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By: Robert Janis

Powersports Shops Doing Their Best to Weather Economic Storm

McKenney Salinas Honda Powersports Showroom
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
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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