Looking back to the beginning of the recession, would you have opted to open your first dealership in 2008? And what about the idea of launching a second store in 2011, 90 miles away?
That’s exactly what David Adams and Kevin Williams did, and it’s been an ownership journey on a variety of fronts. First, both are riders at heart. Adams opted out of his job as a schoolteacher to get into the business; Williams had an equally impressive position with a manufacturing company.
“It’s not that we’re flush with cash, that’s for sure,” is how Adams described the decision to open Delta Powersports in Lathrop, Calif., in 2008. “We do a great job of just keeping things going. It’s been extremely tough — I’m not going to lie. Luckily we made it through those first three years with the first store.”
What, then, made them decide to open Delta Powersports of Merced, located about 90 miles south, in May? Like most dealers who have outlasted the tumultuous economic times, Adams and Williams bring a combination of passion and business savvy. And they’ve seen results as an exclusive Polaris/Victory dealer. Plus, Adams figured he’d be able to make some impressive displays in a 3,000 square-foot showroom that’s part of a 12,500 square-foot building.
“It was hard decision on opening the second store,” Adams said. “We’re in a competitive area when it comes to Polaris. We don’t compete against Yamaha, Kawasaki, Suzuki or Honda. Our customers don’t compare our products to products from other manufacturers. When a customer comes in, he’s look at what price he can get from any other Polaris dealer in California. They’ll drive 500 miles to buy a bike that’s 50 cents cheaper. That’s California.”
As a longtime Harley-Davidson rider, Adams knew just enough about the motorcycle business to get himself into trouble. So he got started by building the store in Lathrop from scratch.
“We both wanted to do something we enjoyed, and we thought this would be it,” Adams said. “And it is, just not in this economy. We built a business plan using numbers from 2005-06, then we cut that plan in half. Then we cut it in half one more time. And that still wasn’t enough. We should have cut it in half again. We started when the business was near the bottom, we rode it to the bottom and it hasn’t changed much since.”
Even so, Adams has seen sales at the oldest store grow by about 12 percent every year.
“I attribute that to mostly having a quality store,” Adams said. “We do a better job of taking care of customers than others. We have a quality service department with a very good technician. From the minute you walk through the door, meeting your needs is our top priority.”
What are the chances of replicating the success in Merced?
“There were sales there, and it’s much more of ag sales,” Adams said. “We don’t have as much of that up here, so we wanted to make sure we had that type of customer covered. Here we sell RZR XPs — and a lot of them, which is surprising at $16,599. It’s ridiculously fast, beyond my ability to comprehend, really.”
Adams can thank a test ride on a Victory for giving him the prod he needed to take the dive.
“I was a Harley rider, of course,” said Adams, who these days can be found atop a Victory Vision. “Kevin and I rode Victorys somewhere once and thought this might be what we want to do.”
And the future looks bright.
Market data book now out
I caught up with Adams while updating the annual Powersports Business Dealer Directory. Be sure to look for the Dealer Directory in December. And if you haven’t received your 2011 Market Data Book in the mail, be on the lookout.
Catering to dealers
You’ll see a handful of stories in this edition that show that dealerships are being heard. The National Powersport Auctions Financing Program didn’t take long to make an impact. NPA Partner, Executive Vice President Justyn Amstutz reports that the program received about 100 applications within the first couple of weeks of its launch. Only five applications were declined and there have been $3 million in credit approvals.
We’ll take a closer look at the program in the December edition of Powersports Business, but suffice to say it’s a welcome addition.
“There was clearly a huge need. Take what’s happening macro-economically and take the transition that we’ve seen from dealers surviving on only selling new product. It’s a testament to a couple of things: the fact that the dealers have become educated on the pre-owned segment and they’re seeing the profitability benefits from selling pre-owned. It’s not a distraction from new-unit sales — it doesn’t take away from new unit sales. It contributes to brand recognition. There’s healthy profit margin in pre-owned sales and dealers are becoming more educated on becoming a more complete business, and that they can do both. At the end of the day, where a lot of the retail and wholesale credit facilities tightened up and said ‘We’re not going to write paper,’ it was a deal that made a tremendous amount of sense for National Powersport Auctions. Why wouldn’t we?”
Separately, the HondaPower financing program gives dealers the opportunity to open lines of credit not only for pre-owned units, but also for store enhancements. It’s all the result of forward-thinking ideas that provide welcome credit assistance to dealers.
Dave McMahon is Senior Editor of Powersports Business. Reach him at firstname.lastname@example.org or 763/383-4411.