The following article was submitted by Powersports Business contributor Mark J. Sheffield, a former dealer principal and current dealership strategic advisor.
Over the last couple of months I’ve had many discussions with dealers about the prospect of bringing on a line of electric bicycles. Some of this is driven by these dealers seeing more and more of these bicycles on the road, and some due to the fact that powersports OEMs have been struggling to keep showrooms stocked. Everyone needs something to sell.
I remember in the early 2000s when the scooter invasion took off. All of a sudden, the annual trade show in Indy was dominated by scooters from hundreds of Asian companies. Many of them were so cheap that I failed to understand how anyone could even build one for that price. Most were only sold by the container load, and I could barely pronounce any of the brand names.
Over the next couple of years, dealers found out why they paid more for Japanese scooters. Many of the imports fell apart the second you sold them (some before you sold them), and parts availability was almost non-existent. In the end, most of these companies disappeared, dealers gave away or discarded excess stock, and the scooter industry returned to what it once looked like. You get what you pay for.
When it comes to electric bicycles, I have a concern that dealers will go through the same cycle that we went through with scooters. There are some established brands out there that are making high quality bikes with top components on them. There are also a lot of brands I have never heard of. With battery technology advancing so rapidly, there is a good chance that many of these models will be obsolete by the time they hit dealer showrooms.
My second concern about these bikes has to do with the dealers that want to sell them. During the scooter invasion, at least dealers were selling a product they were familiar with (engine, gas, tires, brakes, etc.). Bicycles on powersports showrooms are going to sit in the no-man’s land between the Sales and Parts departments. Not expensive enough for the Sales staff to worry about. A specialty product that many parts employees don’t know much about. And who is going to work on them, I don’t see many customers willing to pay $140 an hour to get a tube changed in the service department.
One of the brand names that we all know was not willing to set up powersports dealers to sell their electric bicycles. They had tried this in the past, and found that bicycles in a powersports dealership just got forgotten about. Recently, they have changed their tune on this, and have set up a few dealers. Whether or not this works out, only time will tell.
Over the last eight years, two of my friends in the powersports industry had sons who were bicycle enthusiasts. In both cases, they tried setting up a store in a store, allowing them to sell the bicycles on the powersports showroom or the parts department. In both cases, the results were lackluster. Also, in both cases, when the kids moved the bicycle business out into standalone locations, they performed exceedingly well. The kids had the talent, but the powersports showroom was just not the place to make it happen.
My final concern is that five years from now, there are going to be a lot of powersports dealers with electric bikes sitting in the corners of their showrooms. The bikes will be new, but the batteries will be dead, and replacing those batteries will cost more than the bike originally did. What happens then?
For now, I’m recommending dealers stay in their lane. Our industry still has room to grow, and we are just in the early days of seeing electric motorcycles. Zero Motorcycles and Energica Motor Company are making it work, and now that Polaris Industries and Zero are partnering up, I’m sure we will see new products coming down the pipe. One of the dealers I work with is an Energica dealer. He sells all that he can get, there is no negotiation about the price, and the quality is solid. When we talked last week, he said he could easily sell 300% more than his current allocation.
We are past the halfway point in the pandemic, and business will start to settle back down. You can play on the fringes if you want, but I think we can all find additional ways to grow our dealerships working with the vendors and products that we know.
If you are a powersports dealer, what are your thoughts about electric bicycles?
Mark J. Sheffield is a U.S. Army Veteran and former dealer principal who currently facilitates multiple 20-groups for Spader Business Management. When he’s not assisting with dealership performance, he can be found at the rifle range or digging holes with his backhoe. Contact him at MSheffield@Spader.com.