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May 12, 2008 – California dealer group invites dialog on changing distribution

May 12, 2008
Filed under Columns

The California Motorcycle Dealers Association has successfully begun the process of enacting more comprehensive motorcycle dealer franchise protection with AB 2976 successfully passing out of the California Assembly’s Transportation Committee. The dealers association has at the same time left the door open for a nonjudicial resolution of the issues that prompted the legislation.
John Paliwoda, executive director of the dealer association, said “the chairman and other members of the Transportation Committee expressed their hope that the dealers and manufacturers would meet to negotiate a mutually acceptable settlement that might render the legislation unnecessary.”
Paliwoda has pressed on, offering to facilitate a meeting between the dealer association’s board members and senior officials of OEMs. Since, as was evident at the recent annual meeting of the National Council of Motorcycle Dealer Association, a number of other states are considering enacting more stringent franchise protection laws, the California dealers association has agreed to open the meeting to all state leaders if the OEMs would rather attempt to establish a national dialog, rather than just in California.

THE SKY IS REALLY FALLING

As I have expressed in previous columns, we really do have a very serious problem that is not going away. To be clear, there is still an opportunity out there and creative dealers of all brands are finding a way to sell product profitably. A couple of metric dealers I have known for a long time contacted me in the past couple of weeks and assured me they are still doing well in spite of all the problems in the industry and marketplace. They are doing it by spending more time focused on the front door and making it easy to buy. It is sure not because it has become easy to sell.
A little history lesson might be worthwhile.
At the end of the 1983 season, the dealer network was crammed with noncurrent ’81, ’82 and ’83 models. Everyone held their breath during Honda’s new model introduction in Dallas that September. What would they announce, what would their solution be? Honda’s answer was to take care of the Honda Motor Company’s problems and keep what they had on the water and in their warehouses moving. The new 1984 models carried a reduced price tag, and there was no mention of any programs for earlier models. By the end of 1984, a large percentage of Honda and other brand dealers were out of business. As a footnote, as old-timers will recall, I was bodily ejected from that particular Honda meeting in Dallas.
Is history repeating itself? What is the plan for the 2009 models? Is there a distribution plan? Is there any planned action to help with the movement of noncurrent models? Are metric OEMs ready to implement a sales and inventory driven distribution process?
There is another new problem that seems to be surfacing. While there certainly is no shortage of motorcycles and ATVs in the United States, some dealers are reporting reduced shipments or cancellations of hot models, Suzuki in particular. Is the weak dollar causing OEMs to divert prime product to other countries? This might just be speculation, but it is widespread enough for dealers to expect some real answers from OEM suppliers.
What this is not is a time for business as usual. There is a real need for dealers to make real change. Longer operating hours, expanded and well directed sales staff supported by creative promotion and use of all resources available to dealers is essential at the retail level.
Dealers making the adjustment need much better information from their OEMs and a distribution process that will support the increased effort that is now required.
It all starts with a real dialog. Hopefully the industry’s OEM executives will accept the invitation of the California Motorcycle Dealers Association. If not, then California and dealers from every state will need to get their legislatures to provide what should have come from within the industry.
Cheers, Ed. psb
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.

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