Engelhart Center – Madison, WI – June 27, 2005

ENGELHART CENTER

CONTACT
1589 Greenway Cross
Madison, WI 53713
608/274-2366
www.engelhart.com

OWNERS
A Partnership

BUSINESS PROFILE
40,000-sq.-ft. dealership founded in 1968; at present location since 1972. Carries Honda, Yamaha, Suzuki, Bombardier, Arctic Cat, and Aprilia, plus lawn and garden. Largest-selling segment is streetbike (cruiser and sportbike). 45 employees.

GREATEST CONCERN
“My concern is that the OEMs are pushing too much inventory on the dealers,” says Robert Hintz, a partner. “There’s going to be a saturation of product in the pipeline, and none of the dealers are going to make money. Product is going to be discounted, then used values are going to drop, then some dealers will close because profitability is poor. Yamaha has done a great job in the past five years with their supply and demand, and it has kept their margins strong. Honda needs to take a close look at that-they’re the ones who have really pushed inventory in the last couple of years.”

WHAT’S HOT?
Hot-selling motorcycles at Engelhart Center include the Yamaha R1 sportbike, the Honda VTX 1800 cruiser, and the Suzuki C50 cruiser (formerly the Volusia). “Madison is a campus town, so we sell hundreds of scooters per year-especially the Yamaha Zuma,” says Hintz. “As for ATVs, so many models we sell are hot, like the Suzuki King Quad 700, the Yamaha Grizzly, and the Honda Rubicon.” The dealership sells many helmets (Arai and HJC), street gear (Icon and Joe Rocket), aftermarket exhaust systems, and custom chroming services.

CUSTOMER BUYING TRENDS
Hintz, who has been with the dealership for 11 years, says the customer base is between the ages of 30 and 50, white-collar, with an above-average income. “Snowmobile buyers have turned into ATV buyers,” he notes. “That’s due to the lack of snow. These customers are finding the same pleasures in trail riding on an ATV as on a snowmobile, and they can ride year-’round. A lot of young people are buying dirtbikes, like the Honda XR 50 and CR 50. That has picked up dramatically in the last five years, in part because we have taken a different approach: they are future customers, so we have to make those deals happen. Even if it’s a small profit, you take it, because you want the seeds in the garden. In the last five years many Baby Boomers/empty nesters have come out of the woodwork to buy a motorcycle, which they haven’t owned in 25 years.”

ANTI-POWERSPORTS ISSUES
Madison’s Chain of Lakes includes four interconnected bodies of water right in the city. “We’ve battled a bit the with the no-wake regulations due to high waters,” says Hintz. “During that time people did not want to let boats-including personal watercraft-back on the lakes, but that didn’t pass.”

PARTS AND SERVICE
“Our parts department has six employees-five who work the sales counter and one who sells to the service department-and a manager,” notes Hintz. “We have seven technicians, one service manager, two service writers, and one warranty manager. He just handles recalls and warranty claims.”

PROMOTIONAL HOME RUNS
“We promote our dealership on-line,” says Hintz. “We use a company, www.whoscalling.com, that gives us tracking numbers to put into our ads. We can also monitor a call to see how we are taking care of customers. That has allowed me to really measure what works in advertising. Our largest number of calls come from the yellow pages, our personal internet site, the wwww.cycletrader.com site, and the local trader magazines-Auto Trader, RV Trader. Also, in the last year-and-a-half we’ve developed an internet department with four employees who just sell used parts on eBay. We get those by de-accessorizing the majority of our trade-in bikes. Used bikes’ accessories don’t retain a lot of value, because it’s a select market. So we take off the accessories, sell them on-line, then the used-bike customer can re-accessorize the way he wants to.”

WORDS OF ADVICE
Hintz’s advice: “Join a 20 group. Our 20 group has doubled our bottom line, just based on good business practices. We have a ‘best idea’ contest every time we meet, which is three times per year, so I come away with 20 fresh, new ideas. It has to be an idea that has worked in the dealership, providing proven profit gains or improved systems.” Is it important to belong to a specific 20 group? “As long as it has good leadership, it doesn’t matter whether it’s sponsored by a manufacturer, Lemco, Spader, or Gart Sutton. Just getting educated and sharing ideas really helps. The problem with our industry is that so many dealers don’t run a good business, and it hurts the dealers who are doing the right things. Uneducated dealers can only sell price, and they’re bringing down the margins.” Engelhart Center has won “many accolades” through the years, including the Suzuki Advertising Excellence and Super Service awards.

– Julie Filatoff