Crossroads Motorsports – Gibsonia, PA – June 6, 2005

CROSSROADS MOTORSPORTS
CONTACT
5375 William Flynn Highway
Gibsonia, PA 15044
724/444-6555
www.xroadsmotorsports.com

OWNERS
Joe Marnell and Silent Partners

BUSINESS PROFILE
24,000-sq.-ft. interior plus 4,000-sq.-ft. gated exterior; founded in December 2003 at the present location. “We're moving one-and-a-half miles away,” says Marnell. “We're at one end of Richland Mall in Pittsburgh's northern suburbs. Lowe's is building a 140,000-sq.-ft. store here, so we lost our lease-which is fine, because our new 30,000-sq.-ft. facility on 15 acres is going to be much better.” Carries Yamaha and Suzuki motorcycles, ATVs, and scooters; Kawasaki motorcycles, ATVs, scooters, and “a limited number” of Jet Ski watercraft; and Polaris ATVs, Victory motorcycles, and Ranger utility vehicles. “Motorcycle sales are probably 60% of our business, then 35% ATVs, and 5% is the Mule or Ranger vehicles.” 17 full-time and three part-time employees.

GREATEST CONCERN
Marnell's greatest concern is the import of off-brand, small-displacement vehicles. “Last Christmas my Yamaha PW-50 and Suzuki JR50 off-road motorcycle sales were cut by three-quarters,” he notes. “I hear from the manufacturers that they're going to do something to fix that. I'm concerned that the influx of Chinese- and Korean-made product is going to have a really detrimental effect on my ability to retail, especially at the low end-that 50cc, 80cc, 90cc, and 110cc market. You can't walk away from that, because it's your entry, where you start building brand recognition. But it's hard to explain to a young couple with two children why they should spend $1,800 on two bikes when they buy them at Pep Boys for $800. They say , 'So they're throwaway; I'll take that chance.'” Marnell is also concerned about financing. “When we go outside of the OEM circle, fewer and fewer banks are lending on motorcycles and ATVs. Hopefully that will change, but it's something we have to keep working on.”

WHAT'S HOT?
“Our hottest-selling product is the Victory motorcycle,” says Marnell. “Then the sportbike segment is really strong-the Yamaha YZF-R6 and the Suzuki GSXR 600. Third is the Yamaha Road Star line. Sportbike sales come on strong in Spring, whereas the Road Star is a good-selling, year-round product.” Marnell adds that in the northeast, “for the last three years we've had absolutely horrible Springs. March has not been as strong as we would have liked. We ride comfortably April through October, and there can be 50-degree weather in March and November.” Crossroads Motorsports has over-the-counter PG&A sales of $1.5 million annually, with about $1 million of fast-turning inventory on display at any time. “Our store was designed with the Retail Design Associates merchandising principles. There are more than 300 vehicles on display in our showroom. In our store-within-a-store concept, all brands are segmented. We have Victory, Yamaha, Suzuki, and Kawasaki areas. This business is very brand-specific and brand-loyal. If a customer says, 'I'm looking at Kawasakis,' we bring them into that environment to show the product. If we do move onto another product, we move into a new environment.” The new facility will reinforce this concept.

CUSTOMER BUYING TRENDS
Marnell estimates that his customers range in age from the late 20s through the mid-60s. “Victory seems to appeal more to a 35- or 40-year-old-plus buyer who has greater disposable income. Streetbikes-especially the race product-tend to appeal to those a bit younger. In our store we follow a very strong customer-service program. This shop is very clean, brightly lit, merchandised, and friendly, which we feel is a strong approach to servicing families and women. One of our salespeople is a woman. The motorcycle business is still driven by men, but more and more women are becoming influencers in the decision process, especially those with young families.”

ANTI-POWERSPORTS ISSUES
“ATVs are required to be registered in Pennsylvania with the Department of Conservation and Natural Resources,” says Marnell. “Arctic Cat and Polaris each make all-terrain pickups (ATPs), which are ATVs with a small dump bed on the back. They can't be registered through the Pennsylvania DCNR, and therefore cannot be ridden on state-sponsored trails and game lands. We've been working with Polaris to get that legislation changed so that they are recognized as Class 1 ATVs.”

PARTS AND SERVICE
Crossroads Motorsports' staff includes a service manager, four full-time mechanics,
two service writers, one full-time and one part-time build/prep assistant, a parts manager/salesman, two full-time parts salespeople, one shipping/receiving/wholesale clerk, four vehicle salespeople, a sales manager, and an F&I director.

PROMOTIONAL HOME RUNS
“We promote our dealership aggressively on the World Wide Web,” says Marnell. “Radio is strong, followed by the Cycle Trader for programs and promotions.” Monthly customer-appreciation rides are held May through September (“or October, if the weather cooperates”), with a two-hour trip followed by a cookout. The dealership holds bikes nights, and is a meeting place for the Three Rivers Competition Riders (an off-road organization), the local chapter of the Road Star riders, and ABATE. “We're negotiating with the Pennsylvania rider-training program-one of the premier schools in the country-to hold a training course at our new facility,” adds Marnell.

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WORDS OF ADVICE
Marnell came from a high-technology/marketing background. “Four years ago I went to buy a motorcycle and was treated so horribly at the dealership that I said, 'This is crazy-there has to be a better way of doing business.' It's time for dealers to realize that we're in the 21st century and have to start embracing technology and new ways of marketing and selling to our customers. The automotive sales business 20 years ago is what the motorcycle business is today. We have to start thinking about customer service index scores, investing in training for our technicians, and investing in our sales staff to get them up to speed so that they understand customer satisfaction and how be the very best. And dealers should not be so quick to discount. Sell the quality of your store and your staff. People are not necessarily looking for the lowest price. They're searching for a store that will be there for them-treat them with respect, honesty, fairness. We're looking forward because it's a great product, a fun industry. There are challenges, but that's true with anything.”

- Julie Filatoff

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