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Pre-owned sport bike sales a hit at Team Powersports

October 3, 2011
Filed under Features

North Carolina dealership’s sales up 40 percent from 2010

By Dave McMahon
Senior Editor

In the past 20 months, Team Powersports in Garner, N.C., has had two negative variance months. The other 18 have all been positive.

General manager Fran Contaldi credits continued success with the sport bike segment as one reason for the dealership’s success.
Carrying Honda and Yamaha sport bikes, Contaldi has been able to overcome less-than-favorable finance and insurance costs in a year in which sport bikes retail sales have declined nationally year-over-year since January.

“Sport has been in decline for years. The recession in 2008-09 ushered in major contraction, but the trend had been down anyway. We’re seeing that,” Contaldi said. “I don’t think the interest has been reduced. The credit-worthiness and insurance costs have been the main factors. A major part of our business is used and we have very few lenders that will even consider pre-owned sport bikes.”

DEAL BREAKER
Contaldi said that a typical scenario might involve the dealership’s F&I department providing financing that the customer can afford, only to see the insurance rate kill the deal.

“Say the customer’s budget is $300 a month. We get them a $280 payment on a 600 with however much down,” Contaldi said. “Then they get on the phone with the insurance and the insurance is $300 a month. It happens time and time again. We’ve lost several sales that way — the insurance payment is higher than the finance payment.”

At the same time, Team Powersports has overcome those challenges and seen exceptionally strong sales in the pre-owned sport bike segment.

“We’re probably up 40 percent in pre-owned over last year, and that was 40 percent higher than the year before. We’ve focused on pre-owned sport bike sales,” he said. “The strength of our sales these days is in pre-owned machines in general, and noncurrents with big rebates. That’s been a major contributor for us both this year and last year. We’re way up.”

The sport bike leaders at Team Powersports are the Yamaha R1 and Honda CBR1000RR, but Contaldi says keeping inventory on the showroom floor is a task.

“We don’t have a backlog of inventory. We keep a couple of each color and that’s it,” he said. “The 600s in the pre-owned sport bike sales are still pretty strong, too. We’re lucky if we can keep two or three on the sidewalk. Of our 50 to 60 bike pre-owned inventory, we’re lucky if we’ve got three 600s. The 1000s are very slow to push right now, mainly because of the insurance thing. About the only success with pre-owned sport bikes at that level are the military guys that can get insurance.”

The lack of pre-owned product will likely send Contaldi an auction for next year.

“I don’t go to the auction for pre-owned, although next we’re going to have to consider it,” he said. “Our budget will probably be for 35 pre-owneds a month, and that takes a lot of work. That means in February you need to have 75 pre-owneds and you need to buy 70 more in March.”

SERVICE ON THE RISE
Sport bike service continues to be a positive trend at Team Powersports.

“With service we’re in a bit of a unique market condition. The attrition has been so bad. In the past 10 years we’ve lost five major retailers in our market area – three stores that carried five brands,” Contaldi said. “Being the sole survivor, we get everything, so our service is way up, in the neighborhood of 1,000 hours a month. Sport service may be off a little based on sales being down. They may be skimping on their maintenance, but with that kind of investment we’re still seeing people who want to pay for professional service.”

Contaldi said the dealership is highly successful with priority maintenance contracts, with about 30 contracts per month overall.

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