Inventories are high
As I’ve mentioned before, motorcycle OEMs are strongly encouraging dealers to sell new bikes and are offering subsidized financing incentives to sweeten the deal. We anticipate these incentives to remain in place through the second quarter. Inventories for post-recession used bikes remain high as well. These large pre-owned inventories also give independent dealers ample opportunity to capitalize on the inventory influx and consumer demand.
Consumer demand is up
With increased job security and low inflation, today’s consumer has a little more disposable income, and is interested in satisfying that pent-up demand for a motorcycle. Whether purchasing for a second vehicle or strictly recreational, the customer is ready to make a purchase. But recession memories linger and the buyer is still looking for value.
Lenders are interested
Low inflation and increased disposable income has attracted the attention of the lending community. Several institutions are seeing significant increases in lease originations. Companies such as Nextep – which provides consumers lease-to-own options between $500 and $5,000 — is projecting a 500 percent year-over-year growth in 2016. Chrome Capital reported record high lease originations in February, primarily due to high consumer demand within a niche market of subprime and pre-owned financing. In 2015, MotoLease achieved a 51 percent year-over-year increase in lease contracts. The company expects their numbers to double this year, adding an average of 50 new dealers to its portfolio each month and funding 10,000 leases in 2016.
All of this bodes well for a prosperous 2016. However, where there’s demand there’s competition. Dealerships who offer the right product with the best protection package and the best financing options will come out ahead. Now is the time to take an inventory of your products, packages and financing. Are you poised for success - or will you watch your customer go down the road to your competition?
Do you have the right products?
Are your customers looking for transportation or recreation? Do you have current demographic data on your target market? Does your product inventory match your customer needs? With used inventories at an all-time high, now is the time to make sure you are offering the right product mix for your customer base. And while you’re analyzing your product mix, make sure your sales force and F&I team is up-to-date on all of the products on your floor. Today’s consumer is technically savvy and will likely have researched their purchase before ever setting foot in your dealership.
Do you have the right protection?
While today’s consumer may be ready to lease/purchase, they are not going to spend their dollars foolishly. Protecting their purchase is going to be important and having the right F&I products will be important. In fact, EFG research recently conducted among 1000 motorcycle purchasers showed the availability of a certified pre-owned product would sway their decision 95 percent of the time! Take a look at your F&I products and make sure you have the right portfolio to protect their purchase.
Do you have the right relationship?
Do you have a good relationship with your lending partners? Are they up-to-speed on your customer base, the products on your floor and the F&I packages available at your dealership? Research recently conducted within the lending community show a propensity to support deals with F&I protection packages attached. These value add-ons demonstrate the customer is likely to fulfill their financial terms.
And do you understand your lending partner’s lease options? Can your F&I team confidently discuss the differences between a straight term lease and a lease-to-own option?
2016 looks like it might be a banner year – and leasing might add some extra frosting. Make sure you are set up to succeed.
Glenice Wilder is the vice president of Powersports for EFG Companies. A 33-year industry veteran, Glenice is responsible for growing and developing EFG’s action and powersports market channel. She combines her passion for motorcycles and her dedication to serving EFG’s customers to develop solutions that consistently exceed their expectations. Glenice acts as a strategic partner to assess her clients’ areas for improvement and how EFG can fill that role. She provides insight in how to increase productivity by pairing the right products within the right markets for the greatest return on investment.