September 24, 2007 – An issue worth crossing multiple time zones for
September 24, 2007
Filed under Columns
Three time zones in two weeks is more of a badge of merit rather than a badge of honor in this industry.
After all, traveling is part of any business cycle, particularly in powersports. So the “where” in a recent time zone hopscotch — from Providence, R.I., for the KTM dealer meeting to Madison, Wis., for the LeMans Parts Showcase to San Diego, Calif., for the Big Dog dealer meeting — isn’t as interesting as the “how.”
As in, how is one aftermarket or OEM event different from another? That’s a question we at Powersports Business are commonly asked because of the diversity of events we attend and the number of industry segments we cover.
What’s interesting, however, isn’t the differences between the events, but how, especially this year, their objective is so similar. No matter where we go, the same critical industry issue is being analyzed and reanalyzed: dealer profitability.
It’s an anxious issue for OEMs and aftermarket companies who are losing dealers, who are either shutting down a portion of their business or going out of business altogether. It’s happened this year in parts of the country and will happen in the near future because of the financial pressures affecting consumers and their shopping habits.
The cynics among us would say there is some good in all this, as a down business cycle will cull the worst of the dealers, leaving a little larger slice of the pie for the more deserving.
And perhaps there’s some truth in that. But the more important notion here is this idea of improving profitability. To have dealers strive to achieve growth in areas of their business that are not controlled by uncontrollable forces. Or in layman terms, get dealers to stop relying so heavily on new unit sales and grow their accompanying profit centers.
And to the credit of many OEMs and distributors, this subject has been front and center at a number of different events they’ve hosted this year.
Mel Harris, American Suzuki Motor Corp.’s vice president of motorcycle operations, addressed the subject at the company’s dealer meeting in June.
LeMans Corp. CEO Fred Fox touched on it repeatedly during the annual Parts Showcase in August. So did KTM North American President Jon-Erik Burleson and Big Dog Motorcycles CEO Sheldon Coleman at their respective dealer events.
Ducati North America CEO Michael Lock has taken the dealer profitability issue to another level this year, linking a percentage of dealer bonuses to participation in 20 groups. The effort at encouraging dealers to participate in meetings with their noncompetitors to trade best practices and improve overall profitability should be applauded.
Still, many dealers, Ducati and otherwise, are not interested in opening their businesses to external review and yes, scrutiny by their peers.
We know, thanks to the National Dealer Survey conducted this summer for Powersports Business, that currently less than 40 percent of dealers belong to a 20 group, dealer association or other group that provides tips or input on business practices. If we take the state associations out of that equation, the number of dealers who belong to 20 groups probably is closer to 20 percent and perhaps less than that, according to the 500-dealer survey.
Craig Kissell of Kissell Motorsports, State College, Pa., is part of that minority. The owner of a Ducati-Triumph-Kawasaki dealership is relatively new to the 20 group experience and still has a hard time justifying the time and travel expense it takes to attend such meetings.
That’s not to say his business hasn’t benefited from the 20 group experience.
“We’re trying to implement things that are very difficult,” issues that have been brought to his attention by the 20 group meetings, Kissell said.
Issues like making the service department profitable by changing technicians’ salary structure from how many hours they work to how many hours they bill, a decision that caused a near “mutiny” for Kissell when he implemented it earlier this year.
But with ongoing communication with his service department and the realization of what it could do to his bottom line, Kissell stuck with the change and is now benefiting from it.
It’s a real-life scenario that shows improving dealer profitability, while certainly not easy, is doable and that efforts by the OEMs and aftermarket companies to bring this issue to the forefront are paying off.
Of course, all of these efforts require a dealer to step forward, acknowledge their profitability in a particular segment is not as significant as it could be and then have the gumption to do something about it.
We hope more and more dealers will join Kissell and company, even if it means crossing time zones to do that.
Neil Pascale is editor-in-chief of Powersports Business. He can be reached at firstname.lastname@example.org. psb