June 30, 2003 – Anatomy of a decline: Parts and Accessories are strong
Grab your May 12th issue of Powersports Business magazine and turn to Page 31. Kurt Finley talks about the decline in our industry, and describes what he and other dealers are doing to offset this loss of business.
Loss of business? Since when?
This started me thinking, and I began to sift through our data to see just how much, and how bad.
Turns out that Kurt was on the mark, and it is serious, but (and here is the good news), it is a mixed bag.
Bottom line: Major unit sales are now flat compared to last year, the service department is now flat, but parts and accessories, after a modest decline, now show a strong increase over pervious months.
Here’s how we did it
First, we looked at more than $1 billion dollars worth of major unit sales for 66 dealers over the past 3 years (March 2000 to March 2003). Beginning with March of 2001, we calculated the rate of increase or decrease in each month, for each dealer. This was averaged out for all dealers in the blue line, and then a red trend line added to the picture.
It is easy to see the general direction. Back in March of ’01, we were about 27% over March of ’00 (127%). That rate of increase has gradually declined to the current average of about 98% (March ’03 compared to March ’02). The 98% mark says that we are actually 2% less than a year ago. Not good.
Then, we looked at $98 million worth of service, and we came to the same conclusion. Steady decline from 117% of the previous year, to today’s 103%, March of ’03 over March of ’02.
But now for the good news. When we looked at parts and accessories, he said a strong performance beginning with March of ’01 over March of ’00 by 12%. There is a small decline over the next year, down to just over a 10% increase in Feb of ’02, then a strong climb back up to today’s 14% growth in March of ’03 over March of ’02. Total sales here of $239 million.
So, was Kurt right? Yes, dead on for major units and service. But as we wait for the return of steady growth, smart dealers are focusing on the parts and accessory end of the business.
In a nutshell: Economic slowdown? Our riders will fix it themselves, and they will buy the parts to do it. They will work on their existing machines and dress them out. They will keep ‘em running and make ‘em pretty while they wait for the right time to buy new.
In my biology classes from years ago, we learned that plants and animals either adapt, perish or migrate. Is there a lesson here?
Go check out your parts department.