Big Boxes and Mass Merchandisers
By John Wyckoff
December 15, 2006
An old friend and very successful dealer asked me about the affect of the big box chains and auto supply stores selling products previously sold "exclusively" by franchised powersports dealers. I started by doing some research, then extrapolating a little and here's what I discovered: Most of the "Big Boxes" and car parts stores that sell ATVs, minibikes, small motorcycles and in some cases, accessories like tires, gloves, helmets, etc. don't offer well-known brands. However, many of their core customers wouldn't recognize a major brand except for the big five any way. So, what's the problem?
Just about all of the units these huge windowless warehouse stores sell are made in China. The questions of parts availability, reliability, product insurance and warranty work are left unanswered. You might be thinking, "Well that's their customer's problem, they are not part of our customer base." That may be true. However, let's take a long-range view.
The vast majority of the units sold are destined to be used by relatively young riders. Little or no instruction is offered, and nothing is said about parts which will likely break in normal use. Again, that probably doesn't affect many powersports dealers except, of course, in lost sales. It will affect them later … it could even prove devastating to some dealers.
The chance of these young enthusiasts maturing and coming into your store in the future are slim. Why? More than likely, he or she will have a less-than-satisfying experience with the new low-cost toy once the "new" wears off. The hard-to-understand owner's manual (if it even has one) still leaves much to be desired. It says little about routine maintenance and less about the lubricants or special tools to accomplish the job.
The unsuspecting buyer may even have been told that if he needs service, to just take it to the local motorcycle dealer. Of course, you were not consulted and would rather avoid being put in the middle of this no-win deal. Dealers tell me that this is a major issue. The young user's father will probably get angry with the dealer for opting not to work on the unit, despite the dealer's explanation that there are no parts available, no specifications to follow and any repair work will be temporary at best.
The Feds are once again looking at the ATV market and are coming up with rules relating to horsepower and speed based on the age of the user. Remember the last time the Feds got involved? Three-wheeled ATVs were completely banned! Once the new Federal regulations are put in place, there will be an endless stream of TV news stories about young people being injured (or killed) while riding an ATV. That should be enough to chill sales of high quality units sold by dealers who are professional and do all they can to protect and educate their customers.
Why are so many Big Box outlets now offering ATVs, minibikes and dirtbikes? There's a demand and a very profitable supply of products from China. Combine that with ignorance of the industry and a sales paradigm that treats all items as commodities, and we have the perfect scenario to destroy an entire market. One dealer suggested there is no corporate conscience in marketing these dangerous, at worst, or just poor quality products at best.
I don't mean to lump all the Chinese makers into one category. There are some very honorable makers who have done their homework. They have a reasonable inventory of spare parts, a U.S. warehouse, American personnel guiding their marketing and high quality products. They sell to legitimate powersports dealers. They are, however, in the minority.
The reason the Big Boxes and auto supply chains are able to sell these inferior units is a loophole in the legal system. Few states require licensing of ATVs or dirtbikes that are not used on streets or highways. Fewer have a licensing requirement for the salesperson. That means that state DMVs are not involved. Since the MIC is also not involved, the number of units actually imported and sold is also unknown. It has been suggested that the number is over a half million units a year.
Is there a way to change this situation? I believe there might be, but only if the franchised dealers get together and petition state DMVs to close the loophole. It would be wonderful if there were a Federal driver's license law along with a Federal registration of all vehicles instead of the hodgepodge of state-by-state requirements.
I find it interesting that some states require that powersports salespeople be licensed. Suppose that license applied to all powersports products regardless of displacement or intended use? That would take the major Big Boxes out of the picture since they have no salespeople!
It only takes looking at the Chinese packaging to realize the manual is written in a language that may look like English but is utterly unintelligible. The specifications, if any, are metric. When all is said and done, the responsibility rests solely on the selling dealer with no support or training by the manufacturer.
I'm not aware of any other country that does not have country-wide regulations, country-wide license tests and requirements and country-wide mandates relating to the retailers of powersports products. Perhaps it's time to address these problems in this country?
Until then, I suggest you make it a point to join your state's dealer association and start to take a long look at this situation. It is, after all, your business we're talking about.
If you, as a dealer principal, opt to do nothing, you might soon find there are fewer new people coming into your store. The negative experience they had with the Big Box ATV, scooter or dirtbike may have been enough to turn them off and move them into another market. If enough good people do nothing, the results could be tragic!