Motorcycle and Motor Scooter Dealers

Motorcycle and Motor
Scooter Dealers
Depending on geographic region and climate,
powersports dealers carry ATV’s (all-terrain vehicles),
personal watercraft, or snow-mobiles, as well as
motorcycles and motor scooters.
Primary Categories of Two-Wheeled Vehicles
Industry Overview
•
According to the Motorcycle Industry Council (MIC),
13,688 retail outlets sell motorcycles and related
products in the U.S. There are two categories of
motorcycle and motor scooter dealers: franchised
and nonfranchised. Similar to the new and used car
industry, franchised dealers are authorized to sell new
motorcycles from the leading motorcycle OEM’s -- or
original equipment manufacturers (the largest are
Harley-Davidson, BMW, Honda, Kawasaki, Suzuki, and
Yamaha).
Most popular are on-highway motorcycles (“street
bikes”), which are certified by manufacturers as
being in compliance with the Federal Motor Vehicle
Safety Standards and designed for use on public
roads. This category includes cruisers (HarleyDavidson is the leading cruiser manufacturer), as
well as standard street bikes; touring bikes, sport
bikes, and dual bikes.
•
Next most popular are ATV’s (all-terrain vehicles),
designed for off-highway use by one person. ATV’s
have three or more low-pressure tires, a seat the
rider straddles, and handle bars for steering. ATV’s
have an overall width of 50 inches or less.
•
Off-highway motorcycles (“dirt bikes”) are not
certified by the manufacturer to be in compliance
with federal vehicle safety standards. Big with
younger riders, they are commonly raced in
elaborately designed events.
•
Dual-purpose (or dual-sport) bikes, as the name
implies, are certified to be in compliance with federal
safety standards and are designed for use either on
the highway or for off-highway recreational use.
•
Scooters are small on-highway motorcycles manufactured and specifically designated as scooters.
Some models do not require a motorcycle license,
because of their lower speed. (Vespa, the popular
Italian scooter, is sold through Vespa-only “boutiques”
in the U.S., along with trendy “lifestyle gear.”)
Most franchised dealers also sell accessories, apparel,
and parts -- and they typically perform maintenance and
repair service. Some franchised dealers have usedmotorcycle departments; when motorcycle owners
want to trade in their current models, they use their old
models as trade-ins, which then go into the dealers’
inventory of used motorcycles.
Nonfranchised dealers do not sell new motorcycles and
scooters, but sell used and rebuilt vehicles, as well as
parts, accessories, and riding apparel. Non-franchised
dealers typically derive a significant percentage of their
revenue from their service and repair centers.
•
•
Franchised dealers typically derive around two-thirds
of their annual revenue from the sale of motorcycles,
with the remaining one-third generated from the sale
of parts, accessories, and apparel -- and from service
and repair.
Nonfranchised dealers typically derive around twothirds of their annual revenue from the sale of parts,
accessories, and riding apparel, with the remaining
one-third generated from the sale of used motorcycles, and from service and repair.
While some dealers specialize in motorcycles (and
some further specialize by carrying models from only
one manufacturer), many others, both franchised
and nonfranchised, consider themselves to be in the
“powersports” business.
Issues and Trends
In the U.S, approximately 8.8 million motorcycles
are owned by about 6.6 million people. The industry
generated just over $9 billion in retail sales of new
motorcycles in 2005. Sales of motorcycles, ATVs, and
scooters have tripled in the last decade, and have more
than doubled since 1998. The last quarter of 2005
saw particularly strong growth, with sales of highway
motorcycles, including scooters, growing by over 16%
-- and scooters alone jumping by 65% (MIC, “Statistical
Annual 2005”; Chicago Tribune, June 23, 2006).
