Addition of VW Credit services expected to boost sales
In a move expected to boost unit sales, bolster profits and further strengthen ties between Ducati and its still-new corporate parent, Volkswagen, Ducati North America launched a new in-house retail financing program supported by VW Credit, Inc. The newly established Ducati Financial Services (DFS) officially opened for business in early September, a significant step in the company’s plan to roll out DFS throughout many of its major markets around the globe.
“The introduction of Ducati Financial Services marks an historical time for Ducati North America. With specifically tailored, in-house programs, we are now able to effectively enhance and improve the customer buying and ownership experience,” said Dominique Cheraki, general manager of Ducati North America. “The implementation of a program of this magnitude represents a milestone in the development of Ducati and its growing dealer network in North America.”
In an exclusive interview with Powersports Business, Cheraki cited the addition of VW Credit as the first tangible evidence of the company’s assimilation into the Wolfsburg, Germany-based Volkswagen Group.
“Being bought by such a large group, it will open up different opportunities for us,” he said. “One of the first ideas that we had was we finally will be able to have our own financing solution in house, which, for a manufacturer, is the best situation to be in.”
The United States, Ducati’s largest market with 9,258 units retailed in 2012, has joined Italy and Germany in adopting the new DFS, a project that’s already underway in Mexico and will soon be extended to Canada.
Cheraki said the new financing provides two primary benefits, for both the brand’s customers and its dealers. For customers, the parent company is offering exceptional rates, including a 1.99-percent promotion, as well as the addition of ancillary products like guaranteed asset protection (GAP), Road Hazard Tire and Wheel coverage and the reintroduction of its Ever Red Motorcycle Protection Plan.
For dealers, the new financial partner means additional tools to sell to customers and dedicated DFS staff to work with over the phone, as well as an expected improvement in acceptance rates that could boost new and used unit sales.
“The responsiveness at Volkswagen financing, they really put in place a dedicated team to support Ducati dealers,” Cheraki said. “That’s the first thing, and probably in the future we’ll be able to come with some specific tools, financing ideas and promotions that will help the dealers to sell more, so the direct benefit for the dealer is to make the business easy, to be close to the dealer and be able to have a dedicated team.”
He added that since the project’s launch in September, more than 90 percent of Ducati’s dealer network in the United States has signed up, indicating a high level of interest from dealers.
Cheraki said he expects the Ever Red Motorcycle Protection Plan to have the highest rates of adoption, followed by tire and wheel coverage and GAP.
“GAP protection is quite popular, because it makes a lot of sense,” he said. “If I had to take [out] a loan for a bike, I would not hesitate for one minute to take the GAP … so I expect they will do well.”
Positive dealer reception
Doug Kennedy, general manager of Euro Cycles of Tampa Bay in Florida, is pleased with the launch of DFS, his store’s recent increase in Ducati sales and excitement he picked up from the brand’s recent dealer show in New Orleans.
“I think it’s a great addition, because obviously Volkswagen Credit has a lot more resources and deeper pockets to loan money to our guests,” Kennedy said. “They’re throwing out some really good teaser rates for the motorcycle industry — 1.99 percent is a great rate — but we’re seeing approvals on those rates as well, so it’s not just for the uber-credit-worthy people.”
Kennedy said many of his customers do research online before visiting the store and, therefore, are informed about the new financing option before they walk through the front door.
While his dealership is still working with FreedomRoad Financial, Kennedy expects VW Credit to become his primary lender for Ducati sales. He added that deals financed through VW means that any ancillary sales must be run through the parent company, rather than through his previous third-party provider.
Going forward, Kennedy expects Ducati sales to become a bigger portion of his sales, an idea partially boosted by what he saw and heard at the dealer show.
“I’m one of those guys that actually gets charged up at these things and comes back to the dealership and shares the enthusiasm with my employees,” he said. “Selling motorcycles to me is very passionate, and I’m excited to be in the industry, and I think when you come back from a good dealer show you know your employees see how happy and stoked you are about what’s going to be our future, and I think that passes along to our associates and, hopefully, on to our customers.”
Joe Dominguez, sales and finance manager at Beverly Hills Ducati in Southern California, is similarly excited, and feels the parent-sourced financing is going to be a major plus for his dealership.
“When people hear that it is an actual Ducati financing and then they come up with special rate programs like right now they’re running the 1.99 on Panigale and the Diavel and also the (Streetfighter) 848, I mean 1.99, that’s hard to beat,” Dominguez said. “That’s ‘A’ credit of course, but still it’s a program, and people like that. FreedomRoad did [similar programs], but it seems like Ducati’s just doing a little bit more for us now.”
He added that, like Euro Cycles of Tampa Bay, many of his customers have already heard of the promotion before entering the store. That awareness is attributed to a major Ducati-sponsored advertising campaign that he also feels is boosting his store’s foot traffic.
“The people over there are great — I’m not trying to build them up, but they really are great,” Dominguez said. “You call them up, everybody’s in a good mood, they’re very happy about their jobs. It’s not like going to the DMV.”
He added that due to his dealership’s market, he expects only approximately 60 percent of its Ducati customers to utilize financing, but feels its availability adds a comfort level for prospective customers.
“Most people already know that Volkswagen has taken that over, but for the few that don’t, once they hear it, they’re in,” he said. “Not unless they had a real bad experience with Volkswagen, and not many people do.”