Mar. 10, 2008 – Uncovering the primary reason for the downturn in sales

As I write this I am getting ready to make a presentation to the North Carolina Dealer Association. Anytime I speak, I try to put a positive spin on the current business environment. In truth, it is not very hard to do so. The ponies in the manure pile are there if you look for them.
The last time I have a record of speaking to the North Carolina Dealer Association was back around 1984-’85. If at that time I could have pointed out the quality and broad line up of the current product offering, the acceptance of the general public and the fact that any credit-worthy customer could get financing for long terms at a low rate, they would have asked what I was smoking.
We have more to offer and more ways to make it easy for people to own what we sell than we have ever had. If you couple it with the great automated resources that give you a level of awareness and control of what we do and add the peripheral income opportunities, it is not hard to portray a superior income opportunity for motorcycle dealers.
My message in Charlotte, and anywhere else, is I believe the primary reason for the downturn in sales has been a failure to adjust at the retail level. Now this is your ole Uncle Ed speaking. I have been quick to bash the OEMs, long and loud, when I could attribute any problems dealers faced to them.
The primary dilemma is brought about by a radical change in the buying habits of retail consumers. This requires retail dealers to make the needed adjustments. If you are trying to retail motorcycles and ATVs like we did in 1984, 1994 or 2004, you are simply behind the curve.
Consumers today are glued to the Internet. At home, on the boss’ computer on company time and with their BlackBerrys in between. It is not so much a matter of business being done online, it is the information gathering. Before they finish their first cup of coffee, an interested consumer can know as much about a given product as the new salesperson you just hired. The good news is the Internet does pique a lot of interest and does drive people to find and contact you.
We do get more early phase shoppers and nonenthusiasts than in the past. Hard-core price shoppers have more resources and, when allowed to drive the process, leave little for the dealer. It is a matter of being better prepared to deal with both. I have written much about how to do that in previous columns and will expand on it when I speak to the Carolina dealers.

FRANCHISE LAWS

Anytime I speak to dealers I go over the need to update state franchise laws and share just how other states have successfully brought about implementation of needed legislation. A major concern many dealers voice today is excessive inventory. Salesmanship is used to move product at all levels of the chain. Real or implied threats are against many laws in addition to state franchise regulations. However, in nearly every instance I am aware of, the wrong inventory is the result of bad buying decisions, not unlawful tactics by OEM suppliers.
A retailer should buy at wholesale what you can profitably sell at retail. Trying to outguess the market is a fool’s game, because you are never shown all of the cards. Given the improved resources the consumer has, they are very aware of what is current. Noncurrent product will have to be discounted at retail, make sure it was discounted to you at wholesale or 100 percent of the discount will come from you.
There is no legal requirement for an OEM to show you all the cards. It is good business, from their prospective, to induce you to buy what they have to sell when they want to sell it. Fortunately we have laws in the United States that give you the right to say “no.” Remember the basic rules: