PSB 123s: Increasing pre-owned profit
1. Use wholesale auctions to buy.
“To help manage your used bike inventory, make use of one or more of the dealer-only powersports auctions,” advised Ricky Beggs of Black Book. “Trade-ins and buying off the street are great, but the auctions will give you access to a wider variety of units and make it easy to adjust or dispose of aged any aged inventory.”
2. Don’t forget to review the product.
“If you choose to buy at auction versus online, arrive early,” said Evan Davidson of ADESA. “You will want plenty of time to view the product first hand.”
3. Understand the price cycle.
While an economic downturn can definitely impact profitability, motorcycle and powersports prices tend to fluctuate in a cyclical and relatively predictable fashion, explained Karen Braddy of Manheim Specialty Auctions. For instance, prices tend to be lowest October through December and peak in the spring. Purchase inventory when it’s cheapest and sell when demand is highest.
4. Dress up pre-owned units.
Prepare your pre-owned bikes for the showroom floor with select enhancements. “Parts and service goes over each bike and gets it ready for state inspection,” said Brian George of Off-Road Express in Erie, Pa. “We make sure it passes and do what it takes to get that done first. If a bike doesn’t need much, then I look at parts in my inventory that may have been sitting for awhile and try to load it up with some cool goodies to dress it up.”
5. Remember that quality counts.
“Keep a close eye on the quality of the vehicles that you’re offering to your customers,” said Scott Wegner of Road Track & Trail in Big Bend, Wis. Customers generally seek higher-quality pre-owned vehicles.
6. Appraise every bike that comes into your service department.
“When the owner comes back to pick it up, have a prepared offer ready,” Beggs said. “This is a great way to acquire inventory and to sell a few extra new bikes.”
7. Engage your customers Online.
Connecting with customers through social media channels like Facebook and Twitter can be a great way to transform people who are “just looking” into customers. “Share images of your available inventory or photos of your team in lighthearted situations to help prospective customers get to know your dealership,” Braddy said. “Just be careful not to over-engage them – you don’t want to come across as invasive.”
8. Sell creature comforts.
George says his staff is always pushing the sale of windshields, saddlebags, pipes, helmets, jackets and gloves with his dealership’s pre-owned bikes.
9. Don’t forget added costs.
“Make sure to include any additional expenses that you may incur (transportation fees, repair and reconditioning costs) on your bottom line. Be sure to set your selling price at a level that covers your cost,” Davidson advised.
10. Be mindful of your selection.
Wegner says dealers should provide a wide selection for customers to shop. The more units offered, the larger the pool of interested customers becomes.