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FINANCIAL 12 • May 5, 2014 • Powersports Business www.PowersportsBusiness.com STOCK MARKET WATCH DEALER FINANCIAL SNAPSHOT MARCH 2014 Overall Same Store Sales were up in all regions of the U.S. for March 2014, according to ADP Light- speed data from 1,376 dealers. Parts, however, was down in three regions, dropping the U.S. total down 1.2 percent. Major units were up 6.8 percent in the U.S. The West had the most improved month, up 8.9 percent overall from March 2013, with a 10.2 percent increase in major units. The South fol- lowed with a 6.3 percent overall increase. PARTS SALES Nationally, 628 dealers were up in parts, while 748 were down. SERVICE SALES In service, 715 dealers were up, and 583 were down. MAJOR UNIT SALES 631 dealers were up in unit sales, and 539 were down. NORTHWEST -6.4% Parts Department -1.8% Service Department 2.5% Major Units 1.1% Overall MIDWEST -3.9% Parts Department 8.1% Service Department 3.1% Major Units 2.5% Overall NORTHEAST 4.1% Parts Department 2.1% Service Department 7.2% Major Units 5.9% Overall SOUTH -2.2% Parts Department 5.6% Service Department 7.2% Major Units 6.3% Overall WEST 0.6% Parts Department 7.4% Service Department 10.2% Major Units 8.9% Overall UNITED STATES -1.2% Parts Department 5.4% Service Department 6.8% Major Units 5.7% Overall Stock Price Percent Company Ticker 4/11/14 Change Orbital Engine Corp. Ltd. ADR OE $2.63 10.4% Deere & Company DE $92.01 5.5% General Electric Co. GE $25.43 1.3% Dover Corporation DOV $80.78 1.2% Polaris Industries, Inc. PII $130.50 -5.6% Universal Technical Institute UTI $12.20 -6.2% Brunswick Corp. BC $41.66 -6.9% Speedway Motorsports, Inc. TRK $17.97 -7.8% Arctic Cat, Inc. ACAT $44.00 -8.2% ARI Network Services, Inc. ARIS $3.06 -8.4% POWERSPORTS BUSINESS WINNERS AND LOSERS www.PowersportsBusiness.com FINANCE Powersports Business • May 5, 2014 • 13 FOR MORE ON THE SAME STORE SALES DATA For more information on this report and other industry data, contact: adplightspeed.com/dataservices MARKET WATCH Change 4/11/14 from 3/14 % Change Powersports Business Index 294.350 -17.03 -5.47% Dow Jones Index 139.398 -0.34 -0.24% S&P 500 Index 123.579 -1.73 -1.38% Source: Wells Fargo Securities LLC 80 100 120 140 160 180 200 220 240 260 280 300 320 8/20/13 9/16/13 10/14/13 11/8/13 12/9/13 1/6/14 1/27/14 2/25/14 3/14/14 4/11/14 PSB INDEX* DOW JONES INDEX S&P 500 INDEX STOCK MARKET ACTIVITY * The Powersports Business Index has been adjusted to reflect the addition of TCF Financial Corporation (TCB) on 2/25/14. The customer interview, from an F&I perspective In previous articles, I have written about Power Ratings and rainmakers. This article is now the second part of a series that will explain the sales and finance process, from the finance department's perspective. The customer interview: A private dis- cussion between a finance manager and a prospective customer. The interview occurs right after the turnover from a salesperson. In every case possible, it should occur either before a sale is even agreed upon or immediately after- ward. The objectives of the customer interview are for the finance manager to set the customer at ease, learn a few things about the customer and what he or she is buying, and if needed, begin the transition from a cash deal into a finance deal. Most dealers with poor performing finance departments share one single factor during the sales and finance process: The customer interview either does not take place at all because there was never a turnover, or it takes place after the customer has already left the dealership. Why would a salesperson not want a finance manager to conduct an interview? When the interview fails, many great salespeo- ple or even sales managers/dealer principals believe they are protecting their customers and simplifying the sales process by "railroad- ing" the customer to make the process simpler and quicker. They collect a down payment check, place it in the deal folder, get a sign-off on the deal, tell their customer they will call them when the unit is ready for delivery, and sometimes even tell the customer the "out-the- door" price without any turnover to finance. In this case the salesperson may have what they perceive to be a great "deal," but long term, the dealership rarely benefits from these types of "deals." Even the customer may have been short changed. Given a proper turnover for an interview, the customer is more