Jul. 21, 2008 – Hard dealership sales data and what to do to improve it

From an economic standpoint, it does get harder and harder to find good news. If things are not going well for anyone in any business today, it is not hard to find excuses, and good ones at that, to justify poor results.
The last thing a dealer having a tough time needs is a simplistic generalized solution, so I will try not to offer one. I also will not use any ink to expand on the ills of the marketplace and economy. You don’t need to hear anymore and, even if I could formulate a lame answer to the ills of the world, there is nothing I or anyone reading this can do about it.
So it is back to control what you can control. You can’t control what the media talks about, but you can control and eliminate the negativity in your dealership. The only economic indicator that really matters is how many people came through your door and what you did for them when they did. So, since a complaint without a solution is just bitching, let’s look at some nouns and numbers and what we can do about it.
The most astute dealers in the industry, who report monthly traffic to my former company, have had 9 percent less retail traffic than last year. These leading dealers have managed to maintain the same conversion rate, but 9 percent less traffic has equated to 9 percent less in motorcycle sales. These same dealers have controlled expenses and have a reduction in operating profit of slightly less than 6 percent. Coming off of a good year, that is not the end of the world.
The reports produced by the RPM Group are the only credible data on retail dealerships in the industry. All of the dealers reporting pay to do so, get no real or perceived political gain, as in the case of OEM-sponsored programs, and, although they don’t get the pounding I used to give them, are subject to a hard, face-to-face peer review three times a year. So what we can accept is that the ebb and flow of the marketplace will anoint you with 9 percent less in sales and 6 percent less in profits. You can ride at that level and be in good company.
Since that is the average, it means that half of these astute dealers are doing better and half are doing worse. In my failed retirement I still moderate one group, made up mostly of dealerships in which I have a financial interest. We are not content to be average, even amongst the best dealers in the country. We have found the ponies in the horse manure by implementing the changes in the sales process that is totally focused on providing a quality experience to every showroom visitor I have written about in previous columns.
Also, the clear tone of last month’s meeting was no “stinking thinking” allowed. We have increased, not decreased, the number of salespeople and kept them focused and directed at pursuing the sales opportunities that do exist. Operating profits (EBITDA) are still down, from 13.4 percent-14.47 percent, but we are working on it.
I am not writing this to toot the horn of my guys — these are numbers for Harley-Davidson dealers — it is just to say that you do not have to accept what the marketplace gives you. In fact, with so many dealers lost in the swirl and cutting back hours and staff, the opportunity to make money is, in many cases, better than ever. More manure, more ponies if you are willing to dig for them.

NATIONAL CONFERENCE SET

Advanstar, parent company of Dealernews, has agreed to sponsor a national conference immediately prior to the Indianapolis show in February. This will be the annual meeting for the National Conference of Motorcycle Dealer Associations (NCMDA). Support for the conference has been pledged by this publication (Powersports Business), Assurant and the RPM Group, and I’m sure we will have additional support from other leading companies in the industry.
The purpose of the conference will be to provide every state dealer association the best possible update on franchise legislation and other issues that have a direct impact on dealers in the United States. The board of the NCMDA is going to do all it can to get all 50 states represented, even those who do not have an active dealer association.
The marketplace has produced a number of challenges. Dealers have had to make some major changes in the way they do business, and none of them easy ones. The way in which motorcycles are distributed is long overdue for change. If OEMs fail to address the need, the only choice for dealers is to have protective legislation enacted in their states. Hopefully we will be able to report efforts to establish a meaningful dialog with OEMs that have succeeded and the need for protective legislation has been reduced.
In any case we will provide hard facts on what has happened across the country and what options are available to dealers. Do what you have to do to make sure your state is represented.
Cheers, Ed. psb
Ed Lemco has been involved with the powersports industry for more than 30 years. Lemco, the former owner of Lemco Management Group, is the founder and executive director of the National Council of Motorcycle Dealer Associations. Lemco currently operates a call center for dealers in St Croix.