Powersports' Quest for Smarter Inventory Management Post-COVID

TL;DR: The powersports aftermarket is still working through the post-COVID inventory hangover. What started as a pandemic-era demand surge flipped into an overproduction crisis, and aggressive discounting decimated retained margins. The winners coming out of the reset are the ones treating inventory as a precision tool — leaning on data-driven seasonal planning, disciplined aging protocols, portfolio rationalization, own-brand investment, and GMROI as the central KPI. The era of “stock it and hope” is over.

The Hangover Is Still Here

The powersports aftermarket — made up of parts, accessories, apparel, and service — continues to struggle in the wake of COVID. (We’re going to briefly include the OE sector for perspective.)

While the days of severe inventory shortages and shipping delays, followed by untimely delivery gluts of product stacking up in overflowing ports and warehouses are gone, the hangover remains. Retailers and distributors are still trying to boost turns and retained margins going forward.

How We Got Here

What began as a demand surge in 2020–2022 — fueled by the Fed’s trillion-dollar cash splash, cabin-fever boredom, low interest rates, and product scarcity — flipped into an overproduction crisis seemingly overnight.

Manufacturers scrambled to ramp up output to meet record orders, only for demand to soften as economic headwinds, higher borrowing costs, and consumer impatience (customers will only wait so long until they move on to the next option) replaced panic buying. The bottom line: demand cratered. Hard.

By 2024–2025, dealership lots swelled with excess units, while overstocked apparel and parts shelves resulted in bloated inventories that strained cash flows. What happened next was Retail 101: aggressive discounts were employed to move inventory. To a degree, it worked — over time. But the subsequently decimated retained margins were going to be an obvious negative outcome. Losing money makes business leaders gunshy.

The Learnings That Are Actually Sticking

To say that by this time powersports was suffering from severe PTSD is an understatement. But what’s the point of suffering if there’s no benefit to be had from the pain?

The key here is what were the consensus learnings — if any — that we believe will positively impact how the industry views inventory investment going forward.

For starters, the OE and aftermarket sectors have prioritized inventory discipline not just as a cost-cutting exercise, but as a strategic lever to accelerate inventory turns and protect retained margins.

Data-Driven Seasonal Planning

Central to this newfound appreciation of granular inventory management is the application of data-driven seasonal planning. (Remember, powersports demand is inherently cyclical — spring sales can account for over 40% of annual revenue.)

Yet shockingly, many OE dealers and retailers, even as late as the 2020s, often relied primarily on intuition or OEM pre-buy incentives rather than leaning into a more analytical or digital approach. Sadly, COVID began a purge of less savvy and disciplined operators that is still ongoing today.

Fortunately, current OE dealer management systems (DMS) now provide the backbone: historical sales analysis by model and region, tariff impacts by model, automated aging alerts, carrying cost calculators, and pre-buy ROI modeling that factors in floorplan interest rates.

Setting aggressive aging protocols is separating winners from also-rans. Pre-buy discipline has seemingly sharpened too, while regional nuances (always a variable) are playing an even greater role in pre-season inventory planning.

Distributors Are Getting Ruthless

OE dealers weren’t the only segments impacted by COVID. Indeed, aftermarket distribution continues to struggle to achieve growth targets. Some have even begun significant strategic resets as it relates to inventory management.

Beyond the basic GMROI analysis (we were employing that metric at Cycle Gear starting in the late ’90s), some distributors are going full first-principles and looking with a critical eye at their entire portfolio — and with interesting results.

Analysis has begun segment by segment, brand by brand, in an effort to ruthlessly rationalize not only inventory levels but also what brands are actually occupying precious shelf space, and what segments are productive and which are not.

The “Brand Creep” Problem

Having worked in the distro space, I can attest to the fact that “brand creep” is a very real thing. The pressure to add brands comes from all angles: reps, merchandisers, purchasers, and management. And viewed in isolation, most brand additions don’t seem all that significant — until they are.

Brand creep is costly and ultimately unproductive. Post-COVID, we see a renewed (or maybe first-time-ever) effort to analyze each brand’s contribution to the bottom line, any potential cannibalization effect on other more profitable offerings within the segment, and lastly the opportunity cost that comes with the inherent loss of focus when the portfolio becomes bloated.

Own Brands Are Back in Focus

In conjunction with the exercise in brand rationalization and consolidation, we’re seeing even more emphasis on own-brand investment — whether that’s expanding existing offerings, or less so, creating entirely new brands (the latter being much more difficult and costly).

The historically greater margin capture opportunities are being augmented by the recognition by leadership (in some cases very late to the party) that own brands today are offering even more significant strategic advantages than their third-party cousins. A third-party brand can always “fire” a distributor (and vice-versa). An own brand is a more stable relationship.

