Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Katherine Thompson - Avondale Partners.
Katherine Thompson - Avondale Partners
I want to first focus on inventories at dealer lots right now. In your opinion, how many months of inventory do you think there is in this build given current run rates, and what is really normalized dealer inventory given the current market?
Robert Olson
Well, I think that’s a very difficult question to answer, Katherine, because, we’ve been monitoring our dealer inventories out there and a year ago, we thought it was going to be one level. As time progresses and the dealers continue to keep lowering them, I will say we’ve blown by that number that we thought it was a year ago and it just continues to decrease. I think it is going to end up being that you’re going be looking at turns that are going to be two-plus for the dealers.
I think the financial community is going to demand that. I will say that we’ve got a little ways to go yet, but we’ve made significant in-roads to that, as reported before. We’re down over 40% from last year at this time, and I think we’re getting closer, but it’s really one of those things that it is a hard one to get your arms around.
Katherine Thompson - Avondale Partners
What were the turns in the peak market, and what have turns been in the quarter that you just reported?
Robert Olson
When things were really cooking back in 2004, we were looking at turns that a little over two. I think right now, we would be pushing to say we are getting one turn a year.
Katherine Thompson - Avondale Partners
How are dealers going to be incentivized to increase turns to essentially doubling their turns?
Robert Olson
Well, I think they have got to lower their inventories, and I think their lending partners are forcing them to do that, and we’ve seen, as our dealer inventories continue to lower, we’re seeing improvements in those turns, but it’s going to be, we still have to get more units off the dealers’ lots and/or have retail pick up, and I would much prefer the latter, of course, and as I mentioned in our prepared rashes, there are some signs of some positives going on out there, that that along with the spring selling season that we’re hopeful we’re going to start see some of that retail pick up, which we already have.
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