The Q4 2020 PSR PowerTracker survey provides information on North American gen-set sales from manufacturers, consumers and retailers. Joe Zirnhelt, Power Systems Research, President and CEO, provides the analysis.
Transcript
Welcome to the PSR PowerTALK podcast, produced by Power Systems Research.
00:06 Joe Zirnhelt:
From Power Systems Research, I am Joe Zirnhelt. In today’s PowerTALK podcast we will discuss results from the fourth quarter of 2020 based on our ongoing PowerTracker survey.
00:16 Joe Zirnhelt:
First just a brief background on our PowerTracker survey. Since 1998, Power Systems Research has been continuously maintaining its PowerTracker series of syndicated surveys. Conducting at least 500 interviews each quarter among two key respondent groups in North America: first is 200 interviews among genset dealers and distributors, and second is 300 interviews among business consumers.
00:56 Joe Zirnhelt:
Information from PowerTracker is really targeted at describing what is happening in the sales channel for gensets within North America. In maintaining a quarterly pulse on many aspects of sales levels by brand, fuel, and power range, as well as trends in inventory levels, the outlook in the coming quarter for genset sales, as well as any open-ended comments from dealers concerning why they expect sales to change and what types of changes they see in their customer groups.
01:36 Joe Zirnhelt:
So today we’ll focus on what dealers had to say about the fourth quarter of 2020.
And just a note on the timing of our quarterly survey is that we conduct our dealer interviews in the last two weeks of the quarter that we’re reporting on, and then that goes over into the, the first month of that next quarter. But what this really allows us to do is to, to gather dealer inputs towards the end of that quarter and that we have a good snapshot and, uh, view of the quarter that was just completed.
02:16 Joe Zirnhelt:
So let’s start in on the fourth quarter of 2020.
Overall, sales for gensets continued on a positive trend in the fourth quarter of 2020; up 6.3% from the third quarter levels. This increase followed a slow start to the 2020 year where, overall, dealer-reported sales were down 10% in the first quarter, followed by successive increases of 4% in the second quarter, and then 12% in the third quarter.
02:58 Joe Zirnhelt:
Looking by fuel type and power range within gaseous fueled gensets for the first quarter of 2021, the 10 to 20 kW range had a fourth quarter increase of 13%, and the 21 to 50 kW range saw an increase of 19%. Other power ranges above 50 kW within gaseous fueled gensets experienced a quarterly decrease ranging anywhere from -2 to -5%. And that’s in contrast to a third quarter where the, the greater than 50 kW range saw sales increases in the range of 10 to 30%. So quite a leveling off there in the larger gaseous gensets.
03:45 Joe Zirnhelt:
The diesel fueled gensets, on the other hand, experienced a sharp quarterly decline across the power ranges. Ranging from, uh, -17% in the less than 20 kW gensets and then declines a little more moderate, but still declines of -7 to -8% in all the other power ranges. And this follows a third quarter of 2020 where diesel fueled sets generally experienced low single digit increases from the second quarter to the third quarter of 2020.
04:31 Joe Zirnhelt:
Now we’ll look at the inventory levels. In the fourth quarter of 2020, dealers reported that overall inventories declined by 19% from third quarter 2020 levels. This is significant as it represents the largest magnitude of change in quarterly inventories we’ve, we’ve observed since starting our PowerTracker survey back in 1998.
It’s evident that sales most likely would have been higher in the 10 to 50 kW range for gaseous units. It was evident that the dealers couldn’t simply could not obtain products to meet customer demands due to the longer lead times.
05:14 Joe Zirnhelt:
So what does the outlook appear to be for the first quarter of 2021?
05:20 Joe Zirnhelt:
Expectations of quarter to quarter sales growth for the first quarter of 2021 varied depending on the power range and field type.
Sales for diesel fueled sets are expected to be positive in the low single digits for units above 300 kW and slightly negative for units less than 300 kW. We interpret this outlook from dealers to indicate that the declines and diesel may have bottomed out and we’ll start to see some leveling off and slight recovery as dealers start to fulfill commercial and industrial demand that has been withheld over the last year due to the COVID-19 pandemic, as well as just a general uncertainty during the 2020 year.
06:17 Joe Zirnhelt:
Sales expectations for gaseous fueled gensets are expected to range from -3% to -10% in the power ranges less than 50kW. We see this first quarter forecasted decrease not as a decrease in demand per se, but rather a situation where the current supply cannot meet the current demand for these smaller gaseous gensets.
06:53 Joe Zirnhelt:
The outlook for gaseous fueled gensets above 50kW is positive; ranging anywhere from 2% to 4% for the first quarter and most likely reflecting a situation where, where there is demand there. And dealers feel that they’ll be able to, uh, there’ll be suitable product available to meet that current demand
07:10 Joe Zirnhelt:
And finally, here we look at some of the key themes that emerged in the comments from the genset dealers.
07:19 Joe Zirnhelt:
First area that we’ll explore is the, you know, we asked dealers why do you expect sales to change in the coming quarter?
Really, three key themes here that, that emerged, and (the) first one is longer lead times for genset delivery to the dealers. Over 30% of the dealers we interviewed this quarter, uhm, for the fourth quarter of 2020 cited the, the long lead times and lack of inventory as a reason their sales would be impacted in the upcoming quarter. The lack of available product is delaying their sales pipeline, and this was most specifically targeted at the smaller end of the range for the residential and may include some small, smaller commercial standby sets; 50 kW or less.
The second point here is that the waiting is over. Interestingly, in third quarter of 2020 we did not hear as much, as we normally would in an election year, of consumers taking a wait and see approach in the run up to a presidential election. In the fourth quarter of 2020, we did hear, in retrospect, that some dealers are now reporting that their customers are feeling that, since the election is over and the pandemic is, is perhaps not so new any longer, that they’re ready to move forward with quotes and purchases.
The final point here, and why would sales change, is a common one that was see each quarter: and it’s the weather. We reported last quarter the, the weather effects, you know, are, are varied and really depend on, on the region of the country. The, the fourth quarter reporting period is always rather varied because some parts of the country see more activity during the winter months, in the end of the year, whereas other parts of the country see less activity during the winter months, such as hurricane areas where hurricane season has, has passed.
09:35 Joe Zirnhelt:
So finally, will we, we asked dealers what changes they noticed in their customer groups.
The key points here. The first one was that there’s a, definitely a strong, stronger demand from residential consumers. Dealers reported seeing significant increase in demand from the residential for standby generators due to the COVID-19, more people working from home, as well as just general security of energy supply concerns.
The second point is that the age range has widened. For those interested in home standbys, it’s generally been an older demographic that’s been showing the most interest in standbys. But there’s a few comments this quarter that, that really indicated a, uh, widening in that age range of interested customers, including a definite younger end of the, the demographic also.
Then the final point here is that the consumers are willing to spend. This relates back to the shortage of supply. We typically would see several comments from dealers about customers shopping around and, and bargaining on price. In this quarter, there really were no comments relating to price sensitivity. The consensus was, from the dealers, that if the product is available, the customers are willing to spend. And so, so that tide is really shifted over the, the course of 2020, you know, through the pandemic where customers are now there, they’re ready to spend. There’s less uncertainty.
11:16 Joe Zirnhelt:
So that, that wraps up our overview for the fourth quarter of 2020. This overview has been prepared based on our PowerTracker survey series for North America. Please contact us for more information on on our PowerTracker survey for North America or, really, any other needs you may have for power generation data and information.
Thank you.
11:44
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