Feb. 11, 2008 – Despite economy, profit opportunity has never been better
February 11, 2008
Filed under Columns
With all the talk of new technology, this is a first for me. This column is being written on a Blackberry as I hang out in the Dallas-Fort Worth airport after the Harley-Davidson winter dealer meeting. Hope my thumbs survive, and that Editor Neil does not have any problems translating this to the printed page.
At the Harley meeting, it was clearly the best of times meeting the worst of times. I talked with many dealers who had record years and many who were way down in sales and margins.
The Motor Company kicked off the conference with an outright apology for not meeting production commitments on new models. The new allocation system, which is a genuine effort to put the right bikes in the right place at the right time, was severely impacted when anticipated shipment of product didn’t happen.
The change in the marketplace and the need for dealers to also change was a central theme of the meeting. The outgoing chairman of the dealer advisory council was quite blunt in saying, “change or get out.”
My message to anyone who would listen was the profit opportunity has never been better. Yes, I know the industry was down more than 10 percent for 2007, with ATVs and off-road hardest hit. The 4 percent drop for Harley dealers amounted to a much bigger drop in dollars and profits, but before Harley-Davidson dealers start feeling sorry for themselves, they should try being a metric dealer for a while.
There are many things beyond the control of dealers, but we need to, when buried in a whole lot of horse manure, go looking for the ponies. We do have the highest quality product we have ever offered to the public. We can offer the best financing options ever; there are lots of good people who would like to go to work for you; and most importantly, we have learned how to make money. You do not have to be totally at the whim of the marketplace or completely at the whim of your OEM.
By the time this column is published, I will be an investor in six retail dealerships. Connie and I have put every penny we have where my mouth is. I’m not saying this is the easiest time to be a dealer, but it is the best for those who can find and ride the ponies under the horse manure.
I have changed this year’s acquisition conference to be more focused on turn around. That certainly is what a buyer of most dealerships for sale will need to do and since it is clearly a buyers’ market, a dealer might be better off being a buyer rather than a seller. The exercise should be to buy your dealership from yourself and do what the new owner will do.
I was invited to speak Jan. 30 at the Canadian National Dealers conference in Toronto. I was asked to speak about franchise laws, which our brother and sister dealers to the north do not have. I shared what we have accomplished during the years, bringing about a little more equality of commitment.
I also stressed, as I have done with other audiences, that dealer franchise laws that register and regulate the distribution of motorcycles and ATVs is very much in the interest of the public. It is a strong message that takes the moral high ground and shares the awesome responsibility committed dealers assume every time we deliver a motorized product to a customer. Motorcycles should not ever be allowed to be an off-the-shelf item.
I also shared my best of times message. Franchise laws do bring about more equity in the dealer agreement. However it will never be the OEMs’ responsibility to make you profitable. Canadian dealers have a harder hand dealt to them. I didn’t make light of the challenges they face, particularly if you consider their southern dealers are north of Buffalo. Like U.S. dealers, find and ride the ponies and never forget that the most important economic indicator is what you do with the next customer that walks in the door.
Ed Lemco has been involved with the powersports industry for more than 30 years. Lemco, the former owner of Lemco Management Group, is the founder and executive director of the National Council of Motorcycle Dealer Associations. Lemco currently operates a call center for dealers in St. Croix. psb