By Karin Gelschus
A country with an appetite for large-displacement motorcycles plus a weak U.S. dollar equals a purchase hay day for some foreign consumers, and the resulting growth in the export market of preowned bikes.
There are numerous factors affecting the market’s growth, but the weakening of the U.S. dollar likely has had the biggest impact.
Currently, U.S. exporters are shipping preowned bikes across the globe. Exporters like Jim Dickenson, president of Action Fours in Santa Ana, Calif., usually sell to two or three countries at a time but have worked with numerous others during the years. Dickenson says he’s working currently with the United Kingdom, Germany and New Zealand.
“In the past 18 years we’ve been doing vehicles, I’ve done business with 18 or 19 countries,” he said.
The United Kingdom and New Zealand are two countries another exporter, ABD USA Enterprises, works with. ABD USA President Andre Vandenberg says he also works with a few others and adds that most of his business is through referrals.
Other exporters interviewed also say they get most, if not all, of their clients through referrals and word of mouth. Dickenson of Action Fours says the next biggest way is through shows and sales trips. “We rarely get customers out of auctions,” he noted.
John Hayden, co-owner of Hayden Agencies in Nova Scotia, Canada, doesn’t get a lot of customers out of auctions, but he does get the majority of his product from them.
“I usually buy them (powersports) from auctions. Because I run a car dealership, I’m already down [in the U.S.] buying cars, and when I’m there, I usually buy a bunch of other stuff,” he said. “It’s just a compliment of what we’re already doing. Because [Canada’s] dollar is stronger, it makes it feasible to purchase those vehicles.”
The exchange rate for many countries is causing increases in exporters’ business. Vandenberg says he’s already sold 15 percent more bikes than all of 2006 and is on track to sell an additional 10 percent more bikes this year.
An exporter who wished to remain anonymous says his company should move about 5,000 units this year, but some of his larger clients move between 13,000-15,000 units annually.
“These deals are fairly attractive; otherwise I wouldn’t spend the time and money to do it,” Hayden said.
All exporters interviewed say the market is growing because a number of different factors. However, the weakness of the U.S. dollar is playing the most prominent role.
“[The weak U.S. dollar] is a big factor, but surprisingly it’s not the only one,” said Dickenson. “The big No. 2 reason is supply. Where else are you going to find late-model everything? Other factors are availability and cheap ocean shipping.”
THE FINE PRINT
Dealing with two or three countries simultaneously can be tricky in managing different laws and regulations.
“You really have to know what you can buy and bring across; what paperwork is needed because it’s very strict,” Hayden said. “If you don’t have the right paperwork and you have a load of four-wheelers or snowmobiles and border officials say it won’t cross, it won’t cross. That’s it; you’re done. Your paperwork is key.”
Hayden adds with all the laws and restrictions, sometimes it’s impossible to complete a transaction.
“Some states don’t title off-road vehicles like snowmobiles and ATVs,” he said, “and that’s a huge hurdle because you just can’t export those from U.S. into Canada.”
Vandenberg says a franchised dealer can lose its franchise if anything is sold to an exporter or if the dealer exports new product.
He notes Honda was recently successful with a lawsuit that will ban any new bike imports into the European Union by anyone but the OEM. However, that is still being challenged.
Paperwork is crucial in the export business, but unfortunately, it only goes so far. Exporters have to trust consumers, colleagues, even competitors to complete transactions.
“One of the fundamental things is trust because you simply cannot do this kind of business the way that more official exports are handled. Once you get the banks and lawyers involved, it becomes a nightmare,” Dickenson said. “Today I’m looking for probably $300,000 to be transferred into our company account on the strength of telling someone we bought a bunch of stuff for them, and yes, we promise we’re going to ship it to you. It’s certainly not for everyone.”
Vandenberg agrees. “Most of the people I do business with I’ve done business with since the ‘80s.” He adds he’s developed relationships with his competitors by obtaining certain motorcycles his or his competitors’ clients request.
“Technically we are competitors, but if they need something and I can get it, I will because I know ultimately the favor will be returned,” he said. “We’ve worked together for many years. We trust each other.”
The U.S. dollar isn’t going to stay weak forever, so what are export businesses planning to do when it turns around?
Dickenson says he might retire. “You can’t do this kind of business and take a long-term view,” he said.
However, some believe exporting can be a long-term business because other countries sometimes have shortages of certain models or brands.
Being based in Canada, Hayden says they’ve always purchased powersports in the United States even when the dollar was high. So even if the dollar rebounds, business shouldn’t slow.
Vandenberg left the export business in the early 1990s because the U.S. dollar was strong. Conversely, he plans to stay in the business this time even when the U.S. dollar comes around.
“In the past, we exported motorcycles faster than we could get them because we created a vacuum in the market,” Vandenberg explained. “There are a lot of factors that came into play during that time, so when the dollar does get strong, I will sell more domestically than what I do internationally.”