After a few years of strong revenue growth, 2023 has marked a firm reversal of this trend in the powersports space. According to composite data from U.S. dealers who use Lightspeed DMS, powersports dealers continued to see overall revenue declines in the third quarter. However, there are some bright spots. That same report reflected small increases in service revenue across the nation. In addition to service revenue, smart powersports dealers are recognizing the value of back-end F&I profitability. Additionally, while it remains unclear how the Federal Reserve will address interest rates in 2024, some recent signs of inflation easing this month could free up some cash for consumers and prompt them to return to their powersports dealer.
According to a U.S. Commerce Department report issued in early December, prices for durable goods declined for five straight months as supply chain delays eased. A University of Michigan Surveys of Consumers December report revealed that consumer sentiment soared 13 percent from November metrics, reflecting an improvement in the expected inflation trajectory . Simply put, consumers are feeling a little better about the economy.
For 2024, we recommend powersports dealers take four simple steps to stay on the path to profitability.
- Lean into back-end F&I products to offset financial pressures on front-end margins and capture more revenue per deal.
- Conduct thorough training with F&I managers on managing their lending spread to work with lenders to accept more deals with thin-file customers.
- Refresh the F&I team on how to change cash deals to financing.
- Provide more thorough training with the sales team, from landing the customer on a unit they can afford to training on market-differentiating products and messaging.
Boosting staff training, offering the right product mix for your customers, and educating the consumer on value can give your team and buyer confidence that they’ve reached the best deal.
Products and processes boost profit
The pandemic changed the powersports market in more ways than one. While revenues increased, specific market segments saw more growth than others. Millennial families jumped into the powersports market with both feet, looking for escapes for the entire family. This led to a steep rise in ATV, UTV, and powersports purchases. While overall spending in the powersports space has slowed, these segments remain top performers.
EFG took this shift in purchasing behavior to heart and developed a suite of marine and powersports products designed to put more money in the dealer’s pocket while protecting customers from the high cost of repairs or a change in financial status.
Our Marine Protection is a vehicle service contract providing dealers with diversified income to maintain steady inventory levels, cash flow, and long-term profitability. The coverage gives buyers greater confidence that their purchase will be protected with flexible terms for up to 84 months based on the type and number of engines. This day-one coverage with no deductible protects customers from the high cost of repairing some of the most expensive components.
WALKAWAY® debt protection gives customers the confidence to purchase a new or used motorcycle, ATV, or watercraft by allowing them to return their vehicle and walk away from negative equity in the event of a covered life-changing circumstance. GAP Protection guards against negative equity up to $25,000 and may make up the difference between the loan balance and the value of the watercraft at the time of a total loss due to accident or theft.
These award-winning products are optimized for marine and powersports dealers – not just off-the-shelf options. They enable dealers to engage in productive conversations with buyers while supporting financial decisions on both sides of the desk.
But without the proper training with both the sales and F&I teams, these traffic-driving products might get shoved in a desk drawer. Ensure your team is well versed in your “why buy here” message and the art of collaborative selling rather than simply taking an order. Take time to truly understand the customer’s needs – and concerns. Utilize EFG’s proven selling process and rely on our industry-leading team of trainers who bring years of experience to your team. Whether online, one-on-one, or in a team setting, we can help your team get back to the basics, lean into each individual sale, and come out on the other side with more revenue on the back end.
As we close out 2023 and look towards 2024, make sure you are investing in your people across all departments to activate your business strategy. 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.
