Feb. 8, 2010: Survey identifies dealership road map for 2010
February 8, 2010
Filed under Features
By Neil Pascale
The retail sales plunge of 2009 did not result in huge dealer brand adjustments, will not severely impact the dealership sales force this spring nor has it largely lessoned the optimism of a return to improved major unit sales.
Those are some of the findings of a national dealership survey conducted for Powersports Business that looks at the possible aftereffects of the past tumultuous retail year as well as identifies dealer strategies for 2010.
“After last year, things can’t get too much worse,” Harry Levesque, president of TSI Harley-Davidson in Ellington, Conn., said in a statement that largely mirrored dealer thoughts expressed in the survey.
Nationally, more dealers believe major unit retail sales will improve in 2010 over the previous year than the opposite scenario developing. And perhaps as a result, dealers will largely enter the next crucial selling season — the spring and summer — with a staff that is not radically different in number than the previous year, according to the survey.
The survey, conducted by Irwin Broh and Associates in January, consisted of 150 dealerships from more than 40 states.
The survey found more than 40 percent of dealers believe that new unit sales of motorcycles, ATVs and UTVs will improve in 2010 over a year ago. Only one in every four dealers expects retail sales to continue to slide. Industry major unit sales of motorcycles, scooters and ATVs, as reported by the Motorcycle Industry Council, have declined each of the past two years.
However, the 2009 decline of more than
36 percent is a significant percentage decline over the prior year.
“Either we’re going to see it turn around or the other shoe will drop,” said Robert Eidmann, owner of a Honda Powerhouse dealership in St. Joseph, Mo. Eidmann believes the former is more likely to happen in his region as unemployment levels there have remained below the national trend and the farming community has seen some positive economic indicators.
“What I think is going to happen is we’ll see a slight increase in ATV sales in 2010 based on the farm and ranch market that is still there,” he said, while also noting he’s not quite as optimistic about on-road motorcycle sales.
The sudden drop in on-road motorcycle sales in 2009 did not result in mass brand changes at U.S. dealerships, the survey found. Less than 10 percent of dealers reported dropping either a V-twin, metric, European or Chinese brand during the past year as a result of the recession. The brand segment that was identified as the most dropped was V-twin, although only 6 percent of the surveyed dealers said they did this.
Similarly, an even smaller percentage of dealers said they added brands as a result of the recession. Metric brands were added most often, but less than 5 percent of the surveyed dealers choose to do that.
Most dealerships will approach the upcoming spring and summer selling season with a similar number of employees, despite the decrease in retail sales in 2009, the survey found.
The department that is likely to be hit the hardest is major unit sales. One in four dealers said they will have “less” sales staff than a year ago, while another 10 percent said “far less.”
That decline in sales staff is greater than the parts department and much greater than the service or F&I departments. Nearly seven out of 10 dealerships said their parts department staffing will be at the same level going into the key 2010 selling season. A similar amount was found in the service department and close to 80 percent of dealers said their F&I staffing will remain unchanged from a year ago.
If dealers increase their staffing this spring or summer, where would it most likely occur? Probably in the service department as 13 percent of dealers said they plan on adding staff there over last year’s total.
Eidmann, the Honda Powerhouse dealer, believes the service department is likely to be the area where his store sees sales gains this year. That confidence is largely a result of consumers keeping their vehicles longer, thus the dealership is starting to see more major repair work rather than the quick, oil change-type services.
“Once again, you’ll need better techs,” Eidmann noted.
Many dealers would agree with him, according to the national survey.
Dealers were asked what department is most likely to see sales gains over 2009 and the highest percentage — 29 percent — indicated the service department. However not far behind were major unit sales (26 percent) and the parts and accessory department (23 percent). The sale of preowned units was a distant fourth (17 percent).
Levesque of TSI Harley-Davidson noted his store saw a decrease in preowned sales in 2009 after seeing a steady increase in that segment over the past few years. That decrease could be related to what ailed his new unit sales — horrible riding weather through the summer.
Levesque, however, believes major unit sales could increase this year and a recent bike show, which drew better crowds than a year ago, elevated his spirits.
“Hopefully that’s a sign of something to come,” he said of the Springfield, Conn., show turnout.
If sales do rebound in 2010, where are dealers likely to invest in their business outside of personnel?
Most dealers said they would add to their new unit inventory. The second-highest response was adding to their parts, garments and accessory inventory while stocking heavier on preowned vehicles ranked third.