Hiring Decisions Impact Your Bottom Line

Over the last several months, it seemed like everywhere you looked, there were ‘”Help Wanted” signs and hiring fairs offering sizable referral and signing bonuses. According to the US Department of Labor, the economy added 263,000 jobs in September, and the unemployment rate declined to 3.5 percent as more people entered the labor market looking for work. 9.7 million jobs have been added since President Biden took office, including an average of 378,000 per month over the past three months. However, we’re already beginning to see hiring trends slow as companies prepare for a potential recession in 2023.

While powersports dealers have been setting record profits over the last few years, salespeople have shared in the bounty, raking in significant wage gains tied to their commissions. However, with a recession looming, and inventory on track to becoming right-sized within the next year, dealers are coming to the realization that the current sales-staff might be ill-equipped to adapt to the changing times ahead.

Rather than simply being order takers and counting the commission checks, salespeople will once again need to return to customer service and sales best practices. Those who manage that shift gracefully should do just fine. Those who lack the training, or the capacity to change, will most likely find employment elsewhere.

Business Growth Powersports Market

New Opportunities Spell Success for Second Half

It’s hard to believe we are past the mid-year point of 2022. With inflation rising and consumer confidence dropping, the second half of the year could look drastically different than the first half. However, there are some strategic opportunities for powersports dealers to build in revenue and protect gains generated to date. First, let’s take a look at the state of the market.

The early results of the Q2 2022 Powersports Business/BMO Capital Markets Dealer Survey show generally positive conditions with a few exciting bright spots. 59 percent of dealers ranked business conditions as good or very strong. Activity in the service department continued strong as did pre-owned unit sales. F&I sales gets a gold star with three out of four dealers reporting average or good movement with 15 percent the exceptional dealers reporting very strong results. However, 72 percent of dealers reported new unit sales as flat to negative and 76 percent described inventory as too low.

A new study by CDK Global Lightspeed put a positive spotlight on the personal watercraft market. Average sales price has now exceeded $20,000. Out of every 10 units sold, nine were new. Lastly, Generation X is replacing Baby Boomers as the primary consumer group for powersports and watercraft. According to Pew Research, Generation X consists of just over 65 million people, accounting for 31 percent of the total U.S. income.  Looking ahead, it seems there is plenty of upside for growth and revenue in this market.

Business Growth

Where Are You Making Your Money?

While February numbers showed major unit sales up 13.4 percent, March 2022 numbers from CDK Lightspeed DMS revealed revenue from new and pre-owned sales declined by more than four percent as compared to March 2021, based on composite data from 1,700 dealerships in the U.S. The only positive number in the CDK data was a 4.7 percent increase in service department revenue, countered by an 8 percent decrease in parts revenue. Clearly, consumers are choosing to repair their current bike – if they can get the parts!

Supply chain challenges continue to plague the powersports industry. From new units to used units to parts, 86 percent of dealers said their inventory was too low in the first quarter of 2022. According to the Q1 2022 Powersports Business/BMO Capital Markets Dealer Survey, low inventory woes have increased from Q4 2021. And the pain is being felt across all powersports segments.

While inventory levels may remain dismal for several months, there are strategic opportunities to generate revenue. Let’s consider three tactics that generate profit and strengthen customer engagement.