The powersports market has struggled this year to maintain the high profit margins of the previous few years. Between inventory levels rising and lending rates skyrocketing, front-end margins continue to feel the pressure. As Fall hits several regions known for ATV/UTV use, powersports dealers are hoping the fourth quarter shows some bright spots.
The economic indicators paint a murky picture. While the rate of inflation held steady in September at 3.7 percent, consumer sentiment trended downward reflecting the growing impact of rising prices on discretionary spending. A strong labor market coupled with decreasing prices for fuel and groceries could provide a glimmer of hope.
While these factors are largely out of your control, there is one thing that can make a notable difference – relearning the art of negotiation! Chances are your dealer staff has turned into order takers, giving the consumer a ‘take it or leave it’ attitude that either turns them off completely or shows them a narrow selection of units that don’t meet their needs. I’m not talking about the hard-nosed, fight for every dollar type of negotiation. I’m talking about engaging closely with customers, understanding their needs and financial situation, and working with the entire dealership staff to find the right unit for the customer.
During the pandemic, vehicle inventory was limited, and dealers were able to charge a solid mark-up on each unit. Interest rates were low and consumers with some incentive cash were willing to pay a higher price. The sales team simply took the order, handed the customer over to F&I to close the deal, and confirmed the delivery date with the factory.
Fast forward to today and the world of retail powersports is very different. New unit inventory has largely returned to pre-pandemic levels and consumers have a host of makes and models from which to choose. But, rising interest rates on new unit loans coupled with online shopping turns many potential buyers away – thinking they can’t afford a new bike or ATV. Or at least they think they can’t.
And why do they think they can’t? Because they don’t know their options. With the rise of online shopping, consumers have more tools in their hands than ever before, but few actually use them. Many consumers still need a trusted expert to help them determine the unit must-haves and nice-to-haves to place them into a unit they can afford.
It takes skills to hold these conversations. For experienced sales professionals, that muscle has atrophied a bit. For new team members, today’s selling environment is new territory. And, for F&I team members, the concept of working with the sales team to provide training on affordability is often a foreign concept. Collaborative engagement and negotiation is a critical skill and many dealership teams are lacking in this department.
The good news is – these negotiation skills can be reinvigorated or quickly learned through focused training. While practicing effective negotiation is an art, the mechanics of engaging, earning the customer’s trust, and discerning their needs can be taught by seasoned trainers.
There is one additional benefit to effective negotiation that involves the entire dealership team – an engaged service drive. Rather than waiting for the customer to need service or a repair, collaborative negotiation involves the service team at the time of the sale. Even if it’s a simple introduction – or a detailed explanation of maintaining an off-road ATV – bringing the dealership team to the negotiating table demonstrates that the customer isn’t just another sale. This level of engagement creates invaluable customer satisfaction.
As you create your 2024 business strategy, make sure you are investing in your people across all departments to perfect their collaborative negotiation skills. Work with your provider to deliver training that puts customers in the right vehicle. Make sure your team is well prepared to sell – not just take the order. Our proven team of EFG trainers bring years of sales experience to your team. 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 how our team can help you achieve your winning strategy.
