Frontier Cycles – Laramie, WY – May 16, 2005

FRONTIER CYCLES

CONTACT
2434 Grand Avenue
Laramie, WY 82070
307/742-2606
www.frontiercycles.com

OWNERS
Roy and Jean DeVries
BUSINESS PROFILE
The DeVrieses bought the existing dealership (then Kawasaki, Triumph, BSA, Husqvarna, and Montessa) in 1976. In a rented downtown facility until 1982, then built a 4,000 sq. ft. dealership east of town. “We’re in town again because it has grown up around us,” notes Roy DeVries. In 2002, expanded to 9,000 sq. ft. Carries Kawasaki motorcycles, ATVs, and Mule utility vehicles (but not Jet Ski watercraft-“at 7,265 ft. elevation, the watercraft season is pretty short”); Suzuki motorcycles and ATVs; and Polaris snowmobiles, ATVs, and Rangers. Largest-selling segment is ATV. 2004 was the best year ever for Frontier Cycles, with just over $4 million in gross revenue and sales of 649 units (422 new, 227 used). Nine employees.

GREATEST CONCERN
DeVries’s greatest concern is “the constant pressure to restrict use of national lands. My second concern is that the dealer network must learn to be more disciplined and focused on ‘profit-making’ instead of ‘volume-moving.’ For manufacturers, the more they units they make, the cheaper each unit is, and the better the profit. It’s less profitable for a dealership to go the volume route. Concentrating on profitability takes restraint when ordering.” What about dealers having slim or no margins? “In big cities like Denver or Albuquerque, where more dealers are fighting to make an impact, I could see advertising a really low price. But they still have overhead to cover. So they’ll use a price leader to get customers in then start working on the ‘back end’ of the money. In smaller areas such as Laramie, dealerships are more well-known and are dealing one-on-one. When we talk price, it’s the total price. Each deal must stand on its own. We know the percentage of profit we have to make.”

WHAT’S HOT?
Breaking out at Frontier Cycles: An even split between Kawasaki and Suzuki, and between cruisers and sportbikes. “We sell sportbikes earlier in the year, then cruiser sales pick up in May,” says DeVries. “Laramie is a university town, so there is a lot of sportbike interest. But many young guys don’t have jobs, so it’s hard to get them financed and insured.” Also at home on the range: the Polaris Sportsman ATV in all displacements (400cc, 500cc, 600cc, 700cc, and 800cc), with 500cc as number one. “December, January, and February are intense months for snowmobile parts and accessories sales,” says DeVries. “ATV accessories are fairly spread out year-round. Winch sales are number one because of OEM promotions-customers can always buy some kind of winch for $49-then snow plows next. For cruiser motorcycles, windshields are our bestselling item and saddlebags second. With sportbikes, exhaust systems are first, plus Joe Rocket clothing.”

CUSTOMER BUYING TRENDS
“As the ‘Baby Boomer Bulge’ moves through society and we’re getting older and more affluent, we’re seeing a bit fewer motorcycle sales compared to ATV and snowmobile,” notes DeVries. “Jean and I are also Baby Boomers, so we relate. It’s a solid customer base.” The Medicine Bow National Forest is 30 miles west, with mountains for snowmobiling and riding ATVs. “There aren’t a lot of cabins there; it’s not developed like Colorado. These Snowy Range Mountains are used by ATV riders for hunting, fishing, and camping. A full 50% of our business comes from out of our area, because the mountains are a destination point for western Nebraska, South Dakota, and Colorado’s Front Range.” DeVries also credits Frontier’s repeat business to “longevity, and we’ve always focused on service first. We’re lucky to be in this location. Laramie is a bit isolated, so people who recreate here rely on our help for service. Many conclude, ‘We mostly snowmobile here, and you have taken good care of us, so we’ll buy our next units from you.’”

ANTI-POWERSPORTS ISSUES
“Because Laramie is a university town, there are extreme environmentalists,” says DeVries. “A powerful organization constantly tries to restrict motorized powersports use in Medicine Bow National Forest. We have a tremendous resource in those mountains, which have been multi-use for many years and had been managed well. The conflict comes in the parking lot; in Winter it’s jam-packed with trailered snowmobiles and cross-country skiers’ cars. But it’s a large area, so when people go their own way, in half a mile they don’t see anybody the rest of the day. The state worked hard at developing a good trail system; the Snowy Range Mountains are consistently in the Top 15 best snowmobile areas. We’re lucky because the Rocky Mountains don’t have much population, but do have great twisty roads and scenery.”

PARTS AND SERVICE
DeVries says Frontier Cycle has “four really great technicians,” including one for 29 years and another for 15 years. “The parts manager is the brother of our long-term technician, and has also been here since the beginning. There’s myself and one other full-time salesperson, and Jean is the CEO.” When the DeVrieses remodeled three years ago, “each department got larger. Being able to display items year-round has made a big difference in sales, and I wish we had done that 10 years ago. I’d encourage other dealers to expand. Polaris has a capital-assistance program, but Kawasaki and Suzuki don’t at this point. We pretty much did it on our own.”

PROMOTIONAL HOME RUNS
“Our annual after-hours preferred customer sale is the Friday night before Thanksgiving, with handwritten invitation to 700 repeat customers,” says DeVries. “We bring in food and drink, and mark down everything to super-low prices for one night only.” He adds that the dealership supports “almost any club activity that comes along.”

WORDS OF ADVICE
“The OEMs are very good at pushing units on us, but the bottom line is, it’s our decision to take them or not,” says DeVries. “It’s tough, but we need to stay disciplined to the profit margin. I think 20 groups have been good in keeping dealers more business-oriented instead of enthusiast-oriented. We all love to ride, but it’s a business-it’s about percentages.”

—Julie Filatoff

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