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Pre-owned: A franchise worth acquiring

Pre-owned bikes … an afterthought for most. Appease the OEM. Get the service department rockin’. Drive the parts and apparel sales, and don’t let those bikes hit flooring. Nothing like paying the juice on last year’s inventory (or the year prior). Then deal with those pesky trade-ins.

There are many things that can take your eye off the ball, and many fires in retail that constantly need to be put out. But the used bike market is an absolute gold mine for those wanting to jump into the fray. But you need to jump, not dabble.

Polk reports are quick to let us know that 80 percent of used bikes trade hands outside of dealership walls. Let that sink in. EIGHTY PERCENT! How many of those customers are you NOT driving into the dealership with your ad campaigns, all because you didn’t have the gateway drug they were looking for?

But let’s not get carried away. WHICH used bikes is just as important as HOW MANY used bikes you have. The true question with used inventory mix is: “What bikes should I have?” Harley-Davidson dealers are sitting on a glut of two- and three-year-old touring bikes, while the auction prices are plummeting. Many have the strategy to flip the customer to a new unit and purge the used bikes out in a monthly lot as a wholesale loss. Smaller volume dealers take only what they take in on trade, often times over-allowing on the trade value to move the new bike off of floorplan. And whereas I certainly understand the H-D model, and empathize with the dealers sitting heavy on ’14 product, being proactive about used bike inventory can drive new buyers (and a new demographic) into your store.

For the Harley dealers, continue to use your two- and three-year-old bikes to flip customers to a new. The used bike becomes a great advertising piece, and the difference in payment is close enough for most customers to pull the trigger on the ’15. But tell me about your $8K price point. Tell me about the $9K Ultra on your floor. How about the $4K Sporty?

Many used bike aficionados are looking for the “deal,” and many new customers need a price point easier to stomach. If your pre-owned inventory is too close in price to the new stuff, you’re simply missing an entire group of buyers. It’s not selling a used instead of the new. It’s selling a used in addition to new, and the price point is around 50 percent of the new.

The other side of the coin has to do with embracing other brands. Why do Euro dealers wholesale out Japanese trades? Why don’t metric bike dealers proactively go out and buy used bikes of other brands, instead of just waiting for them to come in on trade? A Honda/Kawasaki dealer is rarely going to have an MV Agusta come in on trade. But if that dealer actually had an MV on the floor, he’d draw in a Euro bike crowd, with the possibility of flipping that guy to a new Honda or Kawasaki. Same thing for the Triumph/Ducati dealer. Go out and buy a used Yamaha FZ9, Bolt or BMW NineT. Those are hot models, and ones that used bike fans are looking for online. When they pop up in your store, so will the customer. Often it’s a guy who never would have been in your store before.

Relative to trade-ins, dealers must make it easier for the customer if they are to grow sales. Remember, 50 percent of the people coming into your store have no intention on buying. They are truly just looking. A guy who has decided to trade will sit by while you take a look at his bike, put it up on the lift, test-ride it, etc. But the goal is to cause those not yet ready to want to trade the bike.

You’ve got to get into their heads before they’ve made the decision to buy. That requires it to be easy and painless. Use the auction guides (prices are changing too fast in the NADA book) to put a number on the bike right there, on the spot and NOW. The idea is to get more numbers in front of more people, therefore we must make it easier for that “just looker” to see some numbers. Once he’s considering it, he’s in the game. You can adjust the trade allowance as needed after the service department assessment. You may get burned on a few, but the volume increase will more than make up for it.

The Used Bike Franchise is the greatest complement to any bike franchise, and is truly multi-faceted. These can be used as advertising pieces just as advertising dollars would be — to drive floor traffic. What you do with that floor traffic is up to you. With customers trading bikes every 2.1 years, there is a tremendous amount of bikes out there, waiting to inspire people to come into your store.

Sam Dantzler is the founder of Sam’s Powersports Garage, a membership website dedicated to best practices and all-staff training. He can be reached at sam@samspowersportsgarage.com.

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