Pre-owned a ‘value proposition’ for Bumpus Harley
March 12, 2012
Filed under Features
Tennessee dealership targets bikes that will sell
As a second-generation owner of five Harley-Davidson dealerships in Tennessee, Scott Bumpus knows to remain level-headed with his approach — never ride the highs too high, and never take the lows too low.
Bumpus, a partner in the business with his brothers Tim and Tom, knows that when his dealerships present customers with products that they want to buy, the business proposition is in a better position than the alternative.
Now in celebrating their 26th year as the owners of Bumpus Harley-Davidson of Memphis, Bumpus Harley-Davidson Collierville, Bumpus Harley-Davidson of Murfreesboro, Lynchburg Harley-Davidson and Bumpus Harley-Davidson of Jackson, business continues to trend upward.
Bumpus took some time during another busy day in February to share some of his best practices with PSB readers.
PSB: It caught my eye that in our recent Dealer Game Plan survey, you reported that your dealerships had seen pre-owned unit sales increase by 25 percent in 2011. What spurred that growth?
SB: When you go back all the way back to when we got into the business, new motorcycles were a hard thing to come by, so pre-owned has always been a big part of our business plan. We’ve always sold more pre-owned than new. Back then it was out of necessity. You could get pre-owned bikes. Now it’s more a value proposition on the pre-owned side. The customer can experience the same enjoyment from pre-owned as he can from new.
PSB: What is it about selling pre-owned alongside new that improves your dealership’s bottom line?
SB: As an OEM dealer, we wanted to make sure we were the place that people would come to for pre-owned bikes as well. You can come out of one of our stores riding a motorcycle and not be out that preconceived amount of money that you think you would have spent if you would have bought new.
Another thing we really like about selling pre-owned is that no one can shop us. Nobody else in the world has that motorcycle. If it’s a brand new Ultra Classic, there are 600 different places where you could buy it. But if it’s an
’04 Heritage with $2,000 in extra chrome and low miles? That’s one of a kind.
PSB: How do you build your pre-owned inventory?
SB: The bulk of our inventory comes from trade-ins. We’re aggressive in that area. We advertise for pre-owned units off the street, and the last couple of years, we’ve been using NPA. The quality of the process that the bikes go through before they even make it to the auction floor keeps me coming back to them. I don’t have to go to the auction in person. I can buy online and I know that when I see a condition report from them, that’s the condition the bike is going to be in.
PSB: At what point do you determine that the customer came to your store looking for a pre-owned bike, or a new one for that matter?
SB: One of the first questions we ask is are you looking for new or pre-owned? We integrate our new and pre-owned bikes in the showroom. We keep them right there together, right next to one another. It’s a great way to build value for pre-owned and shows that in our stores, there’s not a ton of difference between new and pre-owned. I only buy clean, so that helps. We’re not out looking for loss leaders.
PSB: What happens when a customer says he’s undecided about whether he wants to buy new or pre-owned? What’s your next step?
SB: Most of our customers don’t necessarily care if they’re buying new or pre-owned. They’re looking for something that they can spend $350 a month on, and that’s when pre-owned comes into play. And we get them set up that way, so that they’re an attractive option. In fact, we’re looking into a certified pre-owned policy right now. A friend of mine in the business is doing it, to where the bike has to have had one owner, you have to provide the service records, average less than 3,000 miles a year. Those requirements might be a little tough for us to meet, but it’s another avenue that will allow us to continue to build on the reliability of the used bikes.
PSB: You increased your pre-owned sales by 25 percent last year. What’s the plan for 2012?
SB: We average better than 2-to-1 pre-owned to new sales. There’s not a lot of growth left for us there, so we’re going to make sure we bring in bikes that customers can afford. Every bike we trade for goes to service for a full evaluation. Then the sales manager says yes or no for those repairs. We also do the next service for every bike that comes in. I make the call on tires, brakes and lighting; anything else the sales manager has a say. If it’s a repair, where someone’s not going to buy the bike unless it’s fixed, we’ll do a mechanic’s special and sell it as is, and point out the noise in the motor or whatever. We don’t try to put pearls on a pig.
PSB: What type of bikes do you take for trade-ins?
SB: We’ll take any brand, boats and cars, too. We’re very aggressive about taking metric bikes on trade-in. We’ve been retailing about half of the metric and the rest are going to auction.
PSB: What kind of success have you had with consignments?
SB: It depends on the time of the year. There are times when I send them and times when
I hold onto them. If it’s a bike that’s aged and that we’ve done everything we can to move it, we’ll send it to auction.
PSB: Finally, how is 2012 shaping up compared to 2011?
SB: 2011 was up from 2010, and I do believe 2012 will be up from 2011. It’s not because of a turnaround in the economy, but a turnaround in how we deal with the economy. Most people have just as much money now as they had several years ago, and that’s where the value proposition comes in. People are trying to find things that fit into that $8,000-$10,000 price bracket. And we can move those, economy or no economy.