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NEWS INSIDE STARTERS 3 Q&A 6 STARTUP SUBPRIME 9 GAUGE 10 IS CITI GEARED UP TO FILL CAP ONE’S VOID? p7 3Q • 2016 • POWERSPORTSFINANCE.COM
NEWS INSIDEStarterS 3Q&a 6Startup Subprime 9GauGe 10
IS CITI GEARED UP TO FILL CAP ONE’S VOID? p7
3Q • 2016 • POWERSPORTSFINANCE.COM
3Q 20162
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STAFF
Q&A .........................................6
Ride Today Acceptance .......9
Gauge .................................. 11
Revolving Credit .................7• Is Citi geared up to fill Cap One’s void?
• ‘Substantial’ growth on the horizon forThunderRoad financial, CEO Says
• Startup lender maps plan to addressdealers’ subprime dilemma
• Motorcycle Model 2012 Retention Rates
• Vehicle Values by Segment
• Bike Values by Segment
• Motorcyle Recovery Rates
Starters ................................3• Polaris launches ‘captive-like’ program
• MotoLease rolls out franchise leasing
• ‘Stop fighting’ for prime paper,powersports dealer says
• CFPB poised to regulate powersports
• Sportbike OEM launches captive
• Arctic Cat to expand personnel
• Virtual F&I to bolster subprime growth
Bombardier Recreational Products Inc.’s Can-Am Spyder F3 Limited brings full touring capability to the Spyder F3 lineup, including increased storage capacity, heated grips and footboards, and a six-speaker audio system, according to the company’s website. The three-wheeled vehicle is one of four F3 models that BRP revealed in mid-August at the company’s annual dealer meeting in Orlando. The model is now available for sale and financing on the OEM’s website. “The Can-Am Spyders are for completely different customers, they’re kind of flashy and younger,” Donal Hummer Jr., founder and chief executive of ThunderRoad Financial, told Powersports Finance. “They’re somebody that maybe hasn’t ever ridden a motorcycle but saw this, and then went to get their license.”
Motor Culture
3Q 2016 3
Polaris Slingshot
starters
POLARIS LAUNCHES ‘CAPTIVE-LIKE’ PROGRAM
MOTOLEASE ROLLS OUT FRANCHISE LEASING
‘STOP FIGHTING’ FOR PRIME PAPER, DEALER SAYS
Polaris Industries Inc. has partnered with FreedomRoad Financial to form a
“captive-like” retail finance program, called Performance Finance. The consumer finance program is exclusively offered for new and used Victory and Indian motorcycles and for Polaris Slingshot vehicles, as well as for all other brands of used motorcycles from authorized Polaris dealers, according to a company press release. Polaris anticipates phasing in the financing of other Polaris vehicles throughout 2017. “The Performance Finance structure is creating what I would call the ‘captive-like’ structure,” Mike Speetzen, chief financial officer of Polaris, said in a document obtained by Powersports Finance ahead of the launch. Performance Finance should give Polaris “a competitive advantage,” he added.
Performance Finance will include flexible promotional offers, flat fees paid to dealers as a percentage of the amount financed, expedited funding via document imaging, and dedicated dealer training. Polaris, which sold $4.7 billion of powersports vehicles last year, contacted its dealers on July 31 with enrollment instructions, and dealers were asked to sign a Performance Finance dealer agreement by Aug. 15. Effective Sept. 1, enrolled dealers can submit applications through the goperformancefinance.com website, as well as review applications in progress, instant-message underwriters, prepare contracts, and upload funding packages. Consumers, meanwhile, can manage their accounts, make payments, and view loan history, among other features.
MotoLease LLC launched a new leasing program catered to franchise dealers in
August to boost new-vehicle originations and help franchise dealers increase margins, said Emre Ucer, the company’s managing partner. Only 5% to 10% of MotoLease’s originations are for new vehicles, “but we didn’t have a separate program for the new vehicles,” Ucer said. “We were using the same program for both the new and used vehicles. Now we have our ‘standard program’ for the used vehicles and the ‘franchise program’ for the new vehicles.” The new program, which is offered to consumers through MotoLease’s authorized franchise dealer network, will include zero-to-low dealer fees — even for deep-subprime consumers — that are comparable to credit card transaction fees, Ucer said.
All new motorcycles, including cruisers and sportbikes, are eligible for the program. More than 300 MotoLease authorized franchise dealers have enrolled and are using the new program. “We like to increase our new-vehicle originations, and we believe that the new program is better aligned to make more leases,” he said. Additionally, MotoLease has a “couple new OEM manufacturer relations” expected to be finalized in the coming months, “and this program will be a nice starting point for those OEM programs,” he added.
Powersports lenders need to “stop fighting” over the same end of the credit spectrum
— prime and near-prime consumers — that everybody else wants, in order to increase their dealer penetration rate, said Chris Clovis, owner and operator at Freedom EuroCycle Las Vegas. “You’ve got 100 lenders fighting over the same buyers that only represent 20% of the market,” Clovis said. “Meanwhile, 80% of the market is basically ignored. Lenders enter into the space and scratch their heads about why they can’t penetrate more motorcycle dealerships.” Most lenders are competing for dealers’ prime and near-prime business, “so if you [the lender] want to get that business, it needs to be extremely compelling for the dealer,” he said. “The convenience and financial benefit has to be phenomenal for dealers,” like offering “massive” dealer participation rates, he added. “A dealer has 100 different options, so what are you going to do for that dealer that the other 99 lenders won’t do?” Clovis said. “Well, it can be through money or through convenience.” If the lender is easy to work with — requiring little effort from the dealer partner — dealers will work with that lender, he added.
