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By: Robert Janis
Powersports Shops
Doing Their Best to Weather Economic Storm
McKenney Salinas Honda Powersports
Showroom |
Everyone can see it. They are either
experiencing it first hand or they know someone
who is. It is the recession. The news media has
been doing a good job telling us how the auto
industry is suffering through, but what about
the retailers who sell the smaller machines--the
ATVs, motorcycles, watercrafts et al.? How are
they doing?
Well, it appears to be mixed. Although it is
true that some are suffering badly, others are
not hurting as much. ATVSource was able to
contact the general managers or owners of four
retail stores around the country, and they took
the time to tell us how the recession has been
affecting them and what they are trying to do
about it.
Bill Abshier is the general manager of Valley
Cycle and Motorsports, Bakersfield, California.
The actual store was first opened in 1971.
Abshier bought it in 2005. He carries ATVs from
Polaris and motorcycles from Victory, BMW, and
KTM. The dealership has 18 employees. Abshier
said that one office person has resigned, and
she was not replaced. Also, he let an assistant
service manager go because he couldn’t justify
the cost of keeping him.
According to Abshier, Polaris offers
assistance through incentive programs. “Polaris
has bonus programs for what we sell and they
also give rebates to dealers on certain quads,”
he said. The bonuses are based on the number of
ATVs the dealer sells over a certain number
assigned by Polaris. “You get a bonus for every
ATV you sell over the number,” said Abshier.
Polaris provides rebates for the 800
Sportsman, said Abshier. “We get an $800 dealer
rebate in the form of credit on my parts
statement. So, if the invoice on the ATV is
$10,000, then I can sell it for $9,200 and still
break even.”
The shop’s best year was 2006 when it sold
500 ATVs. So far, for 2009, it is averaging 200
a year. That’s off more than a half. “On a good
year we would sell 40 ATVs a month,” said
Abshier. “On a bad year we average 20 a month.
And this is a bad year.”
The problem is lack of traffic and lack of
credit. “Credit has tightened up this year,”
said Abshier. “The lenders are requiring higher
FICO scores.”
Abshier said that he is using HSBC and
General Electric Credit to get the loans for his
customers. “There is no one else around who is
interested in loaning money to purchase a
powersport machine. Even local credit unions
have tightened up.”
As a dealer, Abshier must pay for the bikes
and ATVs he has at the shop. He gets a floor
plan loan in order to do this. He gets his floor
plan loans from the manufacturers. “They give me
a line of credit when a unit is shipped to me,
and it is charged to that line of credit,” he
explained. “Then depending on the manufacturer,
you get free flooring for that unit for a
certain number of days then the interest on your
floor plan loan kicks in. So the manufacturer
helps me out for a short period of time, then it
is up to me.” He gets his floor plan money from
Polaris Acceptance for his ATVs. Despite the
economic situation, there have been no changes
to the floor plan policy.
Abshier added that he has a co-op program
with Polaris as well. When he buys a full page
ad in the local newspaper, Polaris pays for part
of it.
The best time of the year for ATV sales is
December, said Abshier. The worst is
January-February.
McKenney Salinas Honda Powersports |
“I think things have bottomed out,” he
concluded. “We may stay here for a while--maybe
six months. Then I think there will be a
comeback.”
Tom Stark is the general manager of Ace
Powersports, Kenosha, Wisconsin. He carries
bikes and ATVs from Yamaha, Honda, Suzuki, and
Polaris. He has 11 full-time employees. He laid
four employees off in October-November of last
year.
He said that Yamaha has “stepped up to the
plate” recently and provided help with
incentives. “The manufacturers are realizing
that the economy is slowing and that dealers are
loaded with some non-current inventory like ‘08
and prior machines,” said Stark. “So they have
stepped up and are offering dealers incentives
to help clear out the inventory we’ve had on the
floor for a year or two. The programs are
offering customers cash rebates or factory to
dealer rebates, and this is allowing me to price
these units significantly lower than the new
‘09s.”
His best year was 2005. Total sales for
motorcycles, scooters, personal watercraft, and
ATVs were 1200. On a good month in a good year
he would average selling 150 plus units. In the
winter months he averages about 30 to 50 units a
month.
His worst year was 2008. “Sales were down to
just 600 units for the year,” he said. “We
didn’t exceed more than 100 units in any month.”
He blames the current economic situation for
part of his problems, but he also blames the
exchange rate of the yen to the dollar. The
dollar is falling in comparison to the yen which
means Japanese products sold in the U.S. cost
more. In addition, he is in a blue collar
factory town with a Chrysler auto plant and the
auto industry slowdown has affected him.
According to Stark, manufacturers are
providing loans for his customers, but the
criteria for getting those loans tightened last
year. “The requirements for getting loans are
more stringent,” he said. “Especially the FICO
score. A FICO score of 650 could get you a loan
in the past. Now it is a little more of a
challenge. It is awfully hard to get a loan with
scores under 650.”
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