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Rocky Mountain Cycle Plaza – Colorado Springs, CO – Oct. 20, 2003

October 26, 2003
Filed under Power Profiles

CONTACT
3505 East Platte Avenue
Colorado Springs, CO 80909
719/591-9700
www.rockymtncycleplaza.com

OWNER
Vernon Clark

BUSINESS PROFILE

36,050-sq.-ft. dealership founded in 1976; at present location for two years. “A fire two years ago burned down our existing dealership, so we remodeled an old movie theater and moved in,” says Steve Clark, Vernon’s son, who has been with the dealership since 1981.

Carries Honda, Yamaha, Kawasaki, Suzuki, Polaris, Sea-Doo, Aprilia, and Ducati. “We used to sell Yamaha and Polaris snowmobiles. From Colorado Springs, snowmobiling is a three-hour drive, so they weren’t selling well. We do a lot of ATV business, but still sell more motorcycles.” A sister store in Pueblo, 30 miles south, sells Yamaha, Polaris, Sea-Doo, and Victory. 50 employees at both locations.

GREATEST CONCERN

“Because the majority of my buyers use their vehicles for recreational purposes — dirtbiking in the mountains, or camping and hunting with their ATVs — if those areas are closed, that kills 95% of my business,” says Clark.

“Some dealers are active in fighting, but I think it’s up to the manufacturers because they have so much more clout and know how to go about it. By the time the little dealer gets involved, it’s already out of control. I think the manufacturers should build closer ties with the Forest Service.

“If the OEMs had taken the watercraft ban at Lake Powell seriously several years earlier, it probably never would have been closed to begin with. Customers say, ‘If I could use it, I’d probably get one.’ I tell them, ‘Lake Powell is open again.’ They say, ‘Yeah, but that’s this year. What about next year?’”

WHAT’S HOT?

Clark says the dealership sells a diverse group of vehicles. “We do well with all cruiser models, dirtbikes — especially XR 50s, and Sportsman 500 ATVs. We specialize in apparel, especially motocross, plus leathers and helmets.”

CUSTOMER BUYING TRENDS

Colorado has “beautiful scenery for riding,” says Clark. Customers use ATVs mostly for recreation, including hunting, fishing, and camping, with only 5% for utility purposes. This Rocky Mountain city of 700,000 is farming, ranching, and logging country.

Clark has noticed an upswing in ATV and cruiser sales, and a “slight increase” in women riders. “It seems as though sales of big-bore sportbikes are down. The desire is still there, but insurance is just too expensive. I can’t blame the insurance companies — there’s a lot of loss — but that’s really hurting sales.”

ANTI-POWERSPORTS ISSUES

Colorado has a lot of public land, much closed to recreational vehicles. “They’ll want to close down a small area for whatever reason, but you get 10 of them, and the next thing you know it’s a big area.”

PARTS AND SERVICE

“Both parts and service are profitable for us,” says Clark. “We have nine to 10 mechanics, and during summer we can hardly keep up. We have several who work on a specific make, while some do everything. It’s smart to give work to a mechanic who does a lot of that model, because he can get it done faster.” Rocky Mountain Cycle Plaza has 10 to 12 employees in the parts department.

PROMOTIONAL HOME RUNS

“We sell a lot of units,” notes Clark. “We don’t run ads that say, ‘This model for a super-low price.’ Most of our advertising is about image-building: how beautiful our dealership is, how long we’ve been in business, all the neat things that we sell. Nothing about price. My goal is to get people to come in. Then if we absolutely have to — because the dealer across town is — we’ll sell a unit for a lower price.”

WORDS OF ADVICE

“Hold more profit on each sale,” advises Clark. “I don’t think we sold one Yamaha YZF-R6 for retail all year. We priced them $500 over, and sometimes had to go down to retail. We also do things like custom-paint Victory motorcycles. A customer is going to have a heck of a time comparing that at another dealership.”

Clark works on dissuading his salesmen from getting into “give-up” mode. “They come into my office and say, ‘I need this great price — he’s already been to two other dealers.’ I ask, ‘What price was he given?’ ‘I don’t know.’ ‘Is he going to finance? Trade?’ ‘I don’t know.’ I send them back to find out.

“A lot of other dealers are successful with small markups on huge volume, but you have to sell twice as many motorcycles, have more
employees, turn more inventory, and are more at risk of being stuck with inventory during winter — all to make the same amount of money I’m making.”

Clark also charges freight and setup. “At a Honda dealer trip I won five years ago, every top dealer there told me he charged freight and setup, and was astounded we didn’t. I came back and told my staff, and our manager — who had been here 20 years — said, ‘There’s no way a customer is going to pay that.’ We charge $49, $99, $199, or $299, depending on vehicle size. Less than 5% of customers even ask about it. Of those 5%, I’ll split it with them. It has zero inventory costs and takes zero extra employees — it’s free money.”

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