OPINION – Tackling two of the industry’s vexing questions
August 14, 2006
Filed under Columns
Wil Garland’s question was justification enough that this column should be devoted to strong statements, regardless if they’re seen by you, the reader, as the honest-to-goodness truth or just my opinion.
Garland, American IronHorse’s CEO, had picked up a copy of the July 3rd Powersports Business magazine, turned to this page and read the headline, “Made in U.S.A. bias is slipping away.”
That produced the question:
“You think that?” Although he asked it in a friendly manner, his tone suggested that he, in fact, did not.
The magazine was perched on the side of a table on a terrace at a downtown Dallas restaurant as Garland was nursing a Coors in one hand and a cigar in the other. The breezy Dallas night ensured that the cigar smoke was shifting around nearly as quickly as our conversation, which had ultimately produced Garland’s pointed question.
It’s with that conversation in mind that I hesitantly shift away from using this space as a means to produce questions and, at least for this issue, delve into providing answers. Specifically, the answers to these two questions: How does a dealer get a better handle of the wholesale market, an increasingly important selling instrument for the industry, and just what is the most important issue currently vexing dealers across the nation? The answer to both questions could be summed up in just four words: Keep reading this magazine. But the longer answer is also the better one.
The wholesale question came to mind at an Eastern Powersports auction in May. A dealer working the auction talked about a frustrating, albeit common experience: A consumer walks into his dealership with a NADA publication and uses it as justification for why he will not buy a preowned bike at the dealer’s asking price. The bike’s price, the consumer points out, is above the retail value dictated by NADA.
It makes perfect sense, from the customer’s point of view.
From the dealer’s point of view, however, it makes no sense because the actual retail value of the bike had obviously increased from the last time the NADA data was published. In fact, the dealer said he had to buy the bike at a wholesale price that was at the same amount or slightly higher than NADA’s published retail value.
That obviously frustrating situation spurred me to look for a solution, and NADA provided it.
Starting this fall, NADA will provide Powersports Business readers a quarterly look at the average wholesale prices for the nation’s top-moving preowned motorcycles and ATVs. These average prices will come from information NADA gathers from powersports auctions, its own survey of more than 250 dealers, and from other wholesale marketers. That average price will be compared with NADA’s previously published retail price so dealers can see what the actual wholesale market for these vehicles is. And the difference can be surprising.
This new wholesale data also will allow the dealer to go back to the consumer and say, “Here’s the real value of that bike you’re looking at.”
Devoted Powersports Business readers will tell you that NADA has provided this information before in our annual Market Data Book. Now, we’ll be publishing it in the magazine as well on a quarterly basis, starting this September.
The 2006 version of the Data Book, which is due out this month, also holds the answer to the other question I promised to answer: What is the top concern keeping dealers awake at night?
We surveyed 400 dealers from around the nation and asked them that question, along with their thoughts on nontraditional brands that are gaining a bigger presence in the industry. Their answer? Well, I probably shouldn’t give away all the details, but I can tell you the answer is surprising, and we’ve broken it down by region and by three groups of dealers’ annual sales volumes.
Surveyed dealers were given 15 choices to pick as their top concern.
Since I’ve promised answers, I will report the top concern of a diverse group of dealers from Gart Sutton’s Best Operators Club, a 20 group. Fourteen members of that group, an experienced bunch representing dealerships in 11 states, responded to the top concern question. Six choose “interest rates” as their most challenging issue. Five selected “general economic conditions.” New units inventories, competition from big box and from Internet-based retailers also received limited picks as top concerns.
Rising interest rates and their damaging effect on the industry not only was a discussion point among dealers at Sutton’s 20 group, but also in Dallas with Garland — at least before he opened the Opinion page.
And for the record, my response to Garland was: The “Made in the USA” bias perhaps might not be slipping away for IronHorse’s current customers, but very likely those in the future.
Now that should generate some questions. psb
Send your comments or questions to PSB?Editor Neil Pascale at firstname.lastname@example.org.