By Savyata Mishra

Aug 1 (Reuters) - Makers of ATVs, boats and other

recreational vehicles are staring at a bleak summer as caution

around big-ticket purchases amid high interest rates has dashed

hopes of a demand recovery for big manufacturers of leisure

products.

In the wake of the coronavirus pandemic, consumers with

money to spend took advantage of low rates to buy goods many

refer to as "adult toys" - motorcycles, boats, RVs and other

vehicles that cost a lot and are often financed through loans.

The shine came off some of the companies when people

returned to international travel, but now with consumer spending

slipping, makers of the discretionary items are feeling the

pain.

Retail sales in the recreational vehicle industry for June

and July were slightly worse than what dealers experienced in

May, D.A. Davidson analyst Brandon Rolle said.

Late last month, shares of motorboats maker Brunswick

and snowmobiles manufacturer Polaris slumped after they

slashed annual forecasts after reporting a drop in

second-quarter sales and profit.

"Consumers are either maxed out or banks are hesitant to

lend at these elevated levels. All these factors have negatively

impacted the industry retail environment and resulted in a need

to lower inventory of dealerships," Polaris CEO Mike Speetzen

said on a post-earnings call.

Brunswick expects U.S. powerboat sales to a decline of

around 10% after posting a 15% drop in sales during the second

quarter, normally its peak selling season.

Several brokerages have lowered their price targets on

Brunswick and Polaris after their results. Thor Industries ( THO )

also trimmed its full-year forecast and said it expects

weakness to continue into 2025 as dealers are wary of excess

inventory.

The Canadian powersports firm BRP, which reported

results in May, also pruned its annual outlook, despite its

first-quarter profit beating estimates.

"With no signs of a seasonal uptick in demand so far, 2024

will almost certainly be a lost year and prospects for 2025 are

now coming into question," Roth MKM analyst Scott Stember said

about Brunswick.

Most companies took steps to reduce inventory.

Harley-Davidson ( HOG ) cut dealer inventories by 30% and said

it hopes retail and wholesale inventory will be balanced by the

end of the year.

"It's not just about the fact that financing the purchase is

more expensive overall, that budget suppression ...and interest

rates on other finance purchases, not to mention the fact that

there's a confidence issue there," Brunswick CEO David Foulkes

said.

So far this year, Polaris, Brunswick and Thor stocks have

lost between 12% and 16% of their value. Harley-Davidson ( HOG ) was up

2% and BRP 4%.