Issue link: https://read.dmtmag.com/i/164037
September 9, 2013 • Volume 16, Number 11 • $3.99 INSPIRING SUCCESS THROUGH MARKET INTELLIGENCE www.powersportsbusiness.com 1-800/848-6247 FOCUS PSB 10 • September 9, 2013 • Powersports Business www.PowersportsBusiness.com This issue: Finance & Insurance Next issue: Distributor Shows Floorplan financing data shows aged product on the decline GE Capital CDF reports 'healthier' inventory mix BY DAVE McMAHON EDITOR IN CHIEF As Sameer Gaur accurately portrayed the 2013 dealership floorplan financing landscape, August was a much better time to be discussing inventory lending than earlier in the spring. Gaur, president of the Motorsports Group at GE Capital Commercial Distribution Finance, has liked what he has seen from the industry in recent months. "It feels a lot better than it felt last year at this time," he said. SAMEER GAUR "There's quite a bit of positive momentum from a model introduction standpoint; we've all seen it. That's certainly helping a lot in terms of positive sentiment. All of the OEMs that have released product so far have strong portfolios of product, so that's helping." Gaur noted that liquidations have "acceler- ated nicely" in the last few months. "It was an interesting first half of the year," he said. "The snow season had a bit of an extension because the winter lasted a little bit longer. That helped the snowmobile dealers, but it put a slow start to the spring and therefore the motorcycle, ATV and side-by-side selling season. "So the start was soft, but it's stepped up the last few months. The acceleration is there, and the sales have gotten stronger." Gaur, sharing data exclusively with Powersports Business readers, noted that GE Capital CDF statistics show that product two years and older on showroom floors "is tight, in the 5-7 percent range. It was at the higher end of that range last year, and it's at the lower end of that range now. That's an important indicator that it's somewhat healthier, better product." Inventory turns have slowed somewhat. "They were at the top of 2.5-3 times a year last year, and are in the middle of that range now," Gaur said. "Anything above 2.5 is good. I think it's more a reflection of the lack of product last year, which made the liquidations spin faster. Now you have a healthy mix of product, so naturally turns will slow a little bit." Product mix — both new and pre-owned — will give well-inventoried dealers an edge. "It's a passion-driven industry, so you want to have that right mix where you can make the sale when somebody wants the product, as opposed to an order basis," he said. Pre-owned floorplanning has taken a particularly sharp rise among GE Capital dealer partners in 2013. "In the pre-owned space, our activity is between 1.5 and 2 times what was last year," Gaur said. "With respect to listening to the dealers, we've made improvements on our offerings from a systems standpoint. About 95 percent of our advances are completed online, which makes it so much simpler for a dealer to submit. Based on feedback from dealers, we made the investment to facilitate that process. PSB: FOCUS F&I SEE PAGE 10 with F&I Growing the pie Keep your customers captive, offer more services and make money by outsourcing finance and insurance BY TOM KAISER SENIOR EDITOR Justin Ogg is an aggressive salesman. After switching jobs and landing at Chopper City in Fridley, Minn., six months ago, he had a goal of drastically increasing the store's recent sales performance, which had hovered around 200 units per year for the last few years One of Ogg's first moves at the small, onesalesman dealership on the north side of the Twin Cities metro area was to add an outsourced finance and insurance provider as a way to attract and retain more customers. From Ogg's experience at other stores throughout his motorsports career, he knew all of Chopper City's potential customers could just as easily buy their next Polaris or Boss Hogg at any number of competing dealerships in the area — most of which offer in-house or outsourced F&I services. Furthermore, due to the smaller dealership's size, adding a full-time finance manager wouldn't be a profitable possibility. "It was a no-brainer to bring [F&I] over here just to have an extra way of getting somebody financed," Ogg said. "You want to try to capture the excitement and emotion when they're here and ready to go." Whether it was the changing of the guard or the addition of F&I, Chopper City has sold 130 units within the last four months, almost double its historic sales volume. And, with a deal that splits F&I revenue 50/50 with its partner, Web Finance Direct, Chopper City has also added an another source of income to its bottom line. "Most small-town dealers don't want to do anything with financing, because they don't know what it can do for them," Ogg said. "It can be very tedious, time-consuming work. People that have been in it a while, they don't know what they're missing." DOTTING THE I'S Peter Jones has a thick motorsports resume. He's a partner at IBSG Dealer Services, which provides consulting, training and resources to powersports dealers across the country. Part of his IBSG work has included F&I training for individual dealers and the industry as a whole, including a seminar at the upcoming AIMExpo. Currently, Jones is serving as the acting general manager at Tousley Motorsports, a large-format dealership in White Bear Lake, Minn., also on the north side of the Twin Cities. While Tousley is big enough to have two and a half finance managers on site, Jones has worked with dealerships of all sizes, and advocates that everybody offers their customers some form of F&I, whether from inside or outside the store's four walls. "Outsourcing is a realistic idea for a smaller store where they don't do enough business to justify having someone dedicated to it," Jones said. "I think it is a much better alternative than … just having the salesperson do it, and the reason why is because there are so many compliance issues that even larger stores have trouble staying on top of what's required." In the wake of 9/11, the Patriot Act and additional Great Recession financial regulations, Jones spends a lot of his time explaining the importance of immaculate legal compliance to dealers. Adding complicated finance and insurance work to a salesperson's job is risky because of the dangers of non-compliance, as well as the reality of pulling that person off the sales floor to draft paperwork and communicate with lenders. "Selling pre-owned creates more traffic, and if we are behind the scenes helping them finance the trade-in and therefore create a new sale, and keep