likely to purchase additional accessories, purchase finance products, finance their machine with the dealership, come back to the dealership for service, refer their friends and relatives to the dealership for additional business and buy their next machine from the dealership. Call it a ride on a freight train that costs as F&I SOLUTIONS BRIAN GALLMEIER much as $5,000 per occurrence! Every time a salesperson is allowed to take a down pay- ment or payment in full without a customer interview by the finance manager, it costs the dealership $5,000. $5,000 in opportunity costs far exceeds the profits made on a skinny cash deal where the dealership may never see the customer again, or the customer may never use any of the dealership's services. Salespeople so often still get their commis- sions, even though they may be the only one benefitting from the transaction. A STRONG CUSTOMER INTERVIEW Here's the start of a list of what exactly a finance manager can gain from a strong cus- tomer interview. Tell your finance managers to just be them- selves and ask the "5 Ws and How" to start: who, what, where, when, why and how? It's never comfortable to go through the entire list, but gain as much information as possible during the conversation. Start with general conversation and see where it goes in order to get to know the customer. Try and earn the right to ask a few more details about the customer and their riding habits. Who will be the primary rider of the machine? See Gallmeier, Page 13 Who else will be riding? What are you buying today? What are your maintenance capabilities? How often do your clean your equipment? Do you like to clean it, or is it more of a hassle? Have you purchased from us before? Where else have you purchased? Where do you plan on keeping your machine? How about storage? Will you be storing outside or inside? Is it heated and air conditioned? Where will you be riding? What restaurants or bars do you stop at on your trips? Do you go to your favorite GALLMEIER CONTINUED FROM PAGE 12 BRP Inc. (TSX: DOO) on March 28 reported its financial results for the 3- and 12-month peri- ods ended Jan. 31, 2014. All financial informa- tion is in Canadian dollars. "I am pleased with our results for our first year as a publicly-traded company," said José Boisjoli, president and CEO. "The hard work of our employees has yielded good results. Revenues and normal- ized net income for fiscal year 2014 progressed by 10 percent and 15 percent respectively, and Year- Round Products have sur- passed Seasonal Products in terms of revenues for the first time, a testament to our growth strategy in these categories and the continued expansion of our dealer network." Commenting on the outlook for fiscal year 2015, Boisjoli added: "In North America we are exiting an exceptional snowmobile season with dealer inventories at an all-time low. This situ- ation has caused shortages of snowmobiles at certain dealers, but it certainly bodes very well for the next wholesale season in the second half of the year. The coldest winter in over 30 years in North America and the geopolitical uncertainty in Russia will have some impact on product deliveries early in the year, how- ever I am confident we can continue to grow revenues and earnings with a strong product portfolio, a large geographic diversification and some exciting upcoming product news." Revenues increased by $111.4 million, or 14.1 percent, to a quarterly record of $902.9 mil- lion for the three-month period ended Jan. 31, up from $791.5 million from the year-ago period. The increase in revenues includes a favorable foreign exchange rate variation of $53 million, mainly related to the strengthening of the U.S. dollar and the Euro against the Canadian dollar. Revenues increased by $297.9 million, or 10.3 percent, to $3.19 billion for the 12-month period ended Jan. 31, up from $2.89 billion from the year-ago period. The revenues were negatively impacted by the exit of the sport boat business in fiscal year 2013 that accounted for $74 million in revenues for the year-ago period. Excluding the exit of the sport boat business, revenues would have increased by 13.2 percent, or $371.9 million. The increase in revenue includes a favorable foreign exchange rate variation of $114 million, mainly related to the strengthening of the U.S. dollar and the Euro against the Canadian dollar. PSB BRP tops $3 billion in annual revenue P12x14-PSB6-Finance.indd 12 4/23/14 10:00 AM