I am writing my last blog article for PSB. I have been given an opportunity to help spearhead an initiative with a major bank in playing a more prominent role in RV/Marine and powersports retail lending. I’m very excited with the challenges and successes that lie ahead and eager to help make a difference. I’m not leaving the powersports industry, but playing a different role in a manner where it would be best that I no longer contribute in the media. Until recently, I worked for and represented myself. I now represent a financial institution and frankly, I don’t speak for them and I would never want my comments on here to be construed that I do speak for them.
With my last blog, I would like to offer some observations, suggestions and perhaps a little advice based on my 35 years in this industry. I hope you might find it interesting and thought provoking. Given the rather lackluster performance in powersports across the continent, I think it’s worthwhile for all of us to read and consider whatever information or insight offered. You never know when it just might be the missing piece to your own particular puzzle. Let me start with reviewing some individual departments within a dealership.
Service Department: A service manager and service writer are likely the hardest, most thankless positions in a dealership. Very few accolades, but loads of negativity, pretty much every single day. On top of that, you have a limited number of techs so you only have a certain amount of time to sell each day. The only way to improve profit is to have more techs or minimize the amount of wasted time throughout the day. I’ve had Service managers tell me they are hitting 100-percent productivity. Yeah … no, your people aren’t hitting 100 percent. Check your info because it isn’t accurate. Trust me on that. I’ve also found that many don’t understand the difference between productivity and efficiency. Understanding the difference and how they affect your shop makes all the difference in how profitable you are
Parts Department: The department that other departments like to gang up on. It’s always their fault when a part isn’t in when service needs it and sales thinks they are overcharged when accessories and parts are added to a deal. Still, it’s usually the most profitable dept. in the store. Use minimums and maximums, at least on your top 100 fastest moving parts and accessories. Take advantage of return policies provided by OEM’s and start writing down your parts after their first birthday. Finally, understand the difference between mark up and margin. I can’t tell you how many times I have helped with business valuations or consulting and found that Parts margins were just under 29 percent. That’s your margin with a 40 percent mark up. Learn the difference between the two and work towards at least a 35 percent margin.
Sales Department: Train, train and train some more. So many dealers don’t invest in their sales staff and I don’t understand why. This is where it all starts. Sales people need to understand that sales is about relationships. Customers buy from you, the person they are dealing with. No comfort, no trust, no sale. Sales people have to understand how to build those relationship so that the comfort and trust are there, enabling the customer to say yes. When you buy a motorcycle, do you invest in maintenance of the bike? Sure you do, because you want the bike to perform, so why wouldn’t you invest in the maintenance of your sales dept. for the same reason?
Dealer Principles of Auto Dealerships: I’ve noticed over the last decade, that there are more and more auto dealership owners expanding into powersports. Why not, it’s fun, right? I can say with confidence that the fastest way for you auto dealers to make a million dollars in powersports industry, is to invest two million into a dealership. Very few auto dealership owners do well in powersports. Why? Because the auto industry is much more structured than powersports. Powersports is much more cyclical than the auto industry. Most of your competition has more passion and enthusiasm than business acumen and finally, in the auto industry, you’re selling “needs.” In powersports, you’re selling “wants.” That difference places the customer buying experience and your selling experience on whole different level of perspective.
It’s my opinion that in comparison the auto industry, the RV industry and the marine industry, powersports is the most difficult to manage and be profitable. Some of this is self inflicted. I’ve met a number of dealer principles over the years who told me they "can’t be bothered with those financials and all that paperwork. I have a girl for that.” I haven’t been into too many dealerships where accounting is headed by a CGA or a CPA yet they can’t be bothered to question or look into their financials at least monthly and their book keeper is managing all their money? How can anyone be proactive if they have no idea what’s going on?
I’ve also found that most dealers love free advice and will spend about as much money on industry help as they will on training which isn’t much, no matter how much trouble they are in. I don’t get it. I don’t have industry numbers but from I’ve gathered talking to others, I would say that less than 20 percent of the dealer network belongs to a 20 group. Why? I’m not sure and I’m not going to promote or criticize them but I do know that most powersports dealers aren’t comfortable with them. I’ve found that dealers in the industry aren’t fond of sharing financial information and many of those who need help the most, don’t have the means to make the financial commitment to these groups.
OEMs have also played a role in the current state of the industry. The industry has been flooded with dealers, regardless if they had more money than business acumen and flooded the market with excessive product in a cyclical industry. Some offering longer floor plan in the hopes that dealers take more. Who are you helping here? Profit comes from turning inventory and OEM’s have dealers with product 2, 3 even 4 years old. You get annual financial statements from your dealers, so why don’t you have your credit dept. analyze the turns your dealers have? You won’t be impressed with the results, yet they are your future.
Finally, I want to say to owners: You don’t manage your business, your staff manages your business and you manage your staff. You’ll never be able to be effective and grow if you are managing all departments. That’s why you have managers. Make them accountable, give them direction and follow on it, invest in them with training and last but not least, treat them the way you want to be treated. Allow them some ownership of their department and they will take their responsibilities more personally.
I won’t say goodbye, but simply “Until next time.” I’m not leaving the industry entirely and one never knows what the future holds. I wish you all nothing but the very best for the future.
Bruce Marcia is the director of Bruce Marcia and Associates, a retail management consulting firm that specializes in assisting and supporting dealerships in the RV/marine and powersports industries. As a recognized troubleshooter with over 30 years of experience in inventory finance, dealership general management and as a district manager for a major OEM, Bruce has had the unique opportunity to understand and learn from all three important fields that make these industries function.