Issue link: https://read.dmtmag.com/i/719034
OPINION FROM THE EDITOR 10 • September 6, 2016 • Powersports Business www.PowersportsBusiness.com We here at Powersports Busi- ness always try to inspire success. Whether it's by attending dealer meetings (multiple times in August) to learn about the challenges you face or by accepting invitations to press rides to provide you with the inside scoop on the latest machines that will drive customers into your stores (those trips never get old!), we take pride in our connectedness. So it's with that sense of reality that I allow a dealer, and longtime PSB reader, to take over this spot for this edition of the magazine. Vaughn Penrod, owner of Penco Power Products in Kalispell, Montana, wrote to us to tell us about being a dealership owner in 2016. "My brothers and I started a powersports dealer- ship in a small tourist town in northwest Montana back in 1986, and let me tell you, times have changed in the powersports industry. "We started as a small engine, automotive and sharpening service center. Within a few years, we were accepted by Arctic Cat, and that started our powersports journey. We have now grown into a thriving dealership that carries Yamaha, KTM and Husqvarna. Our business has grown into an $8 mil- lion-a-year business. "I will say that the journey has been both rewarding and disappointing. Rewarding, for the obvious reasons of making a life and a living in such a beautiful place and raising our families here. Disappointing because it seems that most of the OEMs and suppliers have forgot- ten the key things that have helped them be successful in the industry. One of those key things is the dealers. "I guess I can relate it to our government from the standpoint of we, as dealers, don't hold much value any- more, yet we are a huge reason for the OEMs' and sup- pliers' success in the industry. The needs and health of the dealers are not a concern anymore. There have been times that we are in direct competition with the OEMs and suppliers. It is sad that greed has taken the place of common sense and good old-fashioned business. "There was a time that OEMs and dealers worked as partners in a two-step process to assure that the consumer got a good product with superior local ser- vice, and we all made a profit. Now, we, as dealers, are seeing margins that are getting lower and lower. We are seeing OEMs caring less and less about our health, even though we are the boots on the ground, so to speak, for them. If we don't sell enough, they just set up another dealer or put current new product in a box store or catalog at discount prices. There's no concern with our inventories or health. "I have watched so many OEMs and suppliers ignore the core business values that got them and the industry where they are today. We are challenged every day with figuring out how to compete with dis- counting and no MAP policies that are enforced. Also, each OEM and supplier can move more product at a quicker rate than the competition, with no concern for the health of the dealer that has made the investment to represent this product. "The industry has become so focused on moving product that it is ignoring all the key things that got them where they are today. Quality and good cus- tomer service is what will keep OEMs and suppliers in business. The dealers are still, and always will be, a very important piece of that puzzle. The manufactur- ers and suppliers are determined to force programs on us, as dealers, regardless of whether it is healthy for us or not. It is time that they step back and look at the big picture and think back on what got them to the place they are at — the dealer. "I represent a company that manufactures com- mercial mowing equipment that retails from $9,000 to $18,000. They have been in business for 25 years, and the same business beliefs that got them started are the same beliefs and practices that have built them into one of the most respected companies in the industry. The key has been great dealers giving great service with 100 percent support from the manufac- turer at all levels. "It is not about the number of mowers they sell; it is about the satisfaction of the end user. It takes all pieces of the puzzle to get that. "The dealer is a key piece of the puzzle for the sup- pliers and the OEMs. I feel they have forgotten that. Remember, boots on the ground. "Many powersports dealers, myself included, have spent millions of dollars on state-of-the-art facilities to represent the OEMs. Many times we are driven to take on this debt at the OEM's request, so we can be an elite type of dealer of some sort. In our case, it was a 'pilot store' in the year 2000. "What we are seeing in the industry is the sup- pliers and OEMs are so concerned with market share that they are creating programs that benefit them but force us to lower our profit margins to be competitive. Sometimes we even have to compete with internet pricing that they have allowed. Rather than have good, strong dealers that represent the product well and help retain the value of the prod- uct, they would rather flood the market with many dealers and create price wars, so no one can make any money. As a dealer, this creates less concern for the product. Why would a dealer want to represent that product? The product loses value and ends up in a catalog or on the internet at pricing below the dealer's original cost. "At one point, the two-step distribution was a very effective way of moving product and servicing the end user, while creating an exciting and thriving powersports industry. Now, we spend much of the time matching catalog and internet prices with no profit, just to move the product. It has turned into a cutthroat business." Penrod continues to share his thoughts about the plight of today's dealership owner. Read his letter in its entirety in the digital edition of the magazine, located at www.PowersportsBusiness.com. PSB Dave McMahon is editor in chief of Powersports Business. Contact him at 763/383-4411 or dmcmahon@powersportsbusiness.com. 1. Can-Am unveils its flagship Maverick X3 (video) 2. Sea-Doo releases 2017 lineup 3. Sea-Doo to launch 2017 lineup, watercraft contest 4. Polaris releases 2017 off-road lineup 5. Motorcycle demo accident at Sturgis Buffalo Chip 6. Honda announces 2017 lineup 7. Costco Auto Program adds Slingshot 8. Indian Motorcycle unveils Scout FTR750 9. Veracka family adds 6th dealership to group 10. 'Harley and the Davidsons' to premiere on Discovery Channel 11. Can-Am releases teaser image 12. Parts Unlimited and Drag Specialties return to Indy 13. North American off-road retailer to enter UTV aftermarket 14. Arctic Cat announces Q1 2017 results 15. CFMOTO USA names director of marketing The headlines above belong to the most frequently viewed articles from Powersports Business' three-times weekly e-news during the July 29-August 21 period. The number is based on the percentage of e-news viewers who clicked on the article's headline. To subscribe to e-news, go to www.bit.ly/PSBEnewsSignup. WHAT'S THE HOTTEST INDUSTRY TOPIC? Powersports Business blog ONLINE WITH POWERSPORTSBUSINESS.COM Leading industry executives and dealer consultants are among the contributors to PSB's blog. See below for recent blogs. Times have changed for this $8-million-a-year dealer Visit powersportsbusiness.com/blogs YouTube surpasses 150,000 views Powersports Business' YouTube channel has seen a lot of traffic in recent months, with new videos and product information supplied by our travels. In fact, the channel has gained more than 25,000 views since June, breaking 150,000 all-time views. Visit www.youtube.com/powersportsbusiness1 to view our latest videos and new unit releases. Managing editor Liz Keener's video of Can-Am's Maverick X3 reached 7,029 views (and counting) in less than a week. You're not going to want to miss it! GLENICE WILDER Vice President of Powersports, EFG Companies Today's American workforce could include four generations of employees, working together in a never-before- seen generational melting pot. One- size-fits-all communication does not work in today's dealership. LAUREN MCLEAN Public Relations Manager, Dealer Spike No doubt you've realized the impor- tance of marketing to your current and future customers with attractive emails that promote your dealership. In order to do this well, you need to stay up to date with your customers' lifestyles. FORREST FLINN Managing Partner, Powersports Management Concepts Dealership management is hard, but it doesn't have to be. Understanding what is important to your employees, in my opinion, defines your dealership culture, which in turn, affects your profitability. KIM ROCCO Director of Marketing, DX1 During micro-moments, we want to learn something, do something, discover something or buy something. And the key point to know about micro-moments is that consumers want and expect fast, relevant results. We here at ness success. Whether it's by attending dealer meetings (multiple times in August) to learn about the challenges you face or by accepting invitations DAVE McMAHON Vaughn Penrod has owned Penco Power Products in Kalispell, Montana, since 1986. PHOTO COURTESY OF THE DAILY INTER LAKE