Ready for the Rebound?

by

Note: the following is the “From the Editor’s” column appearing in the October issue.

Here’s an exercise: Enter the words economy and rebound into Google’s News search function. You’ll get some interesting results.

The day I’m writing this column, I perform this very search. The first story to pop up by relevance is a Wall Street Journal article, the lead paragraph of which reads, “The U.S. economy and financial markets are improving, but are still shaky and are vulnerable to further shocks, Federal Reserve Bank of Atlanta President Dennis Lockhart said.”

I’ve been curious what the policy wonks across the country are prognosticating for a very specific reason. In the course of researching and reporting a handful of stories recently, I’ve heard a phrase with a common theme running through that sounds something like this: “Making sure we’re doing everything we can to brace for when the economy turns around.”

The first time I heard talk about the economy turning around was last year, and it sounded a bit more like pie-in-the-sky hopefulness than what I’ve been hearing lately. And thank goodness for that doubt — this was before things really augured into the ground in September 2008. When these good wishes were being said, most people could only see that things were in a tailspin.

But as of late, this has all come with a more flat-toned seriousness — and hopefulness, just not the pie/sky-sounding kind. One of the more specific examples came from Yamaha Motor Corp. powersports president Henio Arcangeli, who was describing the scene at the OEM’s recent dealer business meetings that occurred in 26 locations nationwide. (Why this instead of the yearly blowout in a single location? How about a turn toward the more economic and efficient?)

Said Arcangeli, “All the dealers that I spoke to yesterday, they’ve taken very decisive actions to improve their overall business to weather the storms and come out much stronger, once the economy picks up.” From this group he heard stories of dealers renegotiating leases and business service contracts, others turning their attention to F&I business, and many focusing on upselling parts and accessories.

“Everybody’s looking to operate a more productive dealership because they have to be able to make a profit with less of a volume base,” he added.

Earlier that month, I’d had a chance to sit down with Western Power Sports president Craig Shoemaker at the distributor’s national sales meeting in Boise, Idaho. He said business was slightly up for the year, with replacement items selling better than the high-dollar stuff. Shoemaker also said he believed the company was in a good position for the turnaround given its upward trajectory of the past five years.

That growth pattern meant that there were a (growing) sales force in place, a (growing) pool of company employees on hand, a number of telemarketing sales reps to handle those areas just out of reach, and distribution warehouses in key locations throughout the country to expand that reach. The main thing was that Shoemaker said he believes that once the housing market comes back, the powersports market will come back right behind — and then shoot ahead like a rocket.

Back in August, columnist, former publisher and industry idol Mike Vaughan recounted a little story about the last time the business took a header. To wit: When the motorcycle industry took a dive in 1983, Vaughan and the rest of his marketing wonks at Kawasaki faced a severely slashed budget and had to get clever or get out. The result? An in-house publication, grassroots marketing and an advertising campaign that focused on riding — all examples of doing more with less. OK, it helped that Kawi had hit the Ninja jackpot, but these ground-up efforts, combined with the bikes, helped the OEM pull up a pretty sweet slice of market share — No. 2 behind Honda.

“The point of all this is that in a declining market, sometimes the only thing you can do is work at gaining market share and managing your business better, and learn to live with smaller gross sales,” Vaughan wrote. He added that it’s also a good idea to turn your focus to your existing customers, the people who have already made a commitment to motorcycling.

I suppose sales are built on a backbone of optimism, and in a down market optimism is one of the things that drives people. But there’s obviously some smart thinking involved with survival. So the question is: How have you been preparing for when the market takes a turn? And would you be ready if that happened next week? Drop us a line at editors@dealernews.com to let us know.

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