Glenice Wilder on Powersports Growth and Lending
Q. Do you foresee any growth in the powersports market?
A. In 2016, unit sales fell off sooner than anticipated due to the uncertainty that surrounded the presidential primaries. We’ll see unit sales pick up again in February, when the first round of income tax refunds arrive. As the business market stabilizes, I would expect the powersports market to see slight growth in 2017, with specificity in numbers by the start of the third quarter. Powersports dealers looking to recoup some of the lost profit from 2016 will put a greater emphasis on increasing aftermarket income through the sale of F&I products and powersports gear, in addition to motorcycle purchases.
Q. How will credit tightening affect Powersports dealers?
A. Lenders seeing increasing loss ratios in the auto space are already beginning to tighten lending standards and pull out of subprime. This will affect growth in the powersports space, as we can expect lenders to tighten standards across industries, regardless of the fact that the powersports market is dictated by different drivers than the auto market. For this reason, dealers will need to invest in significant training on how to work with lenders and get paper bought. We’ll also see an increase in credit card financing options for powersports lending. Those lenders that stay in the powersports space will want to insulate their loans in a market that’s highly dependable on disposable income. For this reason, we will see more lenders evaluate the benefits of including their own complimentary F&I products on their loans.
Q. What changes are necessary to support growth in this space?
A. Powersports dealers that continue to be starved for lenders, up-to-date technology resources, and committed employees will pressure their vendors and product administrators to provide out-of-the-box solutions for these obstacles. We’ll see more dealers taking advantage of digital F&I services provided by said vendors and product administrators, where the whole finance process will be taken care of by the vendor. This will alleviate powersports dealers of the challenge of recruiting, training, and retaining quality finance directors. It will also reduce the compliance pressure they currently feel, and it will better address the ongoing issue of getting paper bought, as the providers will utilize the highest quality and most effective finance managers to complete the finance process. Post-recession powersports purchasers are much more educated on insulating themselves financially on larger purchases. This education will increase consumer demand for quality F&I products that address all aspects of the bike.