April deliveries follow suit with sizable increase
Husqvarna has started off 2012 with a bang.
In the first quarter, the brand saw a 36.2 percent sales increase to 2,642 units. Through April, Husqvarna reported a 40.0 percent increase in deliveries worldwide to 3,560 units thanks to a 52.2 percent boost in April, with 918 units delivered.
Even more success was found in the United States, where deliveries were up 43 percent through April.
The Nuda 900, a naked bike available only in Europe, led the burst in worldwide sales, but a lot of factors contributed to the increase in the U.S.
“I believe it was a combination of same dealers’ year-on-year increases, plus the number of new dealers we’ve added,” said Kris Odwarka, president of Husqvarna Motorcycles North America, LLC.
Dealers ordered more units in early 2012 because they’re beginning to trust the company more, he added. Since BMW took over Husqvarna in 2008, its influences have slowly seeped into the brand. In September, Husqvarna began migrating the shipping of bikes and parts to the BMW automotive parts fulfillment system. That process was finalized in April.
“One thing I’m pretty proud of is for current and the previous two years’ model years, we have almost no part lines on back order,” Odwarka said, adding that only 0.2 percent of those parts are on back order.
The parts fulfillment before September was sufficient, but it wasn’t at the level it has achieved now. For Husqvarna, BMW only ships parts through the air. Those that are shipped two-day air are covered in the parts prices, so dealers know exactly what they’ll pay and what the customer will pay.
“What we chose to do was integrate shipping costs into the parts prices, so the dealer net is the dealer net,” Odwarka said.
For parts that dealers need in less than two days, delivery is available by noon the following day as long as the part is ordered by 6 p.m. local time the day before. Shipping costs a certain percentage of the part price, not to exceed $50.
In addition to streamlined parts fulfillment, Husqvarna can boast a decrease in warranty claims.
“We’ve seen our warranty costs worldwide drop to one-sixth of what they were three model years ago,” Odwarka said.
BMW also had a big influence on that. BMW implemented its quality control at the Tier 2 level, meaning better control was put on those companies that produce parts that are a portion of larger parts produced by another supplier. For example, a Tier 2 supplier may be a spoke manufacturer that produces part of a wheel built by another supplier, or it may be a hub supplier for that wheel.
That improvement in production and the efficiencies in parts fulfillment have both led dealers to have more confidence in carrying the Husqvarna brand.
“I think much of our success with our current dealers has been this trust factor,” Odwarka said.
Dealers have also appreciated working with BMW Financing, which is currently reporting an 80 percent approval rate.
“We have a good interest rate, but the bigger message is 60 months financing and the same credit rate to all credit tiers,” Odwarka said.
Those buyers within the lowest credit tier can borrow 100 percent of the MSRP of a unit, while those in the top tier can borrow up to 130 percent of MSRP. With a five-line credit application, 75 percent of customers get an answer on financing within 30 seconds.
“Speed is important, so that’s why BMW automated so much,” Odwarka explained.
If an answer isn’t received electronically in 30 seconds, BMW Financial services will call the dealer, and most of the time they’re simply looking for more information or a way to get the deal approved, such as a co-signer.
“They’re just trying to help us sell motorcycles,” he said.
Because of services like this, Husqvarna North America has been able to take its dealer network from 72 dealers to 93 in the past
16 months, and more expansion is planned for the network in the coming years.
“The key message is in 10 years we hope to have somewhere between one-quarter to one-half the number of dealers that the Big Five have, or that they had at their peak, and that means numbers in the mid-200s,” Odwarka said.
Despite this projected growth, Husqvarna is slow to add dealers, as is its parent company. BMW’s auto group only has 350 dealers in the U.S., but they sell about 300,000 units per year.
“I’d rather have half as many dealers and each dealer selling twice as many bikes because it’s just a better business model for the dealers,” Odwarka explained.
Husqvarna is confident that BMW will help its sales grow in multiples after watching what the auto manufacturer did with the Mini and Rolls Royce brands. Husqvarna has already announced two new models will be released this fall and by 2015 the entire model line will be revamped with new chassis and powerplants.
“I would say that the future bodes well,” Odwarka said.
Depending on how the economy shifts, Husqvarna expects to see further improvement this year as well.
“We’ll continue to gain market share,” Odwarka said. “How steep that will be in the amount of absolute increase will depend on macroeconomics and how much the economy increases or decreases.”
Husqvarna added the following dealerships in 2012:
The Motorcycle Shop, Anchorage, AK
B&B Cycles, Victorville, CA
Mountain Motorsports, Ontario, CA
Husqvarna Motorcycles of Modesto, Modesto, CA
Husqvarna of Daytona, Daytona Beach, FL
Magic City Cycles, Orlando, FL
Husqvarna Motorcycles of Countryside, Countryside, IL
Staack’s Motorsports, Butte, MT
Penco Power Products, Kalispell, MT
Road Track & Trail Cycles, Muskogee, OK
Husqvarna of Gresham, Gresham, OR
Hermy’s Husqvarna, Port Clinton, PA
Husqvarna Rock Hill, Rock Hill, SC
Sturgis Motorsports, Sturgis, SD
Husqvarna of El Paso, El Paso, TX
Webb Powersports, Ellensburg, WA