PowerSports Business

Sept 4, 2017

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MOTORCYCLE 44 • September 4, 2017 • Powersports Business www.PowersportsBusiness.com New unit sales reported as 'strong' by 25 percent of dealers BY DAVE McMAHON EDITOR IN CHIEF An online survey of Harley-Davidson dealer- ships in the U.S. and Canada revealed that 58 percent described their business perfor- mance in Q2 as "below plan." Another 25 percent said they were "on plan," with just 17 percent reporting "above plan." Those were among the results compiled from the inaugural Powersports Business/ BMO Capital Markets Q2 Harley-Davidson Dealer Survey of H-D dealer principals and general managers. A total of 42 percent of respondents had sin- gle-store operations, with another 33 percent owning 2 or 3 locations. A total of 58 percent of the dealerships that replied generate between $5 million and $20 million in annual revenue. When asked to rate business condi- tions, 36 percent of Harley-Davidson dealers described Q2 overall business conditions as "average." Another 36 said conditions were either "somewhat strong" or "very strong." A total of 42 percent of dealers described new unit sales as "somewhat weak," although none of them replied "very weak." One-third of dealers said new unit sales were average, and 25 percent called them either "somewhat strong" or "very strong." Pre-owned unit sales, meanwhile, were reported as either "very strong" or "somewhat strong" by a total of 72 percent of the dealers who took the survey. Another 28 percent said used unit sales were "average." No dealers who took the survey described pre-owned bike sales as either "weak" or "somewhat weak." PG&A sales in Q2 were described as "average" by 50 percent of the dealers. Another one- third said sales were "somewhat weak," with only 17 percent saying they were "somewhat strong." Service department business was rated as "somewhat strong" by 59 percent of the dealers, with another 33 percent reporting the service department as "average." F&I remained average for half of the dealers who took the sur- vey, with 1 in 4 reporting F&I as "very strong." H a r l e y - D a v i d s o n M o t o r C o . ' s M a y announcement that it has formed an exclu- sive alliance with motorcycle rental opera- tor EagleRider was among the Q2 business transactions that got the thumbs down from Harley-Davidson dealers. EagleRider will exclusively offer current model year Harley- Davidson motorcycle fleets in the touring and large cruiser motorcycle segments, and Harley-Davidson will work exclusively with EagleRider to provide rental, travel and tour experiences from its U.S. dealership network. Dealers reported growing interest from younger riders in the Street 750, but economic conditions and pricing are combining to decrease sales to that customer. Even so, dealers at a rate of 67 percent expect unit sales growth to be flat-to-5 percent in the next 12 months. No dealers expect to see unit sales decline by more than 5 percent over the next 12 months. Driving that outlook are positive comments from dealers who took the survey about a variety of models, including Road Glide, baggers with the all-new 107 cubic inch Milwaukee-Eight engine and Street Glide Specials, among others. The most disappointing models, according to dealers who completed the survey? Street and Softail made their way to the top most often. Dealers also appear to be in a good spot with inventory, as 75 percent reported new unit inventory as "about right." One in three dealers who took the survey said their dealership profit margin was "somewhat worse" than it was a year ago, with half calling their profit margin "about the same" in that period. As for those rumblings about Harley-David- son Motor Co. buying Ducati? When asked if Harley-Davidson should acquire Ducati, 55 percent of the responding dealers said "yes," and 45 percent replied "no." I t ' s t h e o n l y i n d e p e n d e n t s u r v e y of its kind. Dealers interested in tak- ing the Q3 survey should send an email to PSB editor in chief Dave McMahon at dmcmahon@powersportsbusiness.com. Five Harley-Davidson dealers who complete the survey will be randomly selected to receive a $100 Visa gift card. PSB Harley dealers find pre-owned a hit in Q2 Q2 2017 POWERSPORTS BUSINESS/BMO CAPITAL MARKETS HARLEY-DAVIDSON DEALER SURVEY APPROXIMATELY HOW MUCH REVENUE DOES YOUR DEALERSHIP GENERATE IN A TYPICAL YEAR? HOW HAS SPRING WEATHER AFFECTED YOUR BUSINESS IN Q2? +20% or better 8% +10% 8% +5% 25% Flat 42% -5% or worse 17% Significantly better 17% Somewhat better 8% About the same 50% Somewhat worse 25% $5-10 million 25% $10-20 million 33% $20-40 million 17% $40-$50 million 8% More than $50 million 17% Above plan 17% On plan 25% Below plan 58% Significantly helpful 8% Somewhat helpful 17% No impact 41% Moderately negative 17% Significantly negative 17% WHAT TYPE OF GROWTH ARE YOU EXPECTING OVER THE NEXT 12 MONTHS (NEW PRODUCTS ONLY, MEASURED IN UNITS)? IN GENERAL, TO WHAT EXTENT HAS YOUR BUSINESS OUTLOOK CHANGED COMPARED TO SIX MONTHS AGO? HOW WOULD YOU CHARACTERIZE YOUR CALENDAR Q2 (APRIL-JUNE) BUSINESS PERFORMANCE RELATIVE TO PLAN? PLEASE RATE THE FOLLOWING: Indian adds customer experience center in Iowa Spirit Lake factory allows rider to connect with brand Indian Motorcycle announced in August the opening of an Experience Center at its Spirit Lake manufacturing facility. Based in Iowa, the Spirit Lake Experience Center is a free offering for motorcyclists looking to connect with the iconic American motorcycle brand. The Indian Motorcycle Spirit Lake Experi- ence Center will showcase current and historic Indian motorcycles and offer complemen- tary behind-the-scenes tours of its world-class production facility. Visitors will observe the assembly process that's conducted from start to finish with robotic machinery and witness new Indian motorcycles come right off the line. The Spirit Lake Experience Center will also serve as a venue for private events. "As America's first motorcycle company, we have a rich history and a loyal follow- ing of motorcyclists," said Steve Menneto, president of Indian Motorcycle. "Right in America's heartland, the Experience Center not only serves as a unique destination for motorcyclists to engage with the brand, but also showcases our outstanding people who build premium motorcycles." Menneto welcomed the new Experience Center with Spirit Lake employees, friends and family members during an honorary ribbon- cutting ceremony. The Experience Center will be open for complementary tours on Mondays and Fri- days through Nov. 3. Tours will reopen in 2018. Tours will be conducted through appointments only, which can be made by calling Indian Motorcycle Spirit Lake at 712/336-6955. PSB Source: Q2 2017 Powersports Business/BMO Capital Markets 18% 8% 36% 8% 25% 18% 17% 36% 17% 59% 17% 37% 33% 28% 50% 33% 50% 18% 42% 33% 9% 8% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Overall business conditions New unit sales Used unit sales PG&A sales Service department F&I Very weak Somewhat weak Average Somewhat strong Very strong

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