Business Growth

Maximizing Your Opportunities for Profit in 2023

Consumer demand for off-road, boats, and personal watercraft units remained strong for the first half of 2023. However, high prices and financial barriers have impacted sales. While powersports dealers were early movers in digital retailing, they need to take further advantage of this opportunity to strengthen online sales models to have a successful second half of 2023. In addition, a focus on localized financing and improved service capabilities for older models should offset potential revenue loss.

For the powersports and marine industries, the high-flying days of 2022 appear to have come to an end in the first half of 2023. While May dealership revenue growth notched an increase of 8.3 percent for service and sales according to Lightspeed DMS, growing economic concerns have prompted many buyers to delay purchases. The Powersports Business Q1 Dealer Survey reflected that dealers are split on their outlook for the remainder of the year with many leaning towards “somewhat worse” to “significantly worse.”

Although inventory issues have eased significantly and consumer demand remains strong, overcoming rising prices along with growing interest rates will be a tall order for dealers in the second half of the year. Bolstering online sales, taking a customer-focused approach to ownership, and increasing service capabilities to keep those units operating will deliver needed revenue regardless of any economic headwinds.

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.

Business Growth

Protecting Those Gains

This year has certainly brought a lot of positive gains to the powersports industry. The government stimulus coupled with “stay at home” orders early in the year propelled buyers to snatch up ATVs and other recreational units in record numbers. According to CDK, Lightspeed DMS same-store sales for June were up 48.6 percent in the U.S., down slightly from May’s phenomenal 60.7 percent increase in sales.

Anecdotally, the third quarter has continued to be strong regardless of the fact that OEMs simply cannot move fast enough for dealers to capture all the opportunity available. While many dealers are reporting inventory shortages on both new and used bikes, they are also reporting significant gains in pre-order sales, especially within the off-road sector. However, PWC pre-orders are starting to back off because of the season change into fall. Overall, revenue has grown 51.2 percent.

This sales cycle has certainly been a windfall for powersports dealers. However, there are still challenges ahead as we wait to see if and when a second stimulus bill will be passed, as well as the progression of the COVID-19 pandemic in the fall. In light of these factors, how can you protect those gains you received in the second and third quarter?