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U.S. Sales of Motorcycles, ATVs and Scooters
(Unit Sales, in Millions)
2.0
1.51
1.5
1.0
1.63
1.72
1.78
1.98
The traditionally dominant motorcycle icon HarleyDavidson has watched its market share shrink in recent
years, and 2005 continued this trend, although it still
ranks number two, as the following chart shows:
U.S. Market Share of Two-Wheel Motorcycles
1.30
(% of Market by Manufacturer)
1.06
Harley-Davidson / Buell
23.7%
Honda - 29.0%
0.5
0.0
1999
2000 2001
2002 2003
2004
2005
Yamaha - 16.3%
Other - 4.4%
Sources: Specialty Vehicle Institute of America, “Special Report, Summer 2006”;
Discover Today’s Motorcycling, Press Release, February 17, 2006.
Sales of motorcycles, ATVs, and scooters reached
nearly 2 million units in 2005 -- an increase of 8.9% over
the previous year. Strong growth is being driven by the
following factors:
Industry Growth Drivers
•
Rising gas prices. This factor is by far the most
compelling reason behind the 2005 sales spike.
The rising price of gas has made fuel efficiency
highly desirable to consumers, and motorcycles
use far less gasoline than passenger cars and light
trucks.
•
The fun of riding. Fun and the love of the outdoors
are other leading reasons why people gravitate to
motorcycles and scooters. Also, owning a vehicle
can amount to changing or enhancing one’s
lifestyle and increasing social interactions. Many
people join special clubs, where they enjoy riding in
groups and participating in special events.
•
Low costs. As an alternate means of transportation, many people are attracted to the low purchase
costs, in particular, for scooters. Also, the insurance
cost is significantly less.
•
Commuting. These vehicles make commuting in
urban centers efficient and easy. Scooters can easily navigate traffic jams and find convenient parking
spaces.
Sources: www.wkrc.com, Clear Channel Broadcasting, 2006; The Augusta
Chronicle, May 11, 2006; sacbee.com, Metro/Regional News, May 28, 2006.
Just as lower-priced, lower-powered models (scooters,
in particular) have seen increased demand, so too have
higher-end motorcycles attracted increased interest from
growing numbers of aging “baby boomers” -- as well
as women. Motorcycle manufacturers have been going
“high tech” and are offering models with better comfort,
increased safety, and added features (Wall Street
Journal, June 23, 2006).
Suzuki - 12.2%
Kawasaki
9.7%
BMW - 1.3%
KTM - 2.1%
Source: Motorcycle Industry Council, “Statistical Annual 2005.”
Dealers have benefited from the substantial advertising
placed by manufacturers to promote their brands,
as well as from the free-spirited image associated
with riding motorcycles. Dealers have also received
encouragement and support from manufacturers as
they undergo upgrades to their facilities or undertake
rebuilding efforts. As a result, dealers are viewing their
businesses as more than just outlets for selling vehicles.
Accessories are becoming a significant source of
revenue for dealers, and they’re attracting customers by
touting accessories in their marketing and advertising
programs. They’re also incorporating restaurants and
coffee bars into their spaces. Dealerships are designed
for traffic flow, moving customers throughout the store,
with focal points such as interactive kiosks where
employees can interact with customers. Vehicle flow
into the facility is also important, like having a separate
service entrance so customers can easily ride in and out
(Dealernews, “Top 100 Yearbook 2006”).
More dealerships are becoming sales centers for preowned bikes, which they obtain from auctions, trade-ins,
and owners looking to sell. They are offering certified
bikes and reconditioned motorcycles. Some dealers
are putting their own brands on used and reconditioned
motorcycles (Dealernews, December 2005 and May
2006).
Motorcycle and scooter dealers are making greater
use of the Internet as a sales and promotional tool,
in addition to using the more traditional media such
as newspapers, the Yellow Pages, direct mailing,
and radio. Having a website is an excellent way for a
dealership to maximize its revenue from aftermarket
items or accessories, which itself is over a billion-dollara-year industry. A well-designed website draws in new
© 2006 Profile America, Inc. All rights reserved. www.profileamerica.biz
business, and assists in building relationships with
customers (Dealernews, February 2006).
