Clifford’s vision provides dealers with growth option
Pre-owned market growth boosted by NPA co-founder Cliff Clifford
December was a big month for National Powersport Auctions. The powersports wholesale auction company announced it had opened its fifth location and that it had moved its Dallas facility into a larger building to increase efficiencies.
That growth has been made possible — and has become necessary — as NPA has blossomed into the leader in the powersports auction market. While the recent improvements, and others that have been made over NPA’s 27-year history, can be attributed to a number of team members at the company, co-founder and CEO Cliff Clifford has been at the helm throughout the company’s life. Clifford’s efforts in 2016 and those of his company over the past several years are why Powersports Business chose Clifford as the 2017 Executive of the Year.
“Cliff is a quintessential entrepreneur. He is charismatic, possesses a keen sense for opportunity and places integrity and superior customer service at the top of his priority list,” said Jim Woodruff, chief operating officer of NPA. “He has total confidence in his team and surrounds himself with the right people to make anything possible. He’s not afraid to ask the tough questions, is a quick learner of almost anything that comes his way and loves people. Most importantly, Cliff cares deeply about our industry and its people — you can feel it the moment you meet him.”
Clifford has spent his entire career in the motorcycle industry. A rider himself, Clifford was involved in a multi-line powersports dealership in San Diego before he helped launch NPA. It was at the dealership that he learned about the benefits of pre-owned vehicle sales.
“We took everything in trade. We tried to keep 100 used bikes in stock at all times,” Clifford recalled. “But during this period, there was no real mechanism to have an opportunity to acquire vehicles besides trade-ins or off-the-street purchases.”
In the late 1980s, the powersports market was very different than the automotive market, especially when it came to financing. The auto industry had wholesale auction companies and plenty of financing opportunities, while the powersports industry had neither.
Then, in 1989, Kawasaki Motor Corporation announced its Good Times Credit Card, which brought a retail financing option to the industry. As Clifford observed this exciting new opportunity for the industry, he also discovered an opening.
“They started having repos, and they didn’t really have a good solution to serve the liquidation of the repossessions,” Clifford said.
Clifford and other dealers were buying repos one at a time from Kawasaki’s financing arm, but with the growing repo volumes, Clifford was concerned the Good Times Credit Card would come to an end.
He said, “It was my concern that if we didn’t assist this bank in a better process and improve their returns, the bank may stop lending.” He then added, “I knew we had to come up with a better program to serve them. That was the incubator that started National Powersport Auctions/Cycle Express.”
Clifford and the Lomas family launched what was then called Cycle Express in San Diego in 1990. The goal of the company was to relieve Kawasaki’s finance arm of repossessed units, so they wouldn’t overburden the OEM’s retail financing program.
Around this same time, other OEMs entered the retail financing market, and NPA was ready to assist them as well. NPA hosted its first live dealer-only auction in San Diego in 1991, selling 150 units.
“When you really think about it, without the effective, trusted wholesale market that Cliff dreamed of in the early days, lenders would not be able to lend, dealers would not have a steady supply of used inventory, consumers would be buried in their trades, OEMs would be stuck with their demo pools and aged inventory, and no one would have the market data to know what vehicles are really worth,” Woodruff said. “Cliff changed the game for the better and strives every day to create a legacy of excellence, respect and service to the powersports industry.”
Growing the pre-owned market
It wasn’t long before NPA expanded beyond San Diego. Its Atlanta facility opened in 1997. In 2004, NPA added a Dallas location, before Cincinnati opened in 2008.
Along the way, NPA also added 24/7 online auctions, dealer consignments, private dealer exchanges for OEMs to reach only their dealers, simulcasts, the NPA Market Report and the NPA Value Guide.
But Clifford notes one of the biggest changes he’s seen industry-wide that affects his company is how much dealers have embraced pre-owned sales.
“From 2009 to 2013, we spent a lot of time educating dealers about the benefits of pre-owned and inventory management. One of our favorite lines to tell dealer is, ‘If you don’t have it, you can’t sell it,’” he said. “Education is still a key mission today, but thanks to publications like your own and others, pre-owned has been talked about for the last several years.”
Over the past decade, he’s witnessed a shift in the industry, as dealers have realized the larger margins they can make selling used versus new, and what the pre-owned business does to introduce new and different buyers into their dealerships.
“There were dealers of certain brands who wouldn’t take an off-brand in trade. They said, ‘I don’t take XYZ brand; I don’t even consider it a motorcycle.’” Clifford recalled. “I think we broke that glass ceiling over the past 10 years. Most dealers know that if they have a trade-in they don’t want, they can send it directly to the auction for liquidity. This solves your customer’s problem by taking in the trade, and you put him or her on a new bike. Just like any dealer’s goal, NPA’s goal is to get more people riding new vehicles. I would say, in the last 10 years, it has really blown up to be successful.”
