Dec. 24, 2007 – Preowned bike sales increasing
January 2, 2008
Filed under Features
By Neil Pascale
Preowned motorcycle sales are showing resistance to the downturn that has affected segments of the industry’s new unit sales, a national dealership survey conducted for Powersports Business has revealed.
More dealerships are reporting an increase in used motorcycle sales compared to a rise in new unit sales. Plus the increase in preowned units is rising at a faster pace than new unit sales, the survey of 150 dealers from across the nation showed.
Thirty-eight percent of dealers surveyed said their preowned sales this year have increased over the previous year. Plus, only 14 percent said their used sales have declined this year compared to 2006. In contrast, 33 percent of dealers said their new unit sales have dipped below 2006 levels.
Dealers reporting increased preowned activity said 2007 sales are 18 percent over the 2006 level.
For the second straight year, dealers also overwhelmingly report higher gross profit in preowned sales than for new unit motorcycles. Seventy-one percent of dealers said their typical used bike sales provide a higher gross margin than new motorcycle sales.
Perhaps because of the higher gross margin and the improved overall sales, the number of used bikes dealers are selling is rising. This year’s survey shows dealers are selling three new bikes to one used bike. Last year’s survey showed a new-to-used equation of 4:1. The surveys, however, didn’t include the same dealer respondents.
For the first time the survey looked closer at the preowned sales process of dealerships. Here are some of the conclusions:
Overwhelmingly, dealers do not have separate sales personnel for used models. In fact, only two of the 150 dealers surveyed said they have separate sales staff for used bikes.
Most dealers, however, do have separate floor space for their preowned bikes. That was the case with 3?4 of the dealers surveyed.
There isn’t such an unanimous decision on whether a dealership should have separate merchandising or advertising for its preowned inventory. Forty-four percent of dealers said they fit in that category.
Fifty-two percent of preowned bike buyers are financed, which is significantly less than new units (66 percent).
The national survey also found a wide disparity in preowned inventory. Dealers on average keep nearly 25 preowned motorcycles in their inventory. However, nearly 45 percent of dealers keep 10 used motorcycles or under on-hand while 13 percent have 50 or more in stock.
On average, dealers keep their used inventory for 60 days. But again, there is quite a bit of variance on this, as 61.5 percent keep their used inventory for 45 days or under.
Dealers are increasingly using auctions to help fill their inventory or reduce it. This year, 37 percent of dealers said they are buying or selling motorcycles at auctions. That is 13 percentage points higher than last year’s survey.
Of those dealers who are using auctions, 45 percent of them said they are using the Internet to do their auction purchasing.