The Q1 2021 PSR PowerTracker survey provides information on North American gen-set sales trends. Joe Zirnhelt, Power Systems Research President and CEO, provides the analysis.
Transcript
Welcome to the PSR Power Talk podcast, produced by Power Systems Research.
From Power Systems Research I am Joe Zirnhelt. And in today’s PowerTALK podcast we will discuss results from the first quarter of 2021 based on our ongoing PowerTracker survey.
00:17
First, a brief background and our PowerTracker survey. Since 1998, Power Systems Research has been continuously maintaining this PowerTracker series of syndicated surveys, conducting at least 300 interviews each quarter among two key respondent groups in North America; 200 interviews with genset dealers and distributors, and at least 100 interviews with business consumers.
Information from our PowerTracker is really targeted at describing what is happening in the sales channel for gensets within North America and maintaining a quarterly pulse on many aspects; from sales by brand, fuel, and power range, as well as trends and inventory levels, the outlook for the coming quarter, as well as open-ended comments from dealers concerning both why they expect sales to change and what types of changes they’re seeing in their customer groups.
01:28
So today we’ll focus on what dealers had to say about the first quarter of 2021.
A note on the timing of our quarterly survey is that we conduct our dealer interviews in the last two weeks of the quarter and into the first month of the next quarter. This really allows us to gather the dealer inputs concerning the quarter that was just completed.
01:54
So, let’s get started looking at the first quarter report for 2021.
Overall, genset sales declined in the first quarter 2021; down 7, about 7.4% from quarterly sales in the fourth quarter of 2020. This decrease follows three consecutive quarters in 2020, where dealers reported overall sales increases of 4% in the second quarter of 2020, followed by 12% in the third quarter, and finally 6% in the fourth quarter of 2020.
02:40
Looking at sales by fuel type and power range first within gaseous field gensets, which would include gasoline, natural gas, and LPG, the less than 10 kW range had a first quarter decrease of 10%. While the 10 to 20 kW range experienced a decrease of 3%. Rounding out the less than 50 kW units, the 21 to 50 kW range for gaseous fuels was level with the fourth quarter of 2020 levels. Keeping in mind here that the 10 to 20 kW and the 21 to 50 kW ranges experienced growth rates of greater than 10% in each, the third and fourth quarters of 2020, uh, the slightly negative and flat growth in the first quarter of 2021 still represents a fairly strong level of unit sales.
On the larger end of things, for gaseous fuels, and worth noting here, is that the 500 to 1000 kW range for natural gas gensets experienced a 9% growth in the first quarter; rebounding from two consecutive quarters of flat to slightly negative growth.
04:11
Looking at the sales of diesel fuel gensets, these will improve slightly from the sharp declines we saw in the fourth quarter of 2020; but they’re still on the negative growth territory for the first quarter of 2021. Quarterly change across diesel less than 300 kW ranged from minus 4% to minus 9%, while the 300 to 1000 kW range was, was flat relative to fourth quarter 2020 levels.
04:47
Now let’s move on to inventories.
In the first quarter of 2021, dealers reported, overall, that inventories declined by 16% from the fourth quarter 2020 levels. This large, quarterly decline in inventories for the first quarter follows a fourth quarter of 2020 where inventories fell by 19%. So, as demand remains at, at high levels, even despite the negative, overall, first quarter sales growth, we’re still seeing a large number of dealers reporting they cannot maintain supply to meet customer demands; and therefore, we’re seeing inventories continued to, to fall.
05:40
So, what does the outlook appear to be for the second quarter of 2021?
Expectations of quarter-to-quarter sales growth for the second quarter of 2021 varied depending on the power range and field type. Sales for diesel fueled sets are expected to continue to improve in the second quarter with growth between 2% to 6% for the power ranges less, above 20 kW. Diesel fueled units less than 20 kW will see greater increases; with 23% projected for the less than 10 kW diesel, and 15% quarterly growth for the 10 to 20 kW diesel range.
This continues our belief from last quarter that dealers seem to feel that the declines in diesel may have bottomed out and we’ll start to see some growth in the coming out of COVID and now into the peak of construction season, especially for the diesel units less than 20 kW.
06:57
Sales expectations for gaseous fueled gensets are expected to see an increase of 9% in the power range is less than 50 kW. We see this as a positive sign that dealers believe that lead times will improve and product will become more readily available. The outlook for gaseous field gensets above 50K W is positive, ranging anywhere from 2 to 6% for the second quarter.
07:33
So finally, here we’ll look at some of the open-ended responses from dealers and some of the takeaways that we’ve noted.
So, so the first, the first topic is around what, what dealers or why do dealers expect sales to change in the coming quarter the, the second quarter of 2021?
And the first point is that the longer, longer lead times persist for genset delivery to dealers. This is similar to what we mentioned in the fourth quarter of 2020.
08:09
That over 30% of the dealers interviewed during the first quarter of 2021 cited longer lead times and lack of inventory is a reason that their sales would be affected in the upcoming quarter. The lack of available product is, is delaying their, their sales pipeline. And this it was most specifically targeted with the smaller end of the range for residential and some small commercial standby sets in the less than 50 kW range.
08:46
Second point here is that the product is starting to become available. And this is in contrast to the first point, that about the long lead times and the lack of product availability, is that there were a small and, I’d say, a minority number of dealers that expressed some optimism surrounding the fact that they did see some relief in sight for the short supply of the smaller rated portables and residential standby. Again, this was a a smaller number of dealers overall, but the last quarter, for example, there were no mentions about this “light at the end of the tunnel” in terms of seeing their backlog improve. So, hopefully that’s a sign of things to come.
09:36
And then, finally, here, dealer, the demand and activity levels are up.
A growing number of dealers commented on either demand or activity levels indicate, indicated a relatively strong market for gensets in their local area. Overall, the general sentiment reflected a total market that has some, certainly some, positive momentum at the current time. And the, the economy, in general, seems to be improving and a stronger business outlook will support continued sales.
10:17
Final topic here is dealer comments about what changes they’ve noticed in their customer groups?
I have two key takeaways for the first quarter here, and this this also follows from the fourth quarter of 2020, is that continued, you know, strong demand from residential customers. Dealers have seen an increase in demand from the residential group for standby generators due to COVID-19 and, and just general security of energy supply concerns.
And the final point here is, you know, changes in customer groups is knowledgeable customers. You know, potential customers are doing their homework before contacting the genset dealers. The customers are often having a good understanding of the many considerations to be evaluated during the purchase process. There is still some education involved between the dealers and the customer, but the, the base knowledge level of the, the customers noticeably, notes, noticeably improving over time; in the eyes of the dealer.
11:40
So, this, this overview has been prepared based on our PowerTracker surveys. Please contact us for more information on either the PowerTracker survey for North America or any other needs you may have for power generation, data, and information. Thank you.
11:44
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