Dealers Can Drive loyalty and Instill confidence with New F&I Products
By Glenice Wilder 2016 has been a year of change for powersports dealers. Post-recession, the industry saw some positive growth in the powersports space. This has been primarily due to independent dealer sales of pre-owned inventories over new motorcycle sales. New lenders entered the market, and many existing powersports lenders report notable profits. Consumer confidence also rose in 2016, with more available discretionary income to spend on a secondary vehicle purchase. In addition, more financing options became available for powersports products prompting consumers to consider leasing or financing a purchase.
But as we wrap up 2016 and move into next year, concerns about tightening consumer discretionary spending are beginning to grow. In addition, lenders are closely watching the automotive market as there is talk of a plateau. Lenders want to insulate their powersports loans to prevent any negative impact. With this uncertainty on the rise, dealers looking to move the needle in 2017 should consider the below trends and how F&I can help address consumer and lender concerns.
Move beyond price. While price will continue to be the top driver for powersports sales, the next two biggest factors influencing purchasing decisions are the condition of pre-owned bikes and their mileage. No one wants to deal with breakdowns or costly maintenance repairs, and consumers are willing to pay more for a pre-owned motorcycle when they know it’s been inspected and is protected.
Many powersports dealers began focusing on their F&I product offerings recently, and this trend will continue to grow in 2017. Offering a strong certified pre-owned (CPO) program, pre-paid maintenance or other F&I products can generate the confidence that consumers need when making a bike purchase. This is especially important during a time when buyers are evaluating their discretionary spending.
The sale of F&I products also will generate repeat business through the service drive, along with customer loyalty. And while some consumers cannot afford to purchase new, the confidence they gain through the experience and products a dealer provides has the potential to lead to a future upgrade and new bike sale.
Address lender concerns. In addition to building customer trust and loyalty, the addition of F&I to your portfolio will help to alleviate lender concerns and the potential for default in a market that’s highly dependable on disposable income. They are more likely to accept a deal with F&I products attached.
History shows that deals with F&I products attached tend to be less likely to default on the loan. In addition, lenders place a value on consumers who are interested in protecting their bike.
Leverage virtual F&I. Powersports dealers often operate with a small staff, which often creates strain and knowledge gaps in F&I. As a result, many dealers tend to not understand the added profits available to them through the F&I department, and customers may not fully comprehend all the options available to them.
To overcome this challenge, powersports dealers will become more comfortable offering digitized F&I options, including Skype-based presentations or online menus to outline F&I options and pricing. They will look to F&I providers to help them leverage the power of the Internet and enhance their electronic offerings to gain an edge. This is especially important when considering younger buyers, who were raised with technology and conduct research online before making any major purchasing decision.
Don’t overlook millennials. In recent years, buyers of top brand bikes have often been baby boomers with ingrained brand loyalty. However, many baby boomers are passing an age where they can actively use a bike. As a result, manufacturers have struggled to latch onto the millennial age group, which will continue to be a challenge as they find a way to reach this critical audience. Those who do find ways to tap into the millennials’ growing buying power, will significantly boost profitability. But because they have a different mindset, powersports dealers will have to adapt how they sell to them.
One area of growth among millennials is with powersports vehicles, as millennials have growing families and are more interested in activity vehicles that the entire family can enjoy. Sales of 4-seat or 6-seat utility vehicles have recently outpaced motorcycle purchases, and powersports dealers not offering this option are missing opportunities for growth. It’s also important to note that many of these utility vehicles have a high price tag, and often require financing options to close the deal.
Despite economic or demographic challenges that may lie ahead, powersports dealers looking to enhance profitability in 2017 should not overlook F&I. Those who recognize the trends and offer products and services that meet the needs of their customers will be poised to gain trust and more business – leading to a prosperous new year in which they will grow.
Industry veteran Glenice Wilder is vice president of powersports for EFG Companies. She combines her passion for motorcycles and dedication to serving customers to develop solutions that consistently exceed expectations.