Posted by Tom Lombardo on Tue, Jun 10, 2014 @ 10:00 AM
Last year you saw a 34% increase in “door swings” as more people finally began to find the funds to enjoy motorsports, and it looks like you’re on track for another good year in 2014. While still not back to the pre-crisis boom times, store owners who find every possible source of margin have earned higher profits.
To do this, they first take care of the most obvious markets, as the evolution in motorcyclist demographics continues to follow expected trajectories. Women now account for almost 10% of your business while most of your male customers tend to be of a more mature age. All your younger male clients want super sport bikes, one of the bright spots in the sales statistics. And industry associations, along with millions of concerned parents, managed to prevent well-meaning government regulators from decimating sales to the burgeoning youth market.
But the most successful motorsports dealers have taken advantage of other, less obvious shifts in the market. And while it takes capital, determination and patience to make sure you position your business to capture these new revenue opportunities, it’s worth the effort: top dealers have profit margins up to 5% higher than the national average.
First, the pre-owned market has exploded in the last two years and dealers looking to serve it offer fully refurbished bikes, sometimes including service warranties. With higher margins and the potential to obtain a long-term customer relationship, the most profitable dealers sell almost one pre-owned bike for every new one.
Second, finance and insurance have driven profit expansion for many dealers. Finance in particular can enable your sales staff to close new business, but only if you have options in place before your customer makes the decision to buy. One innovative tools you can provide to sales is a multiple check option, enabling them to offer a customer the ability to write two to four checks to be deposited over thirty days. The option can close a new sale with a larger down payment – or with full payment – and it can be applied to services as well.
That matters because, third, service departments have been stellar profit centers, and not just for maintenance. Dealers capable of doing specialized work profit from the surging demand to retrofit bikes into three-wheelers. This trend seems to be gathering force, as older cyclists prefer the stability and additional storage space “trike” configurations offer.
Finally, anticipating demand contributes a great deal to the quest for higher margins. Alex Lezama, Motorcycle Market/Data Analysts at NADAguides.com, highlights touring scooters as an up-and-coming trend, noting that they’re a great entrée to cycling since they’re more stable and are easier to mount and dismount. They showed one of the most significant market share gains coming into 2014, and look to be a stable, if relatively recent, trend.
And on the horizon we can see electric motorcycles soaring silently down the highway. Green consciousness permeates every aspect of American society today, and in the same way that off-road motorsports have become more environmentally aware of the wilderness they traverse, motorcyclists will demand green motorcycles as soon as they are mass manufactured. The Motorcycle Industry Council has already developed guidelines for testing them, and the famed Spanish craftsman motorcycle company Bultaco has already announced a production model for release this year or perhaps next.
Staying in that green mode, and keeping in mind that Americans prefer to make large purchases with checks, you can now verify a tendered check and deposit it right at your point of sale with “Remote Deposit Capture” technology. It saves time, renders that wasteful trip to the bank unnecessary, and can also include a guarantee that you will receive funds even if the check bounces or is stopped. Margin on every dollar matters as your business continues to strengthen, so learn more here.