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Stay Flexible This Fall

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.

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Compliance

Yes – Regulatory Compliance Matters

The powersports industry has been on a profitable roll for several quarters with the majority of dealers exceeding sales expectations. Low interest rates and a recovering economy bode well for strong revenue for the remainder of the year.

While revenues look strong, regulatory oversight is also building momentum. New leadership within the CFPB has signaled through their rulemaking agenda that automotive lending practices will garner increased scrutiny. New legislative bodies within state and local governments in many areas have followed suite to respond to discriminatory lending practices and perceived predatory consumer behavior.

Now, you may be thinking that you are insulated. After all, the CFPB has jurisdiction over lenders and Buy Here Pay Here Dealers, not you. It’s important to remember that under the Consumer Protection Act, state attorneys general can levy fines against retail auto and powersports dealers under the Federal Trade Commission. This means that your powersports dealership is just as likely to be hit with large fines as the auto dealership down the street. So, what can you do to protect your business?

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Compliance Dealership Training

Compliance Training in 2021

We are nearing the first full month with the new Administration and there has been lots of activity from the White House. Vaccine distribution is rolling out, COVID-19 cases are trending down across much of the country, and Congress has a stimulus package to address. All of these actions bode well for the powersports industry eager to ramp up sales.

There have been some notable actions around compliance. Former Federal Trade Commission (FTC) member Rohit Chopra has been nominated to head the Consumer Financial Protection Bureau (CFPB). During his tenure with the FTC, Chopra was active in pursuing abusive and discriminatory lending practices. Specifically, Chopra has signaled interest in establishing more protections against auto lending abuses, specifically for members of the military, Black and Hispanic consumers. If confirmed, Chopra would replace current CFPB head Kathy Kraninger.

As we can expect a renewed and revitalized federal compliance program, there is no better than now for a solid compliance training refresher for your sales and F&I staff.