Preowned bike sales rising across U.S.
December 22, 2008
Filed under Uncategorized
By Neil Pascale
Thanks in part to the summer’s high gas prices, the number of preowned on-road motorcycle sales are likely to increase this year, continuing a welcome trend for the industry.
The sale of used on-road motorcycles through both dealers and private parties eclipsed 950,000 units through September, according to data provided by R.L. Polk, which compiles new and used unit registration information from all 50 states. That total for sold preowned units in the United States is up nearly 13 percent over the year-ago period.
“A lot of people have caught on to the fact that a lot of vehicles take their biggest hit of depreciation the first year and if they can get a nice bike and save the depreciation and somebody has already done the first service, they feel like they’re ahead of the game,” Barry Eisenberg, general manager of Greater Boston Motorsports in Arlington, Mass., said of the allure the preowned market has.
Skyrocketing gas prices also played a key role. According to AAA’s Web site, the nation’s gas prices were highest in June and July. Preowned sales of on-road motorcycles followed that spike.
In June, preowned on-road motorcycle sales increased 33.4 percent over the prior-year period. In July, sales remained high, at 14 percent beyond the 2007 number.
Dealers interviewed by Powersports Business said preowned sales trends followed new units, with small- to mid-displacement bikes easily being the biggest sellers while big-bore units stalled in popularity.
“The magic number was $5,000,” Jeff Hieber, general manager of Barney’s Motorcycles in Florida, said of the preowned market during its peak season this summer. “If it was less than $5,000, you had it in your inventory about three-four days. On big-bore stuff, it could be several months.”
If the preowned sales trends through September continue in the fourth quarter, the used market will see an increase in year-end sales totals for the third time in the past four years, according to Polk. Used on-road motorcycle sales were essentially flat in 2007 after rising slightly the previous two years.
Sales of new on-road motorcycles, meanwhile, are likely to dip slightly for a second straight year.
“Dealers that have never experienced preowned or have never been educated or always said, ‘Well, we don’t need to deal with preowned’ are starting to find that it’s a great alternative to new unit sales,” said Justyn Amstutz, executive vice president of sales and marketing for National Powersport Auctions. “You can still make money in a downturned economy on the preowned market.”
That has been the case at Greater Boston Motorsports where Eisenberg says his sales have increased by nearly 18 percent over the prior year. Besides putting the necessary focus on the preowned market, Eisenberg says the dealership has worked to diversify its used product offerings. That’s why in early December the store that carries Honda, Kawasaki, Suzuki and BMW new units had a Paul Smart Ducati, a Can-Am Spyder and Harleys in its window display.
“All my guys are like, ‘Wow, check this out,’” Eisenberg said of the used Spyder on display at the store. “Not only does it educate us, but it brings people from the marketplace. When we gain that used bike customer, we also gain the parts sales, the service sale and the F&I sale. And we realize those sales can be a little larger with the used bike customer.”
Gross profit margin also can be higher, both at Eisenberg’s store, and according to a past Powersports Business survey, throughout the nation. A 2007 PSB survey of 150 stores found 71 percent of dealers said their typical used bike sale provided a higher gross profit margin than a new motorcycle sale.
While the overall U.S. preowned sales were up through September, dealers reported mixed results in different markets.
Rick Nakagaki, chief operations officer of Eastside MotoSports in Bellevue, Wash., reported decreased preowned sales, which largely followed new units in terms of retail sales volume.
Nakagaki noted a still steady presence of preowned shoppers “but I don’t have what they want.” He said largely consumers are looking for 600cc and under bikes with prices under $5,000, a notable decrease from the prior year.
Also seeing the demand for the small- to mid-size bike was Kurt Thomas, president of Bangor Motor Sports in Bangor, Maine. Thomas says he’s going to end up about flat to the prior year in preowned on-road motorcycle sales.
“We could have sold more preowned easily had we had inventory available,” he said, noting his dealership is not located close to an auction. “We carried over nothing, but I’ve always said if you end up with zero inventory that means you didn’t have enough.”
The Bangor dealership has aggressively sought to increase its used inventory, currently promoting the fact that it will take motorcycles on trade for new snowmobiles.
Another dealership that reported flat sales numbers was Barney’s of Florida. But Hieber, the general manager, says the major cause for the relatively steady sales was the amount of non-current inventory the dealership had and the incentives that OEMs were providing for those new units.
“It was just a really good time to buy new,” Hieber said, noting the non-current inventory excess did not impact the sport bike market quite as much. “Used will always stay dominant on that because the youth are buying it typically and they want to finance less or have less money to buy,” he said.
Jeff Chapman, whose family owns
two Kawasaki dealerships and two Victory stores, reported overall flat preowned motorcycle sales for his family’s operations.
Chapman noted trade-ins have been tougher to come by simply because the amount of business for new units has been down compared to the previous year.
“We’ve aggressively pursued used bikes in order to keep” year-over-year sales relatively flat, he said.
To maintain a preowned inventory, Chapman’s staff shops the local paper and traders for used bikes. The service department staff also alerts customers of the store’s desire for more used bikes.