The Internet is used in other ways by dealers. For example, they go to manufacturers’ sites to order supplies.
One new Web-related development is that a dealer
will soon be able to use his or her dealer management
system (DMS) to order parts from suppliers who are
Powersports-Standard-Protocol (PSP) enabled (CRM
Magazine, May 2005; Dealernews, February 2006).
spend around $6 million annually on motorcycles. If a
motorcycle dealer generates $1 million annually, his or
her market share would be 6.03% -- a baseline against
which future performance can be measured.
Critical Success Factors
CSFs for Motorcycle Dealers
Factors mentioned in the advertising placed by
motorcycle and motor scooter dealers are intended
to motivate customers to contact the dealerships.
“Confidence factors” and “convenience factors” are
designed to appeal to consumers’ desire for reliable
products and services. Examples of each follow:
•
Engage customers who visit the store by telling
them about your store, including how many awards
each department has received, how the business is
involved in the community, the mission statement, and
upcoming events.
•
Put in place strategies for encouraging business
from women, such as hiring one or more female staff,
addressing the woman always when a man and woman
come in, accessorize a bike in the showroom with
parts favorable to a woman, and congratulate her after
she has purchased a bike.
•
Offer bike appraisals to build up the pre-owned
inventory and sell more items.
•
Sustain a relationship with the customer. Follow up
by phone 24 hours after a sale, send a thank-you
card or email, have the store manager or department
manager call the customer and thank him again, send
the customer’s spouse or significant other a small gift
if her approval was critical to a sale, and/or send a gift
card or certificate.
•
Have demo bikes available for customers to take a test
ride, on pavement or dirt roads. Equip the bike with
attractive features.
•
Take the time to explain to the customer how the
bike works, and go over the maintenance basics. The
customer is likely to return if you spend time educating
them.
•
Change merchandise displays on a regular basis
(accessories, particularly), and even change the store
layout a few times a year.
•
Offer training classes for new riders.
•
Hire a website professional to build a site for the
dealership, and include high-quality images and as
much information as possible. The quality of product
presentation has a big effect on the satisfaction of
customers visiting the site.
Confidence Factors Mentioned In Ads
Complete Parts Inventory
Written Repair Estimates
“Customer Service Dept.”
Size of Selection / Inventory
Latest Diagnostic Technology Brands
“5 Star Certified”
Hog Chapter Sponsor
Licensed Service Center
Authorized Dealer
Years in Business
Guarantee / Warranties
Source: 2005 Comparative Ad Analysis Survey, Norbert J. Kuk & Associates.
Convenience Factors Mentioned In Ads
Credit Cards / Financing
Delivery and Pick Up
Multiple Locations / Appts
Days / Hours
Invitation to Visit Website
Parts Locator Hotline
Location Data / Maps
Same Day Tune-Up
Secure Online Ordering
Website / Email Address
Tires Mounted While U Wait
Shop Online for Great Deals
Source: 2005 Comparative Ad Analysis Survey, Norbert J. Kuk & Associates.
Value of Products and
Services in the Industry
Prices of motorcycles vary dramatically, beginning at
$2,400 and ranging up to $65,000 to $100,000 for custom-built bikes. Prices of scooters usually range from
$2,000 to $9,000 (Associated Press, February 21, 2005;
Toledo Blade, May 4, 2006).
Average household spending on motorcycles is
$80.36, calculated by dividing $9 billion by 112 million
households. Average spending helps determine market
potential and market share. For example, in an area
of 75,000 households, it is safe to say that consumers
Sources: Dealernews, December 2005 and May 2006; Dealernews Top 100 Yearbook 2006.
Industry Resources
Motorcycle Industry Council, 2 Jenner Street, Suite 150, Irvine,
California 92718-3812; 949-727-4211; www.mic.org.
Dealernews, 201 East Sandpointe, Suite 600, Santa Ana,
California 92707-5761; 714-513-8400, www.dealernews.com.
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