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Golf Carts, Golf Schmartz; Think Low Speed Vehicles

Golf Carts, Golf Schmartz; Think Low Speed Vehicles
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The history of the golf cart is a story of a product lounging for decades in the shadow of the automobile as a benign niche product that putts around golf courses mostly on weekends.

While the origins of the golf cart appear to be in dispute, the small, motorized caddies that blossomed in popularity in the 1950s has lounged, historically, as a novelty item just waiting for its chance to hit the big time.

We won’t dispute the origins here, but we can review the argument. Some say, the golf cart originated as a battery-powered vehicle designed for golf courses in the early 1930s, specifically 1932 “when the first custom made golf cart hit a golf course in Texarkana, Texas/Arkansas,” according to Nerds Magazine. Others point to the 1950s, when the game itself and the gas-powered carts began to rise in popularity.

Interestingly, it is said that in the 1930s no self-respecting golfer would dare to be seen in a loud, annoying golf cart – giving up the healthy walk through the course and the human caddy that went with it. At first, golf carts were relegated to the disabled golfer, which puts it in the category of a niche within a niche. Nobody had a use for them except golfers and no golfers had a use for them except disabled golfers. That limited the target audience considerably.

Fast forward to 2018, however, and market analysis points to a product poised for prime time, but still waiting for the starter’s pistol to send manufacturing into a sprint.

Among the more optimistic analysis, Allied Market Research claims the golf cart industry will climb to a value of $2.59 billion by 2023 with growth clipping along at a CAGR of 7.2 percent from 2017 to 2023.

IBIS World, on the other hand, has posted one of the more conservative estimates, pointing to an expected annual growth rate of 3.1 percent, starting with revenues of about $1 billion in an industry that currently employs a relatively small workforce of 2,587 people.

The Game of Golf is Declining

One threat that Ibis World is taking seriously is the current decline of the game of golf.

At a glance, that decline seems palpable, but it may also be the case of the boy who cried wolf – that boy being the National Golf Foundation itself.

By their numbers, the National Golf Foundation says there were less than 500 golf courses built from 2005 to 2015 and that the number of courses closing is now outpacing those being built. This seems all the more alarming when compared to the decade of 1995 to 2005 when close to 5,000 golf courses were constructed.

Industry experts now point to “the perfect storm,” and look for clues that indicate why the game is in decline and why the golf cart industry will stumble with it.  People don’t have time for golf anymore and membership prices are too high, according to some. One outlet said the game is so difficult, people are staying away. Golf Operator Magazine even says “next, you have the aging population, aging beyond the point where they enjoy golf.”

What do I think about all of this?

Summing my reaction to that succinctly: Balderdash.  Not only do I play in the local “cardiac league” with several members each year, playing in their 90s, bless their souls, it could be just as easily argued that a “perfect storm” is not conspiring to bring down the game of golf, but doing the exact opposite, especially when focused on the future of golf carts.

The biggest culprit, naysayers say, is the decline in the number of golf courses, which is really just going (please pardon the pun) through a course correction.

In this case, let’s call the National Golf Foundation the association that cried wolf.

In fact, it was the National Golf Foundation that once declared “Build a course a day to keep up with demand.” That was in the 1995-2005 heyday, the decade in which close to 5,000 courses were built in the United States.

That number fell 500 between 2005 and 2015 with the current trend finding more courses closing each year than courses opening. But what is likely happening is the country simply became over-saturated with courses, so a temporary decline is to be expected.

The quote that should set the tone for the industry now is this one: “Every day, 10,000 baby boomers retire.”

That quote, penned in the Wall Street Journal in 2014, by Senator Rob Portman, (R-Ohio) was Portman’s way of warning the country that benefits for the elderly were in need of a fix. But to the golf cart industry, that can only mean the potential for 10,000 new customers every day wondering how to spend their leisure years (and money).

The perfect storm pointing to a potential boom in the golf cart industry includes the economic recovery, the 10,000 new potential customers each day, global warming and snazzy, modern technology.

Industry leaders are smart enough to know the question is not how many golf courses are closing, but how many retirement communities are opening. Build one retirement community a day to keep up with demand is the new mantra for the industry.

A World for Low-Speed Vehicles

There is also a symbiotic relationship between legislative and technological agendas that could spur a whole new market for golf carts, which can be accomplished simply by changing the name. In so many words, don’t think golf carts; think low speed vehicles.

When you change the name, you aren’t stuck with the stereotype of an open buggy bouncing over a golf course carrying white-haired men in knickers and tam-o-shanters playing the grand old game on a Sunday afternoon.

It’s not the future of golf that will determine the course of the golf cart industry, it’s the future itself.

Nowadays, everywhere from the Department of Transportation to local villages are feeling the pressure to broaden the allowances for low speed vehicles that can be used for anything from shopping to Sunday drives to going to church. Low speed vehicles are often simply golf carts with a second bench and a storage area replacing the standard platform that used to hold golf clubs. But they are now leaning towards far more regulated territory, namely city streets. In that sense, technology is already way ahead of the game, because all we need is glass windshields, windshield wipers, headlights and brake lights, turn signals and seat belts and your basic golf cart becomes a low speed vehicle that even Moms will want to drive.

Certainly, the domino effect is underway. All it takes is one retired couple visiting friends in a nearby residential community that allows low speed vehicles and the secret is out. They return home wondering why they are still driving expensive cars or taking the bus to the mall. Golf carts are fun, breezy and just the right speed for retirement years. Who’s in a hurry anymore?

Finally, of course, the perfect storm pointing to a boom in low speed vehicle sales includes the threat of global warming. Electric cars are still a very minor part of the car market in part because the distances batteries can go and the overall oomph batteries provide has not been as there historically. The range of travel, required speeds, weight of vehicles all points to low speed vehicles as perfectly suited for electric power.

As stated, modern technology is providing a boost to the industry as well. In these days, even smart and lean startups are paying attention to this ever-growing arena. For example, we can take a look at technology focused companies such as May Mobility and CartPros. For May Mobility, Low Speed Vehicles provide a great and safe platform for testing autonomous vehicles. Think about it – autonomous vehicles could pose a safety threat, however these low speed vehicles provide a safer environment for testing and optimizing the technology. CartPros, on the other hand, is utilizing Silicon Valley software technology to aid in distribution and logistics for the industry.

Why is that important? Think India. Think China. Think under-developed countries poised to create modern economies and think how enormous the potential is for low speed vehicles to become the export star of the future.

And, by the way, remember those aging golfers who don’t seem to enjoy the game, anymore? Nonsense. Every 90 year old I know who has to stop playing golf is absolutely furious because they can no longer play the game they love.

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Timothy Baler

1 Comments

  1. My colleague Stephen Metzger and I have covered this market for nearly 30 years and I’m afraid you are being too optimistic. The baby boomer retirement trend has been upon us for a number of years and while the trend will continue to drive growth in the Personal Transportation Vehicle (PTV) market, it will only be in the mid-single digit range. In the urban mobility market golf car manufacturers are already being eclipsed by new automotive style electric vehicle ventures as well as bikes, electric bikes, and electric scooters under ride sharing programs. In Europe the urban electric vehicles such as quadricycles are designed for higher speeds which NHTSA will not allow LSVs to operate at in the US without additional costly safety features. Furthermore, the cost of shipping vehicles from the US to Europe or Asian countries like China are cost prohibitive in a cost sensitive market. Chinese manufacturers are already making low speed vehicles by the hundreds of thousands at much lower cost. I don’t see US manufacturers cracking that market. Lately the main golf car manufacturers, in the face of declining golf course fleet sales, have focused on utility vehicles for sales growth.

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