February 7, 2011-Survey: Nearly half saw improved used sales

Dealers say a wide selection is key to keep customers returning
Devin Battley, owner of Battley Harley-Davidson and Battley Cycles in Gaithersburg, Md., saw a 10 percent increase in his preowned unit sales in 2010 because he focused more on that department than he had in the past.
He was among nearly half of the respondents of a Powersports Business dealer survey who said they saw preowned sales increase in 2010 over 2009.
Powersports Business spoke to dealers who saw improved used sales to identify business initiatives and strategies that led to the increased unit sales.
Battley, for instance, has a dedicated used motorcycle department, and in 2010, he hired an experienced sales manager to head it.
“We’ve always been active in preowned bikes. It’s just that we stepped up our activity in the past year,” he reported.
The dealership nearly doubled its investment in preowned inventory over the year prior, and it spent more time bringing in the units. The key to making preowned sales, says Battley and other dealers, is keeping the selection wide.
“As our inventory went up, our sales went up,” Battley said. “There was the same amount of turnover but with a larger amount of inventory.”
To better stock the floor, the dealership began buying wholesale, which it had never done before. The new sales manager had dealt with auctions in the past, and he suggested the dealership give them a try. The plan worked, as the store brought in more preowned inventory through auctions, and through the wholesale process, Battley learned more about buying.
“A lot of times you look at some of these auctions, and some of the prices these people are paying are too high to make good of it,” he said. “You really have to be looking at the right bike and make the buys at the right times.”
Battley has learned to only buy quality bikes, which is also how Kip Niles operates. He owns Arlington Motorsports in Arlington, Texas, and Fort Worth Motorsports in Fort Worth, Texas.
“We buy all the used bikes that we can afford as long as it meets our criteria,” Niles said. “We stay with something that’s very clean, low mileage. We don’t do any vehicles that need major repair or anything. If it’s not washable and maybe put some tires on it and ready to go, we typically don’t mess with them.”
That he only buys ready-to-move bikes leaves a market open for others who are willing to complete more repairs before a sale, he said. Niles had purchased from auctions before, but he became more active in them in 2010, which helped his preowned sales increase 30-35 percent.
“Last winter the used bike market was really nice because we could buy bikes real inexpensive, so we could stock up in the winter and sell in the summer for a profit,” he said.
However, auctions aren’t the only places dealers are going to keep their preowned selection large and varied. They’re also searching local classified ads, encouraging trade-ins, scouring Craigslist and even asking their walk-in customers. That technique worked well for Niles on a recent January day.
“We had two people in the store that were looking to sell bikes, and they didn’t even think to come to us to sell it,” he reported. “They were just browsing in the store, and we ended up buying two bikes from them.”
Battley also purchased trade-ins from a local Harley-Davidson dealership because area customers are more familiar with Battley Cycles’ preowned inventory.
Peter Curless, general manager of Big Moose Harley-Davidson in Portland, Maine, used his preowned inventory to fill holes left by the manufacturer.
“I think part of what we were focusing on is that we had inventory if something changed with the new product in production or manufacturing,” he said.
Because of the wide selection at his dealership, preowned sales increased 22 percent. When buying used bikes, Curless hones in on customers’ budgets more than specific models.
“What we’re trying to really focus on is a certain price point,” he said. “We feel we get the biggest response from customers that are looking in the $8,000-$10,000 range, so if we can utilize that and try to have most of our inventory in that price range, we believe we’ll be successful and have very good margins.”
The three dealers suspect preowned sales have been doing well because customers have become more cautious with their spending.
“The customer wanted a better deal, and the better deal seemed to be, they felt, if it was used, they would get a better prices,” Niles said.
Sometimes, however, customers thought they were getting a deal when they could have spent close to the same amount on a new unit, Curless said.
“Maybe it was just more of the psychological appearance of it’s used, so it must be cheaper,” he added.
No matter the motivation, the key was to get customers to buy once the dealer had invested in the units.
Popular advertising forums for preowned bikes include online classifieds and dealer websites. Because each preowned unit is unique, they are sometimes easier to sell than new ones.
“With used bikes, you can create much more a sense of urgency with the customer,” Battley explained. “You have to buy it now, or you might not have another chance.”
Though preowned units have sold well for Battley over the past year, he expects his new units sales to do better in 2011. Niles agrees, mostly because he’s worried the preowned market has changed.
“It’s hard to get more used bikes because we didn’t sell anything the last two years in new, so that’s not putting as many on the street that were new,” he said.
Niles has seen motorcycle prices increase at auction and the selections for him to buy has grown slimmer. However, he’ll continue to hunt out the preowned bikes he knows he can sell.
“We’re definitely not abandoning our used bikes. There’s too much money there to be made,” he said. “We just have to be a little more careful.”
Battley says many dealers can succeed in the preowned market if they take risks.
“You’ve got to keep trying,” he said. “You’ve got to be willing to make your investment and go forward with it.” PSB

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