Fall is in full swing and the powersports market should be experiencing its annual turnover of moving inventory out so that new units can be showcased on the sales floor. However, inventory challenges continue to plague 2021 sales, with many analysts forecasting continued issues into 2022. In a recent article in the Wall Street Journal, companies such as Polaris offer a glimpse into the numerous issues facing a powersports OEM, which has trickle-down impact on dealers and ultimately customers.
Flexibility should be the mantra this fall as supply chain issues continue to work their way through the industry. For example, Polaris is changing its manufacturing and sales strategies on the fly to cope with shortages of materials and parts. The company said it is juggling approximately 30 + supply-chain constraints for its units, sometimes changing its plans daily for what it produces.
This story has played out in the retail sales numbers across manufacturers. Coming off an historical 2020, the August major unit sales declined 1.4 percent overall in the US. This is not reflective of demand, which remains high. It speaks to inventory, or the lack thereof. Where dealers are usually offering sales ‘blow-outs,’ many are now scrounging for units.
Being nimble will allow savvy dealers to keep revenue flowing while staying connected to customers. One opportunity is in the service bay. August data reflected a whopping 6.2 percent increase in service bay revenue. With protection and repair packages attached to those units at the time of sale that encourage customers to return for service, dealers can count on that revenue.
Flex Your Pipeline
Retail dealers should also be in flex mode this fall. Another opportunity to maintain a flexible connection is through your pre-order process. Right now, powersports dealers are selling not just what’s on their lot, but also what’s in their pipeline. However, for this model to truly work, consumers really need to understand the process.
For example, when a customer reserves a vehicle, they often must pay their down payment at the time of reservation. At this time, they may be thinking that the current manufacturer incentives will still apply when the vehicle is delivered, weeks, or even months, later. However, this is not always the case. While some manufacturers may “lock in” their current incentives at the time of reservation, others do not, meaning that the incentives could change drastically or disappear altogether, resulting in significant changes to the vehicle’s price.
While this can potentially be very frustrating, dealers can use this as an opportunity to create ongoing communication with their customers to educate them the reservation process and the finance process. At EFG, we recommend implementing a sales funnel around orders for delivery, where sales team members reach out to the customer by their preferred method of contact at the following touch points:
- When a VIN is assigned
- When production is complete
- When delivery date expectations are set
- To provide a final delivery date and introduce the finance manager to set expectations on the process when the customer comes to the dealership to take delivery
By building in these communication touchpoints, dealers can create a more streamlined approach to F&I while also providing superior customer service.
Don’t Flex Compliance
One area that a dealership cannot flex is compliance. Whether delivering a bike today – or a month from now – your sales team needs to toe the line when it comes to following local, state and federal compliance rules and regulations.
At the Consumer Financial Protection Bureau (CFPB), a new leader is at the helm. On September 30, the U.S. Senate confirmed new CFPB Director Rohit Chopra. Chopra came from the Federal Trade Commission and brings an enforcement mindset to his new role.
Chopra, 39, will serve a five-year term and has a long history with the organization. He worked closely with Senator Elizabeth Warren on establishing the bureau, then joined it in 2011 to investigate industry abuses in the student lending market.
His appointment comes at an interesting time for retail dealers and lenders. As FTC Commissioner, Chopra actively pursued dealers perceived of implementing discriminatory practices. He also was a vocal proponent for more consumer protections for consumers, specifically regarding perceived auto lending abuses of all minority demographics and military families.
Now is a great time to brush up on your local, state, and federal compliance requirements. Ongoing training can not only provide a good refresher for your team, but it is also an opportunity to confirm that your processes and procedures are compliant. EFG’s team of AFIP-certified F&I trainers and account managers can provide critical guidance through in-person and online training, deal audits, F&I process reviews, and with AFIP certification courses for your team. Contact us today to stay on a profitable and compliant path while you’re waiting for those units to roll onto the lot.