Sept. 1, 2008 – Growing despite challenges

By Neil Pascale
FRISCO, Texas — Tucker Rocky President Steve Johnson addressed the effects the challenging U.S. economy and higher gas prices have had on the aftermarket industry in a recent question-and-answer session with Powersports Business.
Johnson spoke from Frisco, Texas, the site of the company’s National Sales Meeting that featured 150 vendors and hundreds of dealers from around the nation.
Besides addressing the impact of the economy, Johnson also delved into the company’s business results — still growing, despite considerable challenges — and the effect of competitor Motorcycle Stuff closing its operations as well as some of the company’s new product and vendors. Tucker Rocky showcased several new suppliers plus a new house apparel brand for the sport bike market, called Speed and Strength, at its sales meeting.

Powersports Business: Describe the impact the challenging economy and the higher gas prices are having on the powersports market from your perspective.

Steve Johnson: Clearly the industry and the dealers selling new units are being impacted by the fuel prices and it seems like it’s hitting dirt bike sales, sport ATV and ATV sales. That’s just part of the economy that we’re dealing with today. But I think we need to put a different perspective on it. The way I look at is, how many units left the industry? How many went into the scrap yard vs. how many came in? While we’re selling fewer new units compared to the previous year, I believe there are more units in the population being used than the previous year because what’s going to the scrap yard is a lot less than what was sold, even though it was less than last year. So I think we have to keep a positive outlook on this and what that impacts, commodity and repair parts and things like that. We’re not seeing a lot of those products down. We’re actually seeing growth in those areas. It’s not as negative as you might read sometimes, especially for parts and service. The positive is clearly the impact of scooters, dual sports, small cc bikes and stuff like that … What to me is exciting about that is it’s going to bring in new people to dealers that maybe would not have gone into dealers before.

PSB: With the departure of Motorcycle Stuff is there a certain part of the distribution market share that is open? Could there be some market share movement in the distribution sector?

Johnson: It wasn’t a flipping of the switch (in terms of market share leaving) Motorcycle Stuff. It was very gradual over the last several years. So there has been a migration of market share away from Motorcycle Stuff over the years with all of the stresses they have had. So I don’t think it was a flipping of the switch. I think we’ve seen some of that (market share movement), clearly in batteries and tires and some of the commodities.
PSB: Same store sales information year-to-date through June that is provided to Powersports Business by ADP Lightspeed shows essentially a flat parts and accessories market. Is that what Tucker Rocky is seeing in its business?

Johnson: We are seeing some changes. It seems like there is a change away from some of the products that are put on dirt bikes or ATVs when they’re sold brand new. Those lines are somewhat stressed. But we’re also seeing growth in commodity and service lines: oils, tires and batteries. I have no data but my guess is there are more and more older motorcycles being pulled out of the garage and dusted off and tuned up and people are starting to ride and maybe that’s because of the gas prices. We’re positive (in terms of year-over-year sales).

PSB: Because of the troubling economy and high gas prices, has Tucker Rocky had to make any changes, in terms of slowing down growth among the number of new suppliers or new sales reps? Have you had to ease up in any of those areas?

Johnson: No. We still have our goal of being a growth company. And to grow you have to continue to search for product that dealers and consumers want. You have to be analytical, you have to be judicious as you make those decisions. But we’re continually looking for products that we can add to the portfolio and looking for ways to better service the dealers: Can we add new territory to spend more time at dealers to actually improve their operations? So we’re continuing on with the things that got us here.
PSB: We saw a dramatic increase in new scooter sales in the first half. Is the aftermarket part of that segment growing? Is Tucker Rocky looking to add more companies that offer scooter accessories?

Johnson: We are. We just introduced at the show today SHAD bags, which is a hard luggage carrier system for scooters or motorcycles. You can put your books or computer on the back of your scooter or small cc bike. People who ride scooters need helmets. They do need protective clothing and we have a complete line of helmets and clothing, whether it’s our new SS product or Firstgear product. It’s really up to the dealers to not just assume that because (a consumer) bought a scooter, they won’t buy anything else. They do have needs for protective gear. There are accessories that can be put on scooters. More of our manufacturers are coming up with scooter-type performance products and we’ll continue to look for that because we see the trends. (Scooter buyers) may not dress them out as much as a cruiser with all the chrome attachments, but clearly they too have needs and there are opportunities to sell parts and accessories to people who buy scooters.

PSB: This year Tucker Rocky shifted from having two sales meetings per year to one, larger one here in the summer. Are you leaning toward keeping this format for next year?

Johnson: I think so. We’re going to get some learnings from this one. (laughing) We’re going to find out what works and what doesn’t work, but I think so. We have a lot of dealers coming in Sunday and Monday. Hopefully we’ll get a good response from the dealers.


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