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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.

Categories
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.

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Featured

Winning with Excellence

As we close out the first quarter of 2022, powersports dealers are seeing some positive signals, mixed with some areas of concern. According to CDK Lightspeed DMS, revenue from new and used units grew 3.4 percent in January 2022, versus January 2021. Service saw a 1.4 percent decline as compared to a 13.2 percent increase in December. Overall, average dealer revenue was up 3.0 percent for the month. While this is down notably from the high-flying days at the beginning of the pandemic, it’s still a positive.

Areas of concern continue to be available inventory for both new and used units as well as the rate of inflation. Speaking of inflation, a new wrinkle popped up this month as the Federal Reserve raised their interest rate a quarter of a point and signaled six more increases planned for 2022. While these moves are made to tame the rise of inflation, the impact the average consumer can expect to see includes increases in the interest charged on credit card revolving debt, higher mortgage rates, as well as auto and powersports loans.

This monetary tightening may not affect powersports customers immediately. But there is one area that dealers can boost right away….and it might even be free. Dealers can ensure that the entire ownership experience for their customers is one filled with excellence. This intangible, anecdotal attribute will lock in the sale today and for every repeat interaction. It can even bring new customers to the store in the form of referrals and stellar reviews. All it takes is the commitment from every team member and business partner to ensure that each customer engagement is performed with excellence!