The results of the Q1 2022 Powersports Business/BMO Capital Markets Dealer Survey have been released, reflecting a distinct change in sales. For the third consecutive quarter, 27 percent of responding dealers indicated their business was below plan, 12 percent were ahead of plan and 61 percent were on plan.
The February CDK Lightspeed Dealer Management System report showed a bit of a bright spot with major unit sales up 13.4 percent versus February 2021. Revenue also increased 11.3 percent as compared to the three percent gain in January 2022. But these numbers are a far cry from the roaring revenue generated during the height of the pandemic.
The primary culprit of these below-plan numbers is lack of new unit inventory. The supply chain continues to wreak havoc on manufacturing, prompting OEMs to ship bare bones chassis to dealers in order to have something to fill the showroom. The continued microchip shortage coupled with rising inflation and gas prices is impacting everything from gauges to sensors for new units. As these items trickle in, dealers are quickly installing parts to move completed units out the door.
As with the retail automotive market, many dealers are moving to a “pre-order” sales model in order to get units on the books and pressure suppliers to ship parts. With sparse inventory, powersports sales teams are proactively taking pre-orders, and websites are reflecting “book now” options for buyers hoping to have a new bike in time for the summer. This is a business-savvy strategy for the dealer and enables the OEM to calculate actual demand and forecast materials and manufacturing needs.
But there is one thing missing in this forward-thinking approach. Dealers are literally leaving money on the table. By taking a pre-order for just the bike – and not setting the stage for the accompanying F&I package – dealers are missing valuable revenue at the point of sale.
Increase revenue potential at pre-order
Let’s consider this scenario. The customer chooses the bike of their dreams, but it won’t be available for at least 60 days. Undeterred, the salesperson books a pre-order sale, complete with feature customizations. The excited customer puts down a deposit on the bike and the dealer communicates the order to the OEM. Sixty days later, the bike arrives, the customer can’t wait to take possession and quickly rushes through the final paperwork. Having suffered delayed gratification for two months, the customer has little interest in a discussion about protecting their investment. A bike was sold but valuable profit escaped the dealer’s balance sheet.
There is a smarter approach to maximizing F&I revenue on pre-order sales. During the pre-order process, begin the discussion on the needed consumer protection products that should accompany the purchase. The time between taking a deposit and final delivery is perfect for consumer education. It gives your customers time to really consider the benefits available to them and positions your team as trusted advisors. When the customer arrives to finalize the sale, the F&I process is streamlined even further because the products were presented ahead of time, which provides your customers with better service and helps your team process more transactions in a given day.
Just as features can be customized, so can F&I options. On day 10/15/30/45 or when the unit arrives, complete the normal process, building in the specific F&I products that meet the customer’s needs. When the customer arrives to complete their paperwork and take possession of the long-awaited unit, the F&I products are already built into the transaction, the unit is protected, the customer is happy, and the dealer has more revenue to offset struggling sales.
Right now, it’s still up in the air how long supply chain constraints will continue to hamper powersports sales, or whether the pre-order sales model is here to stay. But it’s a proven best practice to engage the customer in F&I discussions early in the sales process.
Our proven team of advisors can assist you and your team with the training, tools, and resources needed for your powersports dealership. At EFG Companies, we’re more than an F&I provider, we’re your business partner with years of expertise in the powersports industry. Contact us today to learn more about winning with excellence and boost your success for 2022.