Archive for October, 2010

Off To EICMA, World’s Largest Motorcycle Show

October 29, 2010

It’s Friday afternoon, and in a few hours I’ll be boarding Delta flight 258 in Minneapolis headed for Milan Italy and EICMA, the world’s largest motorcycle show.

The show opens Tuesday and runs through Sunday, Nov. 7. I’ll be on the floor most days preparing reports that you can read here.

If you’ve not had an opportunity to visit EICMA, here are some numbers to consider: EICMA, which is open to consumers from Thursday to Sunday, drew 450,000 visitors last year, compared to the Dealer Expo which draws less than 20,000 industry only attendees. This year at EICMA, there will be about 1,100 exhibitors from 35 countries set up in six show halls that cover 505,000 sq. ft.

It’s a busy schedule. Tuesday and Wednesday are so-called trade days. That’s when much of the work gets done because there are no consumers jamming the aisles and clogging the booths.

These are the days when companies announce their new products to the industry and the news media. At this moment, there are 23 press conferences scheduled during the two days, roughly one every 30 minutes from the 10 am opening Tuesday to closing at 4 pm Wednesday.

Interestingly, some of the more savvy and aggressive companies have leaked unofficial information on their products prior to the official introduction in order to maximize coverage in magazines and blogs.

I’ll be working the show with Dealernews Editor-in-Chief Dennis Johnson, who has posted his own summary of the show here so I won’t go into all of those items. But here are some of the items on my To Do list, in no particular order:

  • Participate in selected press conferences, including EICMA’s state of the industry session, and sessions by several of the major OEMs.
  • Check out the Chinese and Taiwanese pavilions. I want see what new companies and products might be coming to the U.S.
  • Visit the U.S. Pavilion to discuss exhibitor plans for selling into the European markets.
  • Identify EICMA’s plans for it’s second motorcycle show in China next year.
  • Talk with Italian motorcycle officials such as Constantino Ruggiero, director of EICMA, who is retiring this year. I want to get his view on the 2011 EICMA-China show and his views on the Italian motorcycle industry.
  • Walk the floor to look for new products and new companies and pick up as many news tidbits as I can.

Okay, I’ll be busy at the show, but I’m also planning to sample some of the great dining and shopping in this buzzing fashion center. After all, I do have to provide a bit of perspective for the Big Show, don’t I? JD

Contact me with news tips and story ideas at
joe@powersportsupdate.com or 612/845-8091

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2011 Doesn’t Look Much Better than 2010

October 18, 2010

The U.S. Economy Is In a Flatline Mode.
Consider the Situation When You Vote Next Month

Last January, I attended a dealer 20-Group meeting and offered my outlook for the year. In a nutshell, I told the dealers not to expect a flood of excited customers in the spring; it just wasn’t in the cards. And, in my view, they would be better off planning for a slow season rather than hoping for a heavy increase in floor traffic. I was roundly criticized by one successful dealer for being too negative.

Unfortunately, traffic did not pick up in the second and third quarters and this quarter doesn’t look too hot, either. Now, looking ahead, I don’t think there is much hope for a big improvement in 2011. I’m basing my initial forecast in part on what I’m hearing from a number of sources, and in part on an excellent analysis that appeared Oct. 12, 2010, in the  New York Times. The lengthy report carries the gloomy headline, “Across the U.S., Long Recovery Looks Like Recession.” I suppose I could stop right here; you get the point.

The bottom line is that it’s going to take years to recover from this recession, the downturn that’s been the worst for this country since the Great Depression. Consider the situation as you build your 2011 business plan and as you stand in the voting booth next month.

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Profiting From Failed Competitors

October 13, 2010

“Dealers struggle with this because they feel the pain of their
competitor going out of business.
What do you say to this guy?
It’s not a fun conversation, but it’s something you’ve got to do.”

—Bill Shenk

Nobody likes to see a local business fail. The question is, How do you deal with it? How do you treat a competitor that has failed or is failing? Ignore his problem? Sympathize? Take advantage of his situation? What are you prepared to do?

What if you helped yourself and helped her at the same time… by quickly purchasing some of his most valuable customer assets?

It’s a sensitive situation, of course, especially if you’ve had a cordial relationship with the competitor. But the reality is that when that store closes, several things are likely to happen, and most of them are not going to benefit you unless you take quick action. For example, assuming that he has many of the same lines that you carry:

  • He’s going to have a closeout sale that’s going to suck many of the hot prospects out of the market. That means you lose sales today and in the near future as consumers move up their purchases.
  • When he closes, his OEMs may very well set up a new dealer, or dealers, and if this happens, the new competition very likely is going to be more aggressive and better financed than his predecessor. Now, you have a tougher competitor than you did before; that doesn’t sound like fun, does it?
  • Your OEMs may give you a chance to take over his point, or at least the OEM may sell you his inventory at a discount— if they don’t sell it to another of your competitors.

