The UTV and the Changing Face of the Small, Task-Oriented (STOV) Marketplace

The UTV and the Changing Face of the Small, Task-Oriented (STOV) Marketplace

By Stephen Metzger, PhD., Senior Editorial Advisor, IUV Magazine

One of the phenomena of the current market place today is the on-going success of the off-road 4 X 4, otherwise known as the UTV.  Not only are established companies, such as Polaris and Arctic Cat realizing significant sales gains with this type of vehicle in the face of a dreadful economy, but new entrepreneurial ventures crop up almost monthly.

This success is changing the face of the industry, which I have called the small-task-oriented vehicle (STOV) industry, and its various markets.  The face change is quite dynamic and happening at a rate that is outpacing the capacities of both trade magazine writers and analysts (with the exception of me, of course) and, more importantly, distribution and after sales service systems that are critical to success in the market.  This Innovation Times column analyzes the changes and attempts to map out the major new directions in the market we are likely to see over the next three years.

The Basic Vehicle Platforms

There are at least three “platforms” or vehicle classifications that are, at the same time, diversifying and unifying.  These are the off-road recreational vehicle, golf car derivatives, and the traditional heavy duty utility vehicle, which in turn can be subdivided into two additional classes.  One of these is the all-purpose work vehicle, largely aimed at the turf maintenance market, such as the Toro Workman and the John Deere Gator series.  The second is the so-called burden carrier, typified by Cushman and Taylor Dunn vehicles.   While others may disagree, I see this category, particularly the former subdivision, as diminishing in importance, while the latter will be highly dependent on a broad-based economic renewal leading to substantial warehouse construction. 

Worth mentioning are the offshoots of the motorcycle concept, e.g., the ZAP Zebra and the CAN-AM Roadster.  Neither are presently making much of a dent in the STOV market, and, of course, the Roadster is a sort of touring bike, but both companies are actively designing various features of these vehicles, and, who knows, may build this platform into a viable utility concept. 

The platforms of particular interest for our purposes here, however, are the derivatives of the off-road recreational vehicle and those pertaining to golf cars.  We mentioned above that the STOVs were diversifying and unifying almost simultaneously.  What is meant by this will become more clear.

Metamorphosis from ATV to UTV

In the early 2000s a survey revealed that ATVs were being used extensively for towing, snow removal, transport for work purposes, and various other chores.  Side-by-side versions, better suited for work, but retaining recreational features were subsequently brought on the market.  Prior to that the Kawasaki Mule and JD Gator had pretty much divided the off-road work market between them.

With Polaris in particular strongly pushing the work/utility capabilities of its vehicles, and being highly successful at it, the market saw a plethora of new entrants and the trend has not let up to the present time.

Branching Out Beyond Established Brand Recognition

The emergence of the off-road 4X4 and its popularity across a wide demographic and multiple types of businesses, has led to many companies, known in certain market segments, to branch out into areas beyond their established brand recognition.  The product mode invariably is an off-road 4X4 UTV.  (The newest twist in this process is the emergence of the electric-powered UTV, most prominently seen in Tomberlin’s Vanish, E-Z-GO’s Bad Boy Buggy, the HuntVe, and the Stealth.)

This uneasy juxtaposition of brand recognition and product leads to important marketing considerations.

Who is the Expert?  The Dealer or the End User?

Wearing my hat as Managing Director of International Market Solutions (IMS) and carrying out market research projects, we have found that users are the ones to go to when you are searching for answers to what future small vehicles should look like.  Dealers, on the other hand, have a surprisingly limited perspective (certainly there are exceptions, which you see in dealerships that are heavily into vehicle modification to suit customers’ needs), preferring to take what the manufacturer gives them and then finding out what the judgment of the customer base may be.

Dealers, on the other hand, will often complain that the typical customer does not know what there real needs are, but I would rather say that the customer does know his needs but does not have the knowledge to translate need into the array of vehicle choices.
Many dealers have strong and enduring relationships with their customers and see no reason to rock the boat.  Nothing tests that relationship more, however, than when a competitor moves in with a new vehicle concept that promises more and delivers more.  Customers are in business to make money for themselves, not for the dealers they buy from.

The root of this issue, which I have emphasized in other columns, is that product types are outpacing traditional marketing channels.  And this is not workable either in terms of the initial sales effort or post-sales servicing.  STOV manufacturers have to realize that an essential part of a successful new product introduction is the investment in the learning curve—not only the outlay for the nuts and bolts of the machine and the plant and equipment it takes to build it.

The legendary Peter Drucker, stated that, “Because its purpose is to create a customer, the business has two - and only two - functions: marketing and innovation. Marketing and innovation create value, all the rest are costs.”

Who am I to add to the great man’s wisdom, but those “costs” are largely involved in bringing marketing and innovation together effectively.  Information and the transmittal of it; i.e., education, are, in turn, (or should be) a significant portion of those costs.  No product sells itself. 

Future Directions—Vehicle Features

 As STOV markets expand and diversify, we are seeing certain improvements take hold across most new models coming to market, including:

• Improved suspensions for smoother rides and rollover protection;
• Four-wheel brakes, and increasingly, four-wheel disc brakes;
• More models with four-wheel drive, including electrics;
• More LSV qualified vehicles;
• More powerful engines, gas, diesel, and electric (AC motors in particular);
• Enhanced ergonomics—particularly enhancements to driver comfort and safety.

As these features are added, vehicle prices go up, thus instigating a concentrated effort to minimize cost increases through increased productivity.  Thus, the effort to stretch drive trains and body features into one size (type) fits as many (if not all) as possible, while technology attends to diversification in features.

Future Directions—New Vehicle Types and Powertrains

Overlaying the trends in features and accessories is the choice of powertrain.  What was almost exclusively an ICE vehicle is now widely offered in electric and hybrid versions.  In my view hybrid vehicles will be the next commericially proven innovation to effectively expand the market.  Here the traditional golf car manufacturers may have the advantage, as electric power technology is nothing new to them.

The essential new directions or expansions in the market should be the following:

• Electric and hybrid versions of the 4X4 UTV, expanding beyond the hunter market segment;
• Heavier duty UTVs bumping up against the bigger, and more costly Marukas and ASV Scouts, but maintaining the UTV speed and maneuverability (and look for more tracked vehicles);
• Growing dominance of LSVs in electric and gas versions.

A Final Point Concerning Pricing

Finding the effective price point—proven record that the market is willing to buy at higher price points if the benefits are there.  Excessive worry about increasing the vehicle cost was largely the product of the fleet golf car market, but I would suggest those days are long gone or should be.  The difficulty with prices is that manufacturers decide on raising prices without increasing vehicle benefits, and then expect dealers to pass on their margins to the customer.  Doesn’t work.

On the other hand, give the dealer a truly upgraded product or a different type of product that his established market will embrace—or a product that takes him in a new, profitable direction—and he will have no trouble with the higher price.

About the Author:


Stephen Metzger, PhD, is Managing Director of International Market Solutions, LLC, an internationally-based market research firm.  He is also Principal of International Competitive Assessments, the market research arm of IMS.  ICA has produced four major studies of the small, task-oriented vehicle market since 2000.  Mr. Metzger is Senior Editorial Advisor for Industrial/Utility Vehicle Magazine.