He added, “It’s customer retention. If you have somebody shopping in your dealership who can’t afford a new bike, but can afford something less expensive, you have to have a selection. If they have a good experience, they will come back and be loyal to your dealership, resulting in additional revenue. Not all customers want or can qualify for new. You have to have some options for that customer.”
While some dealers still aren’t in the pre-owned market, it’s safe to say that most are.
“I would consider pre-owned a very important part of a dealer’s business, having the product — the right product for his customer at any given time — is key for success,” Clifford said. “I think the focus should always be new first, but when the customer can’t purchase new, [the dealer] should have an alternative to offer a customer before they leave the shop.”
As Clifford pointed out, without new unit sales, there wouldn’t be used units in circulation for the industry to sell.
NPA’s recent growth
As pre-owned has grown in popularity at the dealer level, NPA has had to increase its presence and options for dealers to buy and sell units.
In mid-December, NPA announced it had opened its fifth location. The 35,000-square-foot Philadelphia-area facility will accommodate more than 500 units per month, and it includes meeting rooms, offices and condition report stations, like the other NPA locations. The Philadelphia location is NPA’s first in the Northeast, and it hosted its first live auction on Jan. 11.
“We love the Northeast. There is a robust motorcycling community and a strong dealer base who produce a lot of vehicle sales for several top OEMs. We’ve had relationships with dealers there for many years, and we’ve learned the regionality of Atlanta or Cincinnati wasn’t ideal for them. NPA knew if we had a closer location to our customers, that it would be a win-win for them and for us,” Clifford explained.
Within days of announcing the opening of its Philadelphia facility, NPA revealed that it had moved its Dallas location to a larger building in Flower Mound, Texas. That new 140,000-square-foot facility gives NPA 40 percent more space in Texas, and it will accommodate 2,000 vehicles.
“One of the reasons for that move was the opportunity with our OEM partners. Our old Dallas facility just wasn’t big enough for what we needed. The new location fits our operations much better and is more efficient for our customers. We love to be efficient in our processes, and the new site allows us to operate the NPA way,” Clifford reported.
These improvements, which have led NPA to increase its staff size to about 160, were due to Clifford’s leadership, Woodruff explained.
“NPA has grown in many ways the last few years, and Cliff has encouraged and supported our team to explore all avenues that complement our core competencies. Cliff has terrific relationships with dealers all across the country — his high standards for quality, integrity and customer service serve as the role model for the NPA brand and what customers can count on from us every day,” he said.
As Clifford explained, each location was added to make it easier for dealers to be able to buy units their customers are requesting and to sell those that aren’t ideal for their market. With five physical auction locations nationwide, NPA now offers five to eight live auctions per month, which are also simulcast, along with multiple online auctions running 24/7.
NPA not only helps the dealer body, but also the industry as a whole. The company moves units for a majority of the industry’s OEMs, along with the top powersports finance companies.
“I don’t spend much time thinking about our role as we are constantly on the throttle, but I hope we are doing what we can to improve the industry,” Clifford said.
Dedication to powersports
As NPA grows, the company has also stayed deeply rooted in powersports. NPA only sells motorcycles, scooters, ATVs, side-by-sides, watercraft and snowmobiles, along with adjacent boats and RVs. With its beginnings based in powersports, and its employees so deeply entrenched in the industry, powersports is the obvious place for NPA to stay.
Clifford also insists that the company is also committed only to wholesale auctions and won’t offer sales to consumers. “[Selling to consumers] would be completely against my belief that we are a body within the industry to support the industry. I wouldn’t want to compete for our customer’s customer,” he said.
Clifford sees NPA’s success resting on the success of the powersports industry as a whole. To that end, NPA continues to make efforts to improve the industry. In the past, NPA has sponsored a number of dealer events and training sessions. NPA brought the first live vehicle auction to Dealer Expo in 2011, and the company is now committed to helping AIMExpo grow.
“We’re excited that AIMExpo has joined forces with the MIC, and I hope to see unification at AIMExpo with more distributors, manufacturers and dealer attendance,” Clifford said.
Along with partnering with industry events, NPA has been providing wholesale data to dealers, lenders and OEMs, helping them understand depreciation models, and working with new lenders looking to get into the powersports industry, as well as dealers wanting to better manage their pre-owned inventory.
“When I say what’s next, I always look for ways to help the industry grow. We are in a unique position to work with multiple facets of the industry. I feel our biggest impact on the industry right now is providing the industry access to years and years of wholesale data. If dealers, lenders and OEMs can better predict what a vehicle is worth, both currently and in 90 days, then they will be able to better manage their business, cash flow, inventory levels, etc. This is very common practice in the auto industry but has not fully developed in powersports,” Clifford concluded. “At the end of the day NPA is driven to grow the industry we love, and I hope all the other companies share our same goal.”