So, if you wait, your options aren’t very good and they actually could be bad enough TO PUT YOU OUT OF BUSINESS. What are you going to do? I asked Bill Shenk, head of PowerHouse Dealer consulting services and the key man in Dealernews’ Dealer Lab project, if this subject had come up in his 20 Group meetings. It has, he said, and he told me some of the steps that his dealers have taken in this situation.

“Going after ORPHAN CUSTOMERS is one of the best ways to boost your business in a tough economy,” says Shenk. “Orphan customers— those without a dealer relationship— are already in the lifestyle and they are looking for a dealership to take care of them.

“But you have to be PROACTIVE. Only one person is going to get that customer list,” emphasizes Shenk. “OEMs tend to split up the list among surrounding dealers. And the (failed) dealer may have brands you don’t carry; you want to get those names, too.”

First, put sensitivities aside, for the moment, and move into action. Make a list of the things that you can do to take advantage of the big change in your marketplace. Here is a sample Action Plan:

CALL your competitor and tell him that you sympathize with his situation and you want to do some things that will help both of you. Offer to pay him for pieces of his business that he won’t be able to sell elsewhere.

BUY his phone number and have calls to his store forwarded to your dealership. Set up a separate number coming into your store so that your employees know where the calls are coming from. Then they can answer with a special greeting. “You have to tell the customers that you bought the number from the previous dealer and that you are trying to take care of them,” says Shenk. This straightforward approach creates a comfort level with the new customers and creates confidence that you will service their needs, he says.

OFFER to purchase his customer list. There are more customers than the ones who have purchased new units; those generally are available from the OEM. “Say there’s a store 30 miles away that carries one of your lines. A nice store might be worth 100 new units a month,” says Shenk. “So, if you get a list of those who purchased in the last two years, you might get 2,500 names from the OEM. But there really might be 10,000 active customers on the total list, people who have purchased parts and accessories and service.”

REVIEW the dealer’s DMS. You’ll get more information here than you would from your OEM. The DMS probably will provide you with the customer’s entire purchase transaction record.

RUN ADVERTISING aimed at your competitor’s customers, offering inexpensive products and services. “It’s easier for these prospects to try you and this new experience for $100, rather than buying a unit for several thousand dollars,” points out Shenk. “It’s a lot easier to drive to your store and try it for a small, first time purchase.” But don’t spend a lot of money on splashy ads. “The cost for advertising to attract these customers can go way through the roof,” says Shenk. “There’s no ROI here.”

PAY THE DEALER to write a letter to his customers recommending your dealership as the place to go for service and support.

SCOOP UP an existing franchise that could fit your operation as quickly as possible. “My preference is to be a motorcycle dealer or an ATV dealer,” says Shenk, “rather than a single-line store. People would rather go to a store that has it all, rather than a one-brand store. That’s been proven.”

Working with your failed competitor isn’t something most of us want to do, but it’s something that you should definitely consider and then move on quickly. “This is a real time sensitive deal,” says Shenk. “Dealers struggle with this because they feel the pain of their competitor going out of business. What do you say to this guy? It’s not a fun conversation, but it’s something you’ve got to do.”  JD

Contact me with news tips and story ideas at
joe@powersportsupdate.com or 952/893-6876

Major Management Changes at CFMOTO

October 8, 2010

CFMOTO, the Chinese powersports company, has made several top level management changes to its U.S. subsidiary based in suburban Minneapolis, according to sources close to the company. The changes include beefing up the management team with outside professionals and a shift in responsibility for Lev Mirman, the former president of the U.S. operation, CFMOTO Powersports.

Mirman retains his equity position with about a 10% ownership of the U.S. operation. Under the new setup, Mirman will focus on legal and regulatory concerns involving CARB, DOT and EPA.

The company declined to discuss the changes in any detail when I contacted the CFMOTO office today.

The new management team is designed to increase efficiencies, and help the company expand its product portfolio into new areas beyond its ATV, scooter and motorcycle products, sources told me. CFMOTO has about 200 U.S. dealers, down from a high of about 215, but it has been adding dealers this year, the company said.

CFMOTO is one of the few Chinese manufacturers that has established its own subsidiary in the U.S., similar to the Japanese models in which the manufacture manages its own brand through its own manufacturing and distribution channel.  Most other Chinese and Taiwanese companies simply hire independent importer/distributor companies to handle their products in this market.

CFMOTO’s parent company,  ChunFeng Holding Group, Ltd., was established in 1989. The group has eight wholly-owned subsidiaries engaged in manufacturing of liquid cooled engines, scooters, motorcycles, vehicle parts and accessories, and investments. The largest engine it manufactures is a 500cc unit, and the smallest is 50cc. JD

Contact me with news tips and story ideas at
jdelmont@dealernews.com or 952/893-6876.