As has always been the case, distributors are keen to find more effective off-ramps for non-current and slow-selling merchandise as financial performance pressures continue to mount. Historically, options have been limited: aggressive discounting to favored customers, returns to vendors, or just sitting on the goods until conditions improve. Today, none of those options are particularly attractive. We expect some distributors in the future to explore DTC solutions, assuming they can square that circle with their dealer base (spoiler alert: they will).

The Mega Retailers Are Setting the Pace

I’d be remiss if I didn’t mention the non-dealer retail space occupied by independent stores and shops and the mega national brands (Cycle Gear, RevZilla, J&P Cycles, RMATV, Chaparral, etc.).

Historically, these companies have been some of the most adept at leveraging technology, own brands, and direct purchasing — along with best retail selling practices — in order to effectively manage inventory while maximizing GMROI.

In addition to sound inventory management, these companies — especially in the CoMoto group — operate at a pace, a “speed of retail,” that ensures issues such as sales velocity, margin retention, and market disruptions are recognized in time to make the appropriate corrections. The agility of these mega retailers is impressive.

Add to that the fact that Cycle Gear has probably taken the own-brand strategy farther in terms of percentage of sales than any other retailer in the space, and it’s not a stretch to say these retail brands stand to gain even more market share in a post-COVID landscape.

The Fundamental Shift in Risk Tolerance

It’s pretty obvious that when it comes to inventory management, risk tolerance has fundamentally shifted.

Pre-COVID and pandemic-era optimism encouraged aggressive stocking strategies in order to fight for market share. Post-boom reality demands a level of conservatism, as dealers exhibit a lower appetite for speculative inventory, favoring agility over volume bets.

Embracing merchandising fundamentals supported by more robust technology is the norm. Higher turns reduce opportunity costs and interest expenses, preserving gross profit even when engaging in modest discounting on slow movers in order to clear space for higher-velocity items. GMROI continues its prominence as a vital KPI, rewarding efficient capital use.

The Bottom Line

The powersports aftermarket inventory reset is less about reacting to surpluses and more about building effective, antifragile operations.

By embracing systems-based forecasting that encompasses seasonality, disciplined aging management, and GMROI goals, dealers are increasing turns, safeguarding margins, and recalibrating risk for an uncertain future.

Those who treat inventory management as a precision tool rather than a sheer volume play will not only weather the post-COVID hangover but emerge stronger — delivering steady profitability while better serving their customers in a volatile market.

Ride Hard, Take Chances

— Hank

Key Takeaways

The powersports aftermarket went from COVID-era shortages to an overproduction crisis almost overnight, and aggressive discounting decimated retained margins through 2024–2025.
Inventory discipline has re-emerged as a strategic lever — not just a cost-control exercise. Data-driven seasonal planning, automated aging alerts, and pre-buy ROI modeling are now baseline expectations.
Distributors are going first-principles on their brand portfolios — cutting brand creep, rationalizing shelf space, and evaluating cannibalization and opportunity cost at the SKU level.
Own-brand investment is accelerating. Higher margin capture is the obvious driver, but strategic stability (you can’t fire your own brand) is the deeper reason.
Mega retailers like those in the CoMoto group are setting the operational pace — combining speed-of-retail agility, deep own-brand penetration, and GMROI-driven discipline that others are racing to match.

Frequently Asked Questions

What caused the post-COVID inventory crisis in powersports? A demand surge in 2020–2022 (fueled by stimulus, cabin fever, low interest rates, and product scarcity) pushed manufacturers to ramp up output aggressively. When demand softened due to inflation, higher interest rates, and consumer impatience, the industry was left with bloated inventories that took years to work through.

What is GMROI and why does it matter in powersports? GMROI (Gross Margin Return on Investment) measures how efficiently inventory dollars generate gross profit. EightFootBrands views it as the central KPI for post-COVID inventory discipline — it rewards turns and margin capture over raw volume, which is exactly the behavior the industry needs more of.

What is “brand creep” and why is it a problem? Brand creep is the gradual accumulation of brands on a distributor’s or retailer’s shelf, usually driven by rep pressure, merchandiser enthusiasm, or management preference. Individually each addition seems minor, but collectively they cannibalize shelf space, dilute focus, and erode profitability. Post-COVID, many distributors are ruthlessly rationalizing their portfolios.

Why are powersports distributors investing more heavily in own brands? Own brands offer higher margin capture and greater strategic stability — a third-party brand can leave, but you can’t fire yourself. Post-COVID pressure on margins has accelerated this shift, and leaders are recognizing own brands as a long-term competitive advantage, not just a margin play.

Which segment of the powersports industry is handling the inventory reset best? The mega retailers — Cycle Gear, RevZilla, J&P Cycles, RMATV, Chaparral, and the broader CoMoto group — combine technology, own-brand strategy, and a fast “speed of retail” that catches margin and velocity issues early. Cycle Gear in particular has pushed own-brand penetration further than most in the space.