Prospects for any additional monetary stimulus prior to the November election declined significantly when a whittled-down Republican plan failed in the Senate on a partisan vote. The proposal amounted to a fraction of the $1 trillion plan Republicans had offered in negotiations with Democrats, who in turn are demanding more than twice as much. The failure to compromise would leave millions of jobless Americans in potentially dire straits, as they exhaust traditional jobless benefits and states run out of additional funds.
For powersports dealers, the last quarter of this year could be very different than the first three quarters. To recap, sales of powersports vehicles, led by ATVs and other recreational units, set records in Q2, with average major unit sales up 60.7 percent and overall revenue gaining by 51.2 percent. Much of this boom was spurred by stimulus funds, coupled with a desire to get outside safely.
Now, the country remains in the grips of the pandemic. According to the Department of Labor, more than 55 million workers have filed for benefits over the past six months. Businesses continue to lay off hundreds of thousands of workers as they grapple with fewer sales and depleted federal aid. Yet despite facing unprecedented economic challenges, over half of U.S. consumers report saving more, according to CIT’s new survey conducted by The Harris Poll. The survey also states that 60 percent of Gen Z and Millennial consumers reported an uptick in savings. When thinking about the future, another 76 percent of consumers are somewhat to very likely to save more than they usually do each month.
The question is – will consumers part with some of that savings on a new powersports vehicle?
Positioning for a Stimulus-Free Fall
Right now, the signs are mixed. While inventory is short right now, manufacturers have begun to push out new 2021 units. Many powersports dealers are already taking deposits on new units, meaning they’re selling the 2021 units before they even arrive at the dealership. In fact, many dealers are also reporting that they’ve already met their 2020 forecast for the entire year.
This year has been a whirlwind with dealers scrambling to meet consumer demands. Now, dealers are well positioned to ride out any further slow down in powersports buying and actually have the necessary breathing room to essentially put their houses in order.
We’re seeing more powersports dealers investing in training to boost unit sales, F&I penetration, and fortify compliance. Powersports dealers lucked out at the beginning of this year with an unprecedented level of sales spurred by the government stimulus. This resulted in a general rush to move metal as fast as possible, meaning corners were cut, processes were relaxed, and the pressure to maximize profitability as much as possible on every sale was lessened. Now with lean times ahead, all those measures need to be beefed up once again, especially when it comes to F&I product penetration. We all know that in lean times, F&I products make all the difference in increasing dealership profit margins.
While the end of 2020 may not have the same shine as the beginning, there are still significant opportunities for profit with the right training and insight into F&I product performance. With more 40 years of experience, EFG Companies is committed to developing market-differentiating solutions for our clients. Find out how we can help you transition to a more profitable future.