure in my job? Is my trade worth enough? Are financing terms attractive? Do I still have room in the household budget for a discretionary purchase?

That is why, as we look ahead, our team tends to focus on these five key economic indicators when evaluating the powersports industry: interest rates and consumer financing costs; consumer confidence and expectations; labor market and real wage growth; household debt, auto loan trends and delinquencies; and retail sales and broader discretionary spending.

INTEREST RATES Powersports is a payment-sensitive business. Even when customer demand is present, higher interest rates can increase monthly payments, reduce approval rates and make buyers more hesitant to move forward. The Federal Reserve kept the federal funds target range at 3.5 % to 3.75 % at its July 29, 2026 meeting, reinforcing that financing costs remain a central consideration for customers and dealers alike

Looking ahead, rate expectations remain an important watch item: recent market commentary indicates that investors are pricing in the possibility of at least one additional rate increase before year-end, which could further pressure affordability.

For dealer principals, the message is straightforward: affordability needs to be managed proactively, not reactively. Sales teams should be trained to discuss payments and financing options early in the customer conversation. Dealers should also understand how higher rates affect their own balance sheets, particularly through floorplan expense. A unit that sits too long is not just taking up space; it is consuming capital.

CONSUMER CONFIDENCE Powersports customers are more likely to buy when they feel optimistic about their income, employment and household finances. In July 2026, The Conference Board reported that its Consumer Confidence Index declined to 90.8, while the Expectations Index remained at 74.7. That expectations reading is important because it reflects consumers’ short-term outlook for income, business and labor-market conditions.

For dealers, weaker confidence does not mean customers disappear. It means they become more selective. They compare more carefully, negotiate harder and may take longer to commit. This is where dealership execution matters. A disciplined CRM process, fast lead response, strong trade appraisal capability can make the difference between a customer who walks and a customer who buys.

LABOR MARKET Job security is one of the most powerful drivers of discretionary spending. In July 2026, the Bureau of Labor Statistics reported that nonfarm payroll employment declined by 23,000 and the unemployment rate was 4.1 %. BLS also reported that real average hourly earnings were down 0.2 % year over year in July 2026.

That combination matters for powersports. A customer may still want the unit, but if real wages are not keeping pace with household expenses, the purchase can be delayed or resized. A buyer who might have stretched into a new premium model may instead consider a used unit, a lower monthly payment, or a repair to an existing vehicle. Dealer principals should think carefully about product mix, price points and the connection between sales and service. In a cautious labor market, service and parts can become an even more important stabilizer of dealership profitability.

HOUSEHOLD DEBT The New York Fed’ s Q2 2026 Household Debt and Credit Report showed total household debt at $ 18.8 trillion, with auto loan balances rising by $ 28 billion, or 1.7 %, and credit card balances increasing by $ 21 billion, or 1.7 %. The same report noted that transitions into early delinquency ticked up for auto loans and mortgages, while remaining largely steady for credit cards and other debts.

For powersports dealers, this is a critical signal. Auto loan performance is not the same as powersports credit, but it provides a useful read-through into lender appetite and consumer balance-sheet stress. If delinquencies rise, lenders may tighten underwriting, reduce advance rates

See Matel & Stanek, Page 21