Retailing Questions Continue for Powersports

October 4, 2010

Wells Fargo Consumer Conference

There wasn’t much to excite investors at the recent two-day consumer conference held by Wells Fargo Securities, according to a report issued by the company last week. The conference was held Sept. 29-30 in New York, but there were not many powersports companies among the 64 firm that gave presentations to the analysts. Perhaps the best known powersports participants were Arctic Cat and Brunswick. Other related companies included International Speedway Corp., Penske Automotive, Tractor Supply, Marine Products, and U.S. Auto Parts Network.

Several trends ran through the presentations, according to reports compiled by attending analysts. These include: A continuing major shift to online marketing in a number of forms; personalized marketing is growing, using the Internet and social media to drive sales at online and bricks and mortar sites; increased sourcing costs which could put pressure on margins even though many companies are operating in a more efficient manner, and holiday inventories seem to be in good shape.

“Powersports retail sales visibility likely will be clouded until the beginning of seasonal sales in March,”  Senior analyst Tim Conder wrote in his conference summary report. Near-term price movements of powersports stocks most likely will be tied to general economic activities, he wrote. In his conclusion about the leisure segment, Conder says he likes certain toy companies, followed by cruise lines and powersports companies. Not a real strong recommendation.

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Gear ethics 101

October 4, 2010

This story originally appeared in the Dealernews October 2010 issue.

As part of our ongoing coverage of the importance of selling gear — for you and your customers — we asked you to submit comments on how you deal with selling riding apparel and safety equipment. We wanted to know if you bring up the possibility of crashing when discussing gear. We asked if selling customers on good riding apparel was the ethical thing to do or just good business. True, you can’t demand customers protect themselves, but it just seems to be good common sense that they do.

We didn’t get an avalanche of responses, but those that did come in were well-thought-out. Two stood out, one from Art Elting, the owner of Country Rode Motowerks, a BMW/Euro store in Rochester, N.Y. The other came from Bob Henig of Bob’s BMW in Jessup, Md. Hmm, both Beemer stores. A coincidence you think?

Elting’s response is good because of its smart-alecky (smart-alecky always wins for me) nature and offers up why certain riders wear what they wear. Scooter riders (he’s also a Vespa/Piaggio dealer) seem to think they can’t get hurt because they don’t go fast. “Very bad mistake,” he says. Sportbike riders in full-face helmets with shorts and T-shirts? Unbelievable. And cruiser riders in soup bowl helmets, fingerless gloves and leather vests. Have to look the part, right? Wrong. BMW riders? Most wear gear. Most. The way he sees it, you can lead a horse to water, but. … You know the rest.

“We know many people who have had serious road rash, and [it’s] guaranteed, if they do ride again, they’ll wear proper gear. A year of skin grafts is not a walk in the park,” he says.
Henig’s response was more his overall take on wearing gear and the atmosphere he fosters in his dealership. “I firmly believe several things — that as dealers we are responsible for setting the right example for our customers, our employees and the general motorcycle population as well as those who don’t ride but see us out riding.” As such, he requires his entire staff to suit up head-to-toe if they’re on a dealership-owned bike. Techs must wear a jacket, boots, a helmet, gloves and a high-visibility vest on test rides. Service advisers must wear helmet and gloves when riding a customer’s bike around the building. Customers who demo bikes are required to be in head-to-toe gear at all times. Henig maintains a full size range of demo gear (boots are coming soon) in men’s and women’s sizes, and he allows customers to test ride gear off the rack. To press the point, he shares stories from other customers about how the gear he sold them helped save their skin, their bones and sometimes their lives.

“My staff is required to strongly suggest that while wearing all this stuff is not legally required, it is the smart thing to do,” he says. “We don’t need to be pushy, but we do need to be sure we educate them [about gear] and [tell them] that maybe their friends are not watching out for their best interests if they still wear jeans and T-shirts while riding today’s motorcycles.”

Did I choose these two examples because they meshed with my beliefs? Absolutely. I’ll never understand why some people dress the way they do when they ride. Should they have the freedom to do so? Yes. But they’ve also got the freedom to hit themselves in the head with a hammer or eat glass. Should they be forced to suit up by law? Probably not.

I suppose my question is why wouldn’t they? I’ve seen the aftermath of bad accidents as have most people who have been around powersports long enough, and it’s pretty ugly. Riding is inherently dangerous and gear won’t save everyone, but it’s all about minimizing the risk. So to the T-shirts-and-shorts-clad duo I saw riding two-up on the 405, I just have to ask why? If they don’t think of themselves, don’t they have families and loved ones to think of? I know this is a question that I will never get answered, but it’s one I’ll always be asking.

How do you sell gear? Let us know.

Dennis Johnson
Editor in Chief
dennis.johnson@dealernews.com