I’ve never been one to dwell on the past but this year demands some reflection as we prepare for success in the upcoming year. While we as a country have endured some tremendous challenges, there also have been many notable events that have given me hope for the future.
As I write this, the first doses of the COVID-19 vaccine are making their way across the country to our well-deserving front line healthcare workers. The presidential election is now behind us and we can move forward – hopefully with a stimulus package to ease the burden shouldered by individuals and small business owners. The Federal Reserve has indicated that interest rates will remain at or near zero at least into 2023. And while we have all been forced to pivot in our ways of doing business, business has continued for the most part. These positive data points tell me that there is much to look forward to as we approach 2021.
Many aspects of the powersports industry experienced a tremendous year in terms of sales, revenue, and overall success metrics. Although fourth quarter data will not be available until the end of January, early indications reflect another strong quarter. According to CDK Lightspeed DMS, new and used unit revenue growth in October clocked in at 33.2 percent. Service has also seen an uptick as riders pull those older bikes out of the garage for a trip down the road. According to Jeremy Jansen, Head of Motorsports at Wells Fargo Commercial Distribution Finance, “North American powersports retail has seen unprecedented activity…resulting in the collective industry entering 2021 with a strong tailwind.”
Set up for Success
With all of this good news swirling around, you still need to stop and make sure your dealership is ready for more success. There are some data points which – if ignored – could cause a pot hole in your otherwise smooth ride.
Fraud and Compliance
As more and more business is conducted online, the opportunities for fraud are increasing exponentially. Identity theft increased 19.8 percent from 2017 to 2018. From 2018 to 2019, it increased 46.4 percent. While we don’t have total numbers for 2020 yet, we can expect another increase simply based on how COVID-19 has opened the door for even more fraud. Make sure your sales and finance teams are completing every step possible in verifying identity, clearing red flags, etc.
Additionally, the incoming presidential administration has signaled a ramp up in compliance oversight with the Consumer Financial Protection Bureau (CFPB) and local state attorneys general. While these rules and regulations can seem burdensome, they are designed to protect both the dealer and consumer. Keep your team up to date on local, state and federal regulations.
Inventory and F&I
It’s likely that this year you “cleaned house” as it relates to available inventory. While it felt good to clear out those units and make way for more bikes, everyone else cleaned up their inventory as well while waiting for manufacturers to resume operations. This put pressure on wholesale markets, causing prices to rise and volume to slow. As you contemplate the new year, make sure you have an inventory strategy. Stock units that fit your buyer demographics. If possible, attach a maintenance plan or extended service contract to every unit sale. When purchasing at auction, make sure you buy units that can be sold with consumer protection products or bikes that your service department can support. As I mentioned last month, the BMA/Powersports Business survey revealed that only one in five dealers said F&I sales were very strong. Don’t go into 2021 leaving money on the table.
While there are many unknown factors facing us in 2021, we do have the benefit of a successful 2020 to ease the uncertainty. The powersports industry is strong and we have many reasons to be thankful.