that somewhat seamless, that facilitates the new product coming to the table. It allows the dealers to say 'I can take your trade-in.'" GE Capital CDF continues to work with OEMs to help create floorplanning programs for their dealers. "We've seen positive momentum building, and it's great to see all the new product coming in," Gaur said. "There's a lot of running hard behind the scenes that we're doing with our OEM partners. We feel, and our dealers feel, really, really strong when you see new product coming in. We're gung-ho about making sure we keep that system fluid." PSB $1,200 A typical $20,000 unit sale can bring in more than $1,200 in additional profit Adding an exclusive F&I manager to the payroll is a difficult proposition for small or mid-size stores, especially when such professionals are expensive and difficult to recruit. Jones estimates that a store should consider such a move when it is selling 60 or more units a month. "Once they hit about 60 to 70 units a month, I think they should have a full-time F&I manager," he said. "At 60 units, that's $24,000 a month (assuming $400 in per-unit F&I profit); that's more than enough to cover the expense of a finance manager." In choosing an F&I provider, Jones recommends stores conduct thorough due diligence by reviewing the company's reputation online, and also talking to other dealer clients. The priority, he said, is making sure the firm will be a true partner in ensuring physical compliance, like computer security, video and audio See Outsourcing F&I on Page 21 Demo magic rts orspo th ot son Mraffic wi Claw itors t ds on ed lanyar m or col Minnesota dealership creates a slew of sales with the first dealer Indian Motorcycle test rides. SEE PAGE 5 Dig this Arctic Cat reaches a niche market with SPEEDPoint equipment for hobby farmers and hunters. SEE PAGE 22 HAVE YOU EEN HELPED? B BY LIZ KEENER MANAGING EDITOR Willkommen KTM dealers venture to Austria to visit the OEM's factory and test ride bikes. SEE PAGE 26 NEWS: Dealers on hiring spree . . . . . . . . . . . . . . . . PAGE 4 FOCUS: Outsourcing F&I. . . . . . . . . . . . . . . . . . . . . PAGE 10 CYCLE: Wolf Scooters roll in . . . . . . . . . . . . . . . . . PAGE 28 PWC: Yamaha debuts new engine . . . . . . . . . . . PAGE 32 speak to a salesperson and which had already been bombarded by everyone on staff. So when JC Cowles became sales support manager, a position that serves as the liaison between the sales manager and the sales staff, he made it his goal to better manage the store's showroom traffic. What he developed was a lanyard system, whereas each of the store's 12-14 salespeople has their own colored lanyard to denote which customers they're working with. "It's to control the traffic in the showroom, and it's to make sure everyone is taken care of," Cowles said. Every morning, each salesperson starts with four or five of his or her lanyards. He attaches his business card to the lanyards and carries them around the floor. Then, when a customer walks in, the salesperson introduces himself. If the customer is ready to buy and set on a certain model, Months ago, when customers walked into Clawson Motorsports in Fresno, Calif., it was hard to decipher which shoppers had yet to the salesperson immediately helps that customer and proceeds through the sales process. However, if a customer comes back with the typical "just looking" retort, the salesperson moves to the lanyard system. The salesperson collects the customer's name and contact information for the CRM, then hands the customer a lanyard. "If you've got a customer that you're working with that wants to look around, the salesperson offers them a lanyard and tells them, 'This is my lanyard, put it JC COWLES on, and that way, no one else will bother you,'" Cowles explained. This gives the customer the opportunity to peruse the more than 700 units in the showroom without being bothered, while managers are assured they've already been approached. "One of the worst things there is as a customer is to have a salesperson walk up every two minutes. 'Can I help you?' 'Can I help you?' 'Can I help you?'" Cowles said, adding that the lanyards prevent salespeople from approaching a customer that has already been helped. Once a customer has a lanyard, the salesperson See Lanyard on Page 5 Suzuki's American rebirth just getting started Suzuki's Rod Lopusnak on the reorganization, product plans and a new beginning BY TOM KAISER SENIOR EDITOR From the outside looking in, things at American Suzuki Motor Corporation appeared bleak during the depths of the Great Recession. No dealer meetings, staff layoffs, limited product introductions, cuts in the ad budget and an auto- motive division that was dragging the rest of the company below the waves all signaled trouble to the outside world. It was a dark time for the entire industry, but many watchers predicted that Suzuki would pull up stakes and abandon the American market altogether. While the company's auto business is strong in Japan and many emerging markets, its thin lineup and weak American dealer network proved too steep a hill for the company, which had been selling cars in the United States since the introduction of the 1986 Suzuki Samurai. Following its Chapter 11 bankruptcy announcement last November, American Suzuki Motor Corporation officially exited the U.S. auto market, and ASMC was dissolved, with powersports assets sold to the newly organized Suzuki Motor of America, Inc. Those inside the company, as well as its dealers, saw the news as the rebirth of a major powersports brand, while uncertainty and rumors continue to circulate among the enthusiast public. This year, a string of impressive sales gains throughout SMAI's portfolio have breathed new life into the company, and its recent announcement as a founding OEM participant at the inaugural See Suzuki on Page 6 HOTNEWS "Get Best Price" feature now available on CycleTrader.com CycleTrader.com, a division of Dominion Enterprises, has released "Get Best Price" — a new option available P01x07-PSB11-News.indd 1 for dealer inventory listings on CycleTrader. The new feature assists dealers with map pricing and increases the likelihood powersports shoppers and buyers will interact with dealers on the site. Dealers can activate this free feature in their Inventory Management Tool (IMT) and list both a primary asking price and a secondary reduced price for their units. Once entered, only the main asking price and a "Get Best Price" button will appear online to consumers. When a consumer visiting CycleTrader.com selects "Get Best Price" for a unit, a form will be displayed for the See Hot News on Page 3 8/28/13 10:01 AM