Category: Dealership Training

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Business Growth Dealership Training Powersports Market

Managing Negative Equity

The powersports market hit a wall in July 2023 versus July 2022, notching declines across sales, parts, and service, with combined revenue declining an average of 6.9 percent across the country, according to 1,700 dealerships who use Lightspeed DMS. This is a dramatic change from the previous month when dealerships saw a combined revenue bump of 4.9 percent. The average dealership reported a 7.3 percent decrease in new and preowned sales revenue versus a year ago.

What happened? Some dealers posit that customers were looking for premium models which remain in short supply. Others shared that consumers continue to feel the pinch of high interest rates, prompting them to press pause on their purchases and retain their existing models a bit longer. As major OEMs debuted their 2024 models this summer, are your buyers simply waiting for the latest and greatest? Or were the July numbers the harbinger of a rough landing for the end of the year?

Either way, it is imperative that dealer principals keep an eye on one key metric – negative equity. During the pandemic, supply chain issues and COVID stimulus checks prompted many buyers to purchase a new unit at record high prices. Interest rates were still manageable, and consumers were stuck at home, looking for an outside recreation option for the family. Fast forward to 2023 and Americans have bought into the lifestyle of getting away from it all and enjoying time with the family, but it’s time for a new unit. Efforts to trade in their entry vehicle reveal a disappointing outcome – they are underwater on financing and the lender is unwilling to take on the negative equity with a new purchase.

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Dealership Training

It’s Not Too Late

Powersports dealerships and salespeople alike have reaped the benefits of healthy profit margins over the last few years. However, just as the margin pendulum swung deep into seller’s market territory, it’s beginning its backward trajectory into a buyer’s market.

According to Lightspeed DMS, powersports dealers reported an overall revenue loss of 1.4 percent during the first quarter of 2023, with service showing the only positive trend. The Powersports Business Q1 Dealer Survey also reflected increasing concern for growing inventory levels in the face of mounting economic fears. Dealers are split on their outlook for the remainder of the year, with many leaning towards “somewhat worse” to “significantly worse” as compared to the end of last year. While inflation and pricing continue to worry, inventory issues have eased significantly.

Where does that leave you? It should be a dog whistle to step on the gas and start selling! I don’t mean lowering your prices or launching some gimmick. I mean empowering your sales team to dust off their selling habits, which may have been dormant for the past three years. The days of relying on ‘pent up demand’ and high margins to make quota are over. The effects of stubbornly high interest rates, lingering concerns about the economy and a potential recession are beginning to show. Your sales team likely needs a refresher course – at a minimum – or a complete training upgrade given the increasing transition to a digital sales platform.

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Dealership Training

Subscription Training Delivers Profit

May closed out with powersports dealers feeling pretty good about the state of their business. According to a Powersports Business Online Learning Series poll, nearly one-third of responding dealers ranked the success level of their dealership as a 9 or 10 (on a scale of 1-10). It’s no wonder! April numbers continued their meteoric rise, with major unit sales rising 39.2 percent in April 2021 versus the previous year. With Spring in full swing and Summer just around the corner – and the rain subsiding for many – the forecast for the first half of 2021 remains very strong for both new and used units.

Despite continued inventory constraints and some concerns about labor and inflationary numbers, it looks like the powersports industry will have a banner year. But what if there was some additional profit to be had from unit sales? And not just small change, but measurable PRU? Those profit opportunities can be found in training.

This month, EFG launched a subscription-based training model which includes both digital and in-person options, delivering timely tools in a learning environment that works best for each employee. The service also supports the new digital retailing model now used by many powersports dealers. Dealer management can select their preferred subscription package across a wide variety of curriculum, benefiting from up to a 20 percent discount from standard training rates.

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