May 24, 2010 – A puzzling development over dealership marketing

Frankly, I’m confused.

You see, a national survey conducted for Powersports Business earlier this year showed a real split among dealers about their 2010 retail sales forecast. Most thought major unit sales would rebound, but there were also a significant number of dealers who weren’t quite so sure. And yet, dealers, on average, were not planning to do more special marketing events than the previous year.

What gives? How can an enthusiast industry rebound sufficiently without a regular dose of enthusiasm pumped into its retail bloodstream?

Consider this: Most dealerships do not plan a special event at least once per quarter. That is the finding of a national survey conducted by Irwin Broh and Associates for Powersports Business. The survey, conducted in January, queried 150 dealerships.

Of those dealerships, more than 68 percent said they planned on holding a special marketing event less than four times this year.

Plus, only about one in four dealers said they were planning to increase the number of special marketing events in 2010 compared to a year ago.

And yet, as an industry, we’re stuck in a less than an ideal situation here. Too much of our inventory is aged and doesn’t have that “new model” magic. That gotta check it out, gotta sit on it craving from the enthusiast public.

So really, special events have to capture that interest, that fascination with the pastime if we’re to keep the excitement level up.

So what gives? Why aren’t we doing more big events?

Many dealerships will point to a reduced marketing budget and a smaller staff. The budget reduction is expected, but at the same time the marketing dollar goes much farther today than it did just a year or two ago. One dealer told me earlier this year that he is refusing to sign radio contracts for open house events unless that radio station commits to sending a certain number of their employees to the dealership event to help with mundane, but important tasks.

Likewise, there seems to be more interest at the OEM level to push demo rides, a practice that has constantly been ranked very high by new bike buyers about why they made the choice they did. See the cover story on Kawasaki for the latest development on additional demo opportunities this summer.

Also, an aftermarket contest developed by the Motorcycle Industry Council has already proven a success for dealers to draw in the enthusiast. See pg. 35 on details of that aftermarket program.

Yes the existing U.S. retail environment remains challenging for the industry, but it figures to be even more so unless dealers can take advantage of these emerging special event opportunities.

Answering a dealer question

As I originally wrote on “Industry Insiders” — Powersports Business’ blog at insider.powersportsbusiness.com — I wanted to share a question — and its appropriate answer — I recently received regarding Harley-Davidson U.S. motorcycle sales.

Readers of Powersports Business will know we routinely show which on-road models are faring best in the U.S. retail market. In other words, the hottest sellers by month. Unlike other publications, this information is not a guesstimate. Thanks to our partnership with R.L. Polk & Co., the industry’s leading provider of new and used unit data, we have information straight from state registrations. R.L. Polk compiles this data and then analyzes it and shares some of it with Powersports Business readers.

The question I referred to earlier deals with that new unit retail sales data. One of our readers, a dealer in Indiana, rightly pointed out that Harley-Davidson models have in the past year dominated the top model listings, often putting eight or nine models in the top 10. “According to market statistics,” this dealer pointed out, “Harley Davidson has about a 60 percent share in 750cc motorcycles and above, but that should only allow for maybe 6 out of the 10 spots. By the numbers in your magazine, it looks like Harley has about 90 percent of the market. Please explain the numbers to me.”

It’s certainly a valid question.

Here’s the answer: It all relates to the sheer number of brands and those brands’ models available in the marketplace. Yes, Harley dominates the top 10, but there are so many options out there that the pool is much deeper than you can imagine.

I went back to our friends at R.L. Polk to provide you with an idea of how deep that competitive pool is. Here is their answer regarding the number of brands and models that are included in the on-road data that is compiled for Powersports Business: