April 23, 2007 – An offer or a disguised slap in the face?

If I walked into your dealership, extended a greeting, an offer for lunch and later an offer to buy your store, I would in fact be conveying a simple message: I can run your dealership better than you can.
Before puzzling over that scenario, stop and ask yourself a simple question: What was your gut reaction to the idea that somebody can run your dealership better than you can? Guffaw? Did your hair stand up on the back of your neck? Competitive juices start to fire up? Or perhaps your reaction was totally different. Perhaps you chuckled and thought, “Good luck, buddy.” Or, maybe it was, “For the right price, go ahead and prove it.”
If your reaction was the latter, it’s time to put your dealership up for sale and let someone else expand your business into the growth markets the industry is just starting to touch, including the Internet.
But if you were somewhat irked by the message that somebody can run the business better than you can, pat yourself on the back and then dive into the growth markets. It’s time to invest more of your time improving the number of preowned units you sell, the amount of F&I sold on each new unit and last but certainly not least, improving your e-commerce.
Because according to a national survey done for Powersports Business, the latter isn’t happening nearly enough by dealer principals and top managers. In fact, not only is it not happening enough, many are not even thinking about it enough.
And if that continues, then one day you can expect the dealership door to swing open and for somebody to extend a hand and ask you to lunch.
Two days in Denver at a presentation on Harley-Davidson dealership acquisitions taught me that much. Today’s dealership buyers — be they newcomers to the industry or existing players — have come to one conclusion if they are seriously considering purchasing a new store: They can run it better than the predecessor. If that’s not a possibility, then there’s no real reason for a buyer to sign on the dotted line.
The buyer has to have a swagger. A cocky attitude, if you will. And that’s not really a bad thing because that self confidence isn’t aimed at the seller. It’s not like the dealers stood up at the Denver meeting and said, “You know, we’re really much better business managers than our protégés.”
But at the same time, look at what seems to be an increasing interest in dealership acquisitions in a different light. Ask yourself why dealers, and not just Harley-Davidson dealers, and newcomers to the industry are so interested in dealership acquisitions. Why did a healthy number of people — at least 40 or more from several parts of the nation — pay $2,000-$3,000 to learn about the issues and challenges surrounding dealer acquisitions?
Is it because there has been continued growth in our industry for more than 10 years? Probably.
Is it because motorcycling continues to become ever engrained in our culture as a fun and exciting activity, hence leading to the projected continued growth in sales? Probably.
Is it because there are so many dealers out there who aren’t performing up to snuff, effectively leaving a bunch of low-hanging fruit for investors outside the industry? Undoubtedly.
That’s the real sobering thought behind this heightened interest in acquisitions. A fair number of dealers are either underperforming, or they’re simply not diving into potential growth areas with the enthusiasm and energy that’s required. And the Internet is the perfect example.
We asked 159 dealer principals or top dealership officials what the average number of hits their Web sites generated each month. Nearly 45 percent didn’t have a clue.
Then we asked the same dealers in an average month, how many solid sales leads their Web sites generated from consumers checking out new units? Roughly one-third had no idea.
How is this possible?
How is it that perhaps your best connection to the shopper, and most definitely your best link to the affluent shopper, is not important enough to be known by a top dealership official? It’s as bad a business sin in today’s competitive retail climate as not having a key to the front door.
Skeptical of that thought? Then consider this: According to a new survey by the
independent New York City-based Luxury Institute, 96 percent of Americans with annual incomes of $150,000-plus buy products and services online. And not just a week before Christmas.
At the very least, here’s what the dealers who are not putting their time into e-commerce are missing: On average, dealers surveyed for PSB are selling 10 new units per month directly off Internet leads. That’s 120 units annually, and of course that doesn’t include the accompanying F&I, parts, accessories and service sale boosts.
That new unit sales total isn’t huge, by any means. But, it’s something that somebody who would invite you to lunch would circle as a prime opportunity to enhance your business. psb
Neil Pascale is editor-in-chief of Powersports Business. He can be reached at npascale@ehlertpublishing.com.