2010 Dealer Trends Through March

2010 Dealer Trends Through March

We recently conducted a survey of some of our 20-group dealers. We really wanted to know what the dealers felt, since they are on the front lines every day. You can’t always get what you want (reminds me of a song …) from the statistics that are available. This article will discuss their responses as well as compare their reported YTD data for 2010 and 2009.

While powersports sales continue to be down compared with 4 or 5 years ago, March picked up for most dealers. The early numbers from some of our groups show overall improvements in most categories compared to the disaster that was 2009. Dealers comment that floor traffic is picking up. Dealers have also reduced their inventory. Some are concerned about having sufficient product on hand. Since we believe in the old adage that "It is usually easier to find units than it is to get rid of them," this may actually be good news. In addition, some banks and credit unions are starting to free up money and "buying deeper" (that is, accepting lower credit scores).

Positive Numbers (March YTD 2010 compared with 2009)

  • Overall store gross profit is up 2%
  • Overall net operating profit is up 2.5%
  • Personnel and administrative expenses as a percentage of gross profit are down
  • Percent of revenue change is up over 18% for groups reviewed
  • New and pre-owned unit gross profit is up for all products except scooters
  • Service/labor margin is up 9% to 10%
  • F&I net operating profit per vehicle sold is up over 160%

Current unit trends
Dealers reported that used mid-size street motorcycles and new models with rebates are selling well to the budget-conscious consumers we have now. Sportbikes sales have been slow, but appear to be picking up somewhat; financing and insurance have been a problem here as the customers are generally younger and many have less (or poor) credit. Most off-road bike sales have been slow, with the exception of a few models with high demand and low availability.

Overall, ATV sales have been down for the last few years. However, they are up from last spring. UTV sales have been doing well, too. This market has grown due to whole goods and accessory product expansion and improvements, combined with the need for utility vehicles. In some areas farmers are using these as a low-cost alternatives to trucks and tractors for certain jobs.

The youth segment is suffering due to bad press as well as tight consumer budgets. Scooter sales are continuing to suffer as fuel prices remain relatively low.

Consumer trends
Overall, dealers noted that today’s consumers tend to be more mature folks with higher incomes and good credit histories. However, they take longer to close. They may come in four or more times before they make the buying decision. Many come in after considerable web research. They know more about the products and what is on sale on dealer websites. Most dealers report that traditional advertising is not producing. They are finding that their best results are coming from social marketing, tradeshows and community events. The younger single and family folks with annual incomes under $75,000 are buying parts or service instead of units.

Other trends and opportunities
Dealer internet sales as well as the use of eBay to move obsolete inventory have changed dealership business structures; this profit center will only continue to grow. Social marketing through services such as Twitter, Facebook and YouTube has become more significant to our business. You must become more creative and Internet-savvy to keep pace with the market.

The surveys and numbers support the fact that cutting-edge technology sells product. Fuel injection and improved fuel economy has become a way of life in our industry. Power steering has become a factor in sales of larger ATVs. Technologies such as traction control, stability control, and ABS are popular features. Unique products like the Spyder are growing in popularity. You need to recognize that these technologies require considerable changes to your technicians’ qualifications and training, and you must respond appropriately.

Due to the reduction in the size of the dealer network, there is a huge opportunity for profitable growth as this economy slowly turns around. The product shortages and reduced competition mean you can hold better margins. In addition to capturing new customers, retain every one you can by pursuing a customer-satisfaction business philosophy. Have the right people in place to maximize every customer opportunity. The right people possess a proper attitude, aptitude and training. Moreover, there is no reason to have "B" and "C" players on your staff when there are "A" players out there looking for work. Keep your staff sharp by providing them with ongoing, high-quality training.

More dealers than ever report using true computer-based CRM tools instead of the traditional paper traffic log. These tools provide extensive tracking and follow-up capabilities. Dealers can monitor conversations and e-mails between their dealership and individual customers, as well as measure the performance of their staff. If you haven’t already, acquire and utilize all the features these tools offer. When sales are slow, customer prospecting and quality follow-up processes are critical to your business.

It ain’t over yet by a long shot, but there are positive signs that our business is improving.

In order to survive the ups and downs of this market, controlling inventory and expenses has to remain a priority. Once you have the formula dialed, don’t divert from it as the economy improves.

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