July 23, 2007 – 6 ways to boost your preowned profits
July 23, 2007
Filed under Features
LAS VEGAS — There is little debate among dealers about what the preowned motorcycle market can bring:?higher profit margins.
Nearly 65 percent of dealers said in a 2006 Powersports Business survey that they made better margins — up to 14 percentage points higher — on used bikes. In a recent seminar held during the American Suzuki Motor Corp. dealer meeting, that percentage of dealers who saw increased profit margins from preowned vs. new probably would have been higher. More than 100 dealers from around the nation attended the seminar and ticked off a number of advantages to the preowned market, including of course, elevated profit margins.
The dealers, along with seminar hosts Gart Sutton & Associates, also spelled out ways to increase the profitability of the preowned market. Here are six best practices that Sutton, his staff and the dealers came up with:
1. Stamp of Approval
Place a tag or stamp on a serviced motorcycle that says, “acceptable for trade.” The customer will see the tag and likely question dealership staff, who can then inform the consumer about the store’s trade-in program. The stamp of approval program is meant to begin a dialogue with the consumer about the possibility of trading in their unit for a new one and for the dealership to make sure consumers know that trade-ins are welcome.
2. Sign of the Times
How well known is your dealership for taking trade-ins? Do consumers view your store as a place where trade-ins are welcomed and easily dealt with? One way to gauge your trade-in acceptance level, as scored by your community, is to peruse the local newspaper’s classified ads. If there are a bunch of used bike ads, then it’s probably a safe bet that there is a disconnect between how consumers view your store’s trade-in policy and how you view your trade-in policy.
3. Addition by Subtraction
The Powersports Business survey from 2006 showed 71 percent of dealers found PG&A sales on preowned bikes to be lower — by an average of $300 — than on new bikes. One possible cure: when you accept a trade-in, strip off the accessories and sell them on eBay. That way, the consumer can focus on getting new and improved aftermarket accessories, plus you’ll see added profit from e-Bay sales.
4. The Donut Treatment
A few dealers at the Suzuki seminar noted they often find their cheapest trade-ins via area auto dealers, who will take used bikes in on trades for new cars. But how do you keep your dealership’s name front and center with the auto dealership’s staff? Try delivering a dozen donuts a few times a year, along with a stack of your business cards.
5. Make a Friend, or Two
Connect with dealers in different parts of the country to swap preowned inventory, especially anything that has been on your floor for more than 90 days.
6. Dust Survey
Call customers who have purchased a new bike in the past 12 to 24 months and ask them if they’re still riding. If not, offer them cash or a consignment opportunity. This could be the easiest and most cost-effective way to boost your preowned stock.