PowerSports Business

May 21, 2018

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w w w . p o w e r s p o r t s b u s i n e s s . c o m INSPIRING SUCCESS THROUGH MARKET INTELLIGENCE May 21, 2018 • Volume 21, Number 7 • $3.99 Dealership gets spring snowmobile sales boost with event support Wells Fargo CDF exec Jeremy Jansen 'cautiously optimistic' for remainder of 2018 With the Q1 2018 Powersports Business/ BMO Capital Markets Dealer Survey show- ing improvements over both Q4 2017 and the year-ago quarter, the encouraging results enticed us to take a look at the overall dealer body heading into the spring selling season. One of the key indicators to assess the health of the U.S. dealerships is the state of floorplan financing. To take a closer look, Powersports Business editor in chief Dave McMahon and Jeremy Jansen, Motorsports President at Wells Fargo Commercial Dis- tribution Finance, discussed the current powersports marketplace. POWERSPORTS BUSINESS: Looking at the first quarter of 2018, how would you assess inventory turns at dealer- ships compared to Q1 2017? JEREMY JANSEN: Inventory turns across the industry have been slightly elevated. Turns across the industry right now are about 2.5 times annually.The biggest thing we see right now is the health of the channel when you look at inventory aging. Aging (over 360 days in inventory) is down significantly from Q1 2017. It's as low as I've seen it on a dollar basis in the last three years. Overall the deal- ers are reasonably satisfied with inventory levels that they have on the floor. We're also starting to see wholesale volumes pick back up again. There are a few small pockets of whole- sale volume softness, but by-and-large across the country, we've seen slight increases year- o v e r - y e a r i n w h o l e - sale volume, both with motorcycles and off-road vehicles. PSB: How do you see the financial strength and outlook of the dealer body at large? JJ: We feel good about the condition of the dealer body. There are a couple of drivers for that, and one is the aforementioned inventory aging — the less aged inventory you have, the lower your interest expenses generally. So that's a financial improvementfor the dealer. We also continue to see dealership consolida- tion. Our team will process 20 to 25 dealership acquisitions per quarter, and typically we are seeing a stronger, long-term player acquiring a weaker financial profile dealer. Net-net, that's going to improve the quality of the dealer base overall. When we look at other risk manage- ment factors such as delinquency or non- earning assets, they're all in a very comfortable band. Another portfolio health indicator is the amount of dealers on a monthly basis that convert into our workout group. That monthly cadence has been very consistent for the last two-three years. We are not seeing any spikes in what we would consider challenging loans. Dealer body health rising with decline of aged inventory See page 26. JEREMY JANSEN See Wells Fargo CDF, Page 8 Eye-catching entry is just the beginning Technology, style upgrades highlight new space for Euro dealership On Any Moto in Arizona BY JIMMY GILLIGAN STAFF REPORTER On Any Moto, a dealership in Tucson, Arizona that sells mostly Ital- ian brands, recently opened a brand new location that triples the size of their footprint. The new 10,000-square-foot dealership, located at 2535 N. Jackrabbit Ave., is just over a half-mile away from the dealership's previous location. But in terms of technology and design, one could call it worlds apart. "We went after uniqueness, style and we're definitely state-of- the-art — we have a lot of technology in the building," said executive vice president and general manager Michael Battaglia, who added that the space was designed and built to fit retail standards set by Ducati, one of the dealership's major lines. The most compelling feature of the new space is at its entrance, where On Any Moto's massive 40-foot radius awning that greets visitors is made to model the Ducati trellis motorcycle frame. Photo courtesy of On Any Moto See On Any Moto, Page 8 MIC prioritizes ridership growth during meeting Vitrano, Boderman, Woodruff all re-elected to MIC Board The Motorcycle Industry Council Board of Directors in May re-elected Paul Vitrano as board chair, Chuck Boderman as vice chair and Jim Woodruff as secretary/treasurer. The board also committed to doubling down on efforts to attract new riders during its two-day strategic planning meeting. See MIC, Page 6 The Motorcycle Industry Council, Specialty Vehicle Institute of America and Recreational Off-Highway Vehicle Association are praising an order, signed by U.S. Secretary of the Interior Ryan Zinke, that directs bureaus within the Interior Department to create plans that develop or expand recreational opportunities on public lands. Above, media members enjoyed public trails in the Uintas Wilderness of Utah during the Cam- Am Maverick Trail press intro. Photo by Wayne Davis

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