Issue link: https://read.dmtmag.com/i/698493
FINANCIAL Ride Today Acceptance filling void in powersports space BY LIZ KEENER MANAGING EDITOR In 2012, Encompass Consulting employees began looking into sub-prime and non-prime lending options for powersports customers, and they came up nearly empty-handed. Encompass has been helping automotive deal- ers start their own cap- tive finance companies, offering lines of credit since 2004. Some of its a u t o m o t i v e c u s t o m - ers were looking for sub-prime and non- p r i m e p o w e r s p o r t s financing, but it was hard to come by. With this discovery, Encompass started financing motorcycles to sub- and non-prime customers in the New England market, and found success within the first three months of launching the program. Research was then done to assess the need for these services nationwide. Not surprisingly, the need was apparent. "When we dived into motorcycles very deeply, we couldn't find chal- lenged credit lenders for the sub-prime industry," Richard Snyder, direc- tor of Captive Finance for Rider Today Accep- tance, told Powersports Business. When new owners took over Encompass in January 2015, they were interested in further exploring sub-prime and non-prime lending in the powersports space, and Ride Today Acceptance was created. "They saw a tremendous demand because there really wasn't a whole lot in the market. And about half of the country, believe it or not, would fall into that non-prime or sub- prime definition based on credit," said Jason Sheeley, national sales manager for Ride Today Acceptance. "Compared to the automotive industry, where there are maybe 1,000 lend- ers, there were probably not even a half-dozen nationwide lenders [in the sub-prime space in powersports]. Because of our experience in doing it for our captive dealers on the admin- istrative side, we just saw a large open market there that really hadn't been tapped. It's a very underserved market." About half of all powersports customers fall into the non- or sub-prime category, Sheeley said, so dealers who don't have that option for retail financing are losing about 50 percent of their potential buyers. "To get a powersports vehicle, it's a higher risk than an automobile, so when lenders' guidelines are looking at powersports, they're much more stringent when compared to an auto. So yes, it's always going to fall within that 40-50 percent of the industry coming into powersports will be in the sub-prime market," Snyder explained. Ride Today Acceptance offers loans on model year 2001 and newer new and pre- owned on-road, off-road, metric and V-twin motorcycles, as well as ATVs and side-by- sides. Ride Today works with franchise and independent dealerships, from those like five- store group American Heritage Motorcycles to smaller shops. Ride Today currently serves 28 states, with the goal to be available in 40 states by the end of 2016. More than 200 dealers are now working with Ride Today. Sheeley said Ride Today Acceptance offers dealers the chance to earn sales from customers who are turned down by traditional lenders. "The number that I've been told by bigger 16 • July 11, 2016 • Powersports Business www.PowersportsBusiness.com Auto-based lender enters sub-prime market STOCK MARKET WATCH DEALER FINANCIAL SNAPSHOT MAY 2016 Same Store Sales for 1,576 CDK Global Recreation dealers in May were down 5 percent overall in com- parison to sales in May 2015. The Northwest and Northeast regions experienced decreased sales in all four categories. The Midwest, West and South saw one increased category each; major units were up 0.4 percent in the West; service department sales grew 0.1 percent in the Midwest, and service was up 1 percent in the South. PARTS SALES In parts, 566 dealers increased and 1,010 decreased. SERVICE SALES Service sales saw 718 dealers were up, while 794 were down. MAJOR UNIT SALES 628 dealers were up, while 784 were down in major unit sales. NORTHWEST -7.9% Parts Department -2.0% Service Department -0.4% Major Units -1.7% Overall MIDWEST -1.4% Parts Department 0.1% Service Department -2.6% Major Units -2.6% Overall NORTHEAST -16.0% Parts Department 9.0% Service Department -17.4% Major Units -16.5% Overall SOUTH -4.5% Parts Department 1.0% Service Department -2.9% Major Units -3.7% Overall WEST -2.8% Parts Department -0.6% Service Department 0.4% Major Units -1.5% Overall UNITED STATES -6.0% Parts Department -1.4% Service Department -4.4% Major Units -5.0% Overall Stock Price Percent Company Ticker 6/17/16 Change Arctic Cat, Inc. ACAT $16.69 17.2% Deere & Company DE $86.00 10.6% Dover Corporation DOV $70.27 8.7% ARI Network Services, Inc. ARIS $4.10 7.9% ArvinMeritor ARM $8.63 5.5% Honda Motor Corp. ADR HMC $25.95 -3.2% TCF Financial Corporation TCB $13.07 -4.3% Universal Technical Institute UTI $3.02 -5.6% Marine Max, Inc. HZO $15.75 -6.6% Spy Inc. XSPY $0.10 -9.1% POWERSPORTS BUSINESS WINNERS AND LOSERS MARKET WATCH Change 6/17/16 from 5/20 % Change Powersports Business Index 229.980 1.44 0.63% Dow Jones Index 153.736 1.52 0.99% S&P 500 Index 140.970 1.29 0.92% Source: Wells Fargo Securities LLC 0 50 100 150 200 250 300 11/6/15 12/4/15 12/31/15 1/22/16 2/19/16 3/11/16 4/8/16 4/29/16 5/20/16 6/17/16 PSB INDEXED VALUE DOW JONES INDEXED S&P 500 INDEXED STOCK MARKET ACTIVITY FOR MORE ON THE SAME STORE SALES DATA For more information on this report and other industry data, contact: cdkrecreation.com/dataservices See Ride Today, Page 18 RICHARD SNYDER JASON SHEELEY