Sept. 1, 2008 – Orderly distribution can be a reality in the industry

California is attempting to follow the lead of Montana in prohibiting a myriad of practices OEMs employ to apply subtle and not so subtle pressure on dealers to assume an inappropriate burden of inventory. Dealers across the United States are now taking issue with a distribution process that:

  • Is not responsive to market conditions;
  • Places an undue burden of inventory on the retailer;
  • Creates a chaotic and unpredictable retail marketplace;
  • Affects the dealer’s ability to prioritize interest of consumer;
  • Hides or distorts critical market information;
  • Lags far behind other industries in many respects.
    Harley-Davidson has demonstrated that all of the above problems are soluble. Granted, many Harley dealers have taken issue with one or more components of the company’s new allocation process, but all would have to agree that there has been a genuine effort to address the above issues.
    The California Motorcycle Dealers Association (CMDA) scheduled a meeting on Aug. 13 to meet with OEMs to determine if a nonlegislative solution could be worked out. I have in previous columns and in speaking engagements across the country urged that substantive changes in the distribution process are preferable to legislating against specific practices. If the intent of OEMs is to continue to broker rather than distribute product, new practices will simply replace what is legislated against. The entire industry would be very well served if all OEMs adapted a professional distribution process similar to what Harley-Davidson dealers enjoy.
    Largely because of the position I had taken, CMDA had asked for my input and involvement in the meeting with the OEMs, which was to be conducted at the Motorcycle Industry Council (MIC) offices. I was not surprised when MIC staff reacted by refusing to sanction any meeting that I was involved with. What was surprising though was that senior managers of Harley-Davidson Motor Company who had planned to attend were “politely uninvited.” So the meeting was held without your ole Uncle Ed and the Motor Company. CMDA President Ray Nowakowski advised after the meeting that he thought it was productive and the delegates attending listened to what dealers had to say and promised to get back to the CMDA after receiving direction from their supervisors.
    My continued advice to state dealer associations when speaking to legislators in their state is to stress the following:
    1. Concerns are more than economic
    Dealers need suppliers to share the awesome responsibility a motorcycle dealer assumes when attempting to match the right motorcycle or ATV to a consumer. To serve his/her customers, a dealer needs to be free to stock the right motorcycles at an appropriate inventory level. The inherent risk associated with the use of what we sell merits state regulation if the industry cannot maintain appropriate practices.
    2. An industry solution is available
    I would urge state associations to hold up Harley-Davidson as an example of how the problem can be solved from within. Orderly distribution can be a reality, if OEMs choose to make it so. Failing that, legislation is a necessity.


    Massive price reductions, mostly from Honda, on noncurrent motorcycles resulted in a spike in registrations and was really good news for dealers in a position to take advantage of the offer. The real winners were the dealers who were not buried in product not subject to the current hot deal. Once again the need to be cautious when ordering product was brought home.
    Always remember that “free” flooring is never for the benefit of the dealer. It is offered to get the product out of the distributors’ warehouse and into yours. You pay up front for hot models and hot deals, and that is where you make money. Don’t buy out of fear, ignorance or greed (FIG) and always remember that no dealer ever went broke for what he didn’t buy.


    The annual convention of the National Council of State Dealer Associations (NCMDA) will be held Feb. 12 in Indianapolis just prior to the Dealer Expo. The general session will be open to all franchised dealer principals. A fully hosted reception will follow the meeting. NCMDA, in conjunction with the show’s producers, will be providing an industry update and informational programs. All franchised dealers will be receiving an invitation.
    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.

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