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Top Two Reasons Motorcycle Dealers Should Dream Big – NOW!

Posted by Tom Lombardo | Wed, Jan 28, 2015 @ 07:00 AM

Motorcycle Dealer Mega MallCourageous motorcycle dealers may be perfectly positioned to breakout and expand their businesses over the course of the next few years.

Two significant changes seem to be coming together to make this possible: the first has to do with motorcycles, and the second has to do with money.

Motorcycles First

American’s evolving attitudes towards transportation have inspired vast innovation, ranging from self-driving cars to ones powered with hydrogen.

But if we’re going to dream about your business, we should keep in mind that internal combustion engines still overwhelmingly dominate the market. Things are changing, but we need to think about why, and we should probably look at longer time frames.

One long-term trend seems here to stay: demand for vehicles that start to compete with motorcycles on a cost-per-mile basis. If that’s correct, then what might the time frame look like for vehicles that you could sell at your dealership?

To get a handle on what to expect – and when to expect it -- industry experts often refer to what happened with the Toyota Prius.

Toyota released it in the United States in 2000, when gas cost $1.27 – that’s $1.47 in today’s dollars – and they sold the car at a loss for many years in order to develop their market.

Back then the equivalent of a buck fifty for a gallon of gas seemed exorbitant, and there was a strong market for fuel efficiency. In 2008 when gas peaked at $4.02 a gallon, demand was even stronger – but no one could afford to buy anything and several years of market development stagnated during the recession.

Today the national average is $2.21 a gallon, which is a staggering, inflation-adjusted 50% increase since the Prius was released. Virtually nothing else in the economy has increased so much.

Even if we’re accustomed to higher fuel prices, they still take a much bigger chunk out of our budgets today because since 2000 median income rose only 0.01%. We’re earning about the same, but we’re spending half again as much on gasoline – and this after the steep drop in price we’ve seen in recent months.

Vehicles with a lower cost-per-mile put money directly back into the consumer’s pocket, and most of today’s innovation appeals to this simple fact.

Mercedes’ Smart Car and other high-efficiency vehicles gained market share in the last decade. Diesel technology made radical advances to meet the same demand. Even trucks are now made out of lighter – and stronger – materials to increase efficiency. Pure electric cars from Nissan and Ford compete on purchase price with hybrids and offer buyers even lower cost-per-mile options.

The demand is growing. While we may be biased because we’re located in California, they do say that “as California goes, so goes the country.” So it’s worth noting that last year in the Golden State one of every ten vehicles sold was a hybrid electric or plug-in electric.

If that’s where the country’s going, then perhaps you should get there first.

The Motorcycle Dealer’s Response

So let’s dream big.

You know that people who only buy cars won’t come to your dealership for anything, so we can ignore them. And you know that people who only buy motorcycles will continue to do so.

But perhaps you can attract people who are thinking creatively somewhere between those extremes and compete to sell them their next vehicle, be it for fun or for commuting.

So what could you add to your product line?

Vehicles that beat everything else on a cost-per-mile basis, of course.

Take the American-made Zev7000 for example. Designed for commuters, not only is it 100% electric, it has a top speed of 70mph, enabling owners to ride stretches of freeway along the way.

Zev7000

It’s also entirely possible that three wheeled vehicles – which are all classified as motorcycles – might earn their place on American highways over the course of the next few years.

One company, Elio Motors, has attracted a huge amount of buzz for its stylish version because it not only has an internal combustion engine fitting the existing refueling infrastructure, but also because it is built almost entirely with stock parts, making maintenance easy. They’re not in production yet, but when they start selling they’re promising a price tag less than $10,000.

Or how about a re-purposed Formula One design? In 2012 Nissan worked with an American company, Delta Wing, to produce a unique Formula One racer whose front wheels were close together at the tip of the chassis, giving it a three-wheeled look. On its maiden race it performed beautifully until it was destroyed in a crash. Now Delta Wing wants to produce a three-wheeled electric car to compete with the Elio.

Delta Wing

And of course, for the motorcycle purist, two American companies other than Harley Davidson have already built excellent electric motorcycles with enough range for both commuting and touring, and with enough performance to attract a discerning buyer.

The first is Energica, whose Ego bike put it on the map as a true contender.

Energica

And then there’s the pioneer in this space, Zero, that’s already showing it knows how to continuously innovate to build bikes with enough punch to require best-in-class components. Their 2015 models include touring and dirt bikes and feature, standard, Showa suspension, Bosch switchable ABS and Pirelli tires.

Zero

Now, About the Money…

Since we’re dreaming we might just forget about the financial burden that stocking and dealing any of these products would require.

But we don’t have to, because if there was ever a time to include the money in the dream, 2015 is it.

While the country was in the grip of the recession three years ago Congress passed the Jumpstart Our Business Start-ups (JOBS) Act. The hokey name cloaks a great idea: the Act intended to create new funding opportunities for businesspeople like you.

Rather than go to a bank and hope for a loan, you could present your business dreams to investors who would “crowd fund” your idea of their own free will.

That means asking a lot of people for small amounts of money so they collectively finance you. In return, you might give them something, the way artists do on Kickstarter.

Or, you might give them stock in your company, similar to what a corporation does when it issues an Initial Public Offering on the New York Stock Exchange.

The stock aspect of it was huge, and Congress wanted to make it much easier for small businesses – that is, 99% of all businesses – to use the same funding mechanism used on Wall Street.

But the idea of issuing stock confused everyone, including the Security and Exchange Commission, which oversees all stock markets in the United States. Since the SEC didn’t get it, even though crowd funding was legal no one touched it because they didn’t want to get bitten when the SEC finalized its rules.

Now the rules are in place, so you might dream about using this new source of funding as a way to take on these new possibilities – or whichever ones you think will work best in your area.

The first crowd funding site that is fully compliant and ready to go is www.fundable.com, and you can learn everything you need to know about the process from them. In essence, if you sell stock to raise money, your stockholders can later sell the stock to someone else or back to you, hopefully for a profit. In essence it’s the exact same game they play on Wall Street.

Which means you already know the main thing your investor will want to see: how well you are doing now. If you’re looking to convince people that you can sell something new, you’ll need to demonstrate that you can sell what you already have – and that you can protect your cash flow while you’re doing it.

We might be able to help you with that last part.

Americans write checks for one of every five purchases over $100, and you probably accept a lot of them. Many are probably in the four or five figures.

If so, then each check matters a lot to your financial statement. If you’re dreaming about building your business you might want to guarantee that revenue so you can show your investors that you’ve done so. Learn how here.

Check Guarantee Insider's Guide

Topics: Auto Dealerships

Written by Tom Lombardo