3Q 2016 5
Arctic Cat Inc. moved its corporate headquarters to a six-story building
in downtown Minneapolis from Plymouth, Minn., in mid-August, which will allow the manufacturer to add 150 to 200 new employees. Arctic Cat, a manufacturer of ATVs, side-by-sides, and snowmobiles, now occupies a 55,000-square-foot office in a historic warehouse. The company’s previous 11,000-square-foot corporate office was “at capacity and unable to meet the future needs of the business,” according to a company release.
“Our new location enables us to bring our leadership team and critical corporate functions together in one space, to better meet the needs of the business going forward,” the company’s President and Chief Executive Christopher Metz said in the release. Arctic Cat will retain its core Minnesota manufacturing operations in St. Cloud and Thief River Falls.
starters
CFPB POISED TO REGULATE POWERSPORTS LENDERS
ARCTIC CAT TO EXPAND PERSONNEL AT NEW HQ
VIRTUAL F&I AIMS TO BOLSTER SUBPRIME
The Consumer Financial Protection Bureau is poised to target subsets of the
auto finance industry — such as powersports lenders — this year, which could start with regulatory scrutiny of servicemember lending practices, said Mary Calkins, partner at Akerman LLP. The laws that could come into play within powersports are fairly broad, she said, but the Servicemembers Civil Relief Act (SCRA), for example, could be an area the CFPB starts scrutinizing. “Motorcycles, in particular, attract a lot of servicemembers, and the CFPB has a whole servicemember office built to protect members of the military,” Calkins said.
Powersports lenders are already on the CFPB’s radar, because the agency has been “very focused on the auto finance industry, and the powersports industry is a subset,” she added. “Regulatory scrutiny has already arisen with regard to Evergreen Bank Group Inc., and that was not because the CFPB was focusing on powersports, but it happened to be encompassed in that investigation and action [of disparate impact].” Calkins was referring to a May 2015 Department of Justice settlement with Evergreen Bank to resolve allegations of discriminatory lending practices relating to indirect motorcycle lending. The consent order required the bank to pay $395,000 in consumer redress and to implement dealer compensation policies.
The best way for powersports lenders to prepare for regulatory examination is to monitor their own compliance systems and lending practices “before they ever hear from a regulator,” Calkins said. “Once regulators come knocking, it could be a little late to make fixes that ward off scrutiny. Lenders need to scrutinize themselves first.”
Full Throttle Finance Co., a virtual F&I office, aims to better serve subprime
consumers and bolster sales growth for smaller dealers by helping declined customers at the dealership get approved for financing, said Joe Becerra, the company’s partner and vice president.
The La Feria, Texas-based company launched early this year and operates “just like an F&I office,” except it targets the smaller dealerships that may not have an F&I office and struggle to serve lower-credit consumers, Becerra said. Full Throttle Finance does not replace a dealership’s F&I department; rather, it works on a consumer-to-consumer basis as a third-party service provider to help get the dealership’s declined clients approved through one of Full Throttle’s eight lender partners. Once the consumer is approved, Full Throttle contacts the customer to discuss payment and rate options, but the consumer’s loan contract and documents are all completed directly at the dealership, Becerra added.
Becerra, also F&I manager at powersports dealership F&T Valley Motorsports, saw a need for Full Throttle’s services through his dealership experience. “Dealerships are losing money, but it’s more about the clients that are getting declined,” he said. In some cases, especially at smaller dealerships, there is no F&I department, Becerra said. Rather, the dealership’s sales personnel are submitting the deals themselves, and if the consumer gets declined, that’s the end of the line, he added, because many F&I employees are not as well educated on finance process or don’t know how to adjust loans terms properly. Full Throttle Finance currently works with eight marine, recreational vehicle, and travel trailer dealerships in Southern Texas, but is actively recruiting powersports dealers, Becerra said. Additionally, the company will hire at least two or three sales and marketing representatives to expand its powersports presence and generate more business, he added.
—Natalie Mattila
SPORTBIKE OEM LAUNCHES WHOLESALE CAPTIVE
American sportbike manufacturer EBR Motorcycles launched a floorplan
f inancing captive, EBR Motorcycles Floorplan Program, in late July, after dfficulties securing a partner quickly enough to provide inventory financing to dealers proved difficult, said Steve Smith, the OEM’s chief executive. “We need to get more of our products out into the showroom,” Smith said. As a smaller manufacturer, sometimes the interest rates offered by the major floorplan financiers are “a bit too high, or just not viable at our current volumes,” he added.
East Troy, Wis.-based EBR Motorcycles, which relaunched in March after a yearlong hiatus, has 15 dealers; its goal is to reach 40 dealers by yearend. Meanwhile, EBR continues to scout third-party floorplan partners. “Because we are a small, unknown party, we have to prove ourselves with the big players,” Smith said. While some providers have expressed interest, “that is a long process, and we didn’t think we could wait,” he added.
3Q 20166
‘SUBSTANTIAL’ GROWTH ON THE HORIZON FOR THUNDERROAD FINANCIAL, CHIEF EXEC SAYS
In April, ThunderRoad Financial LLC became the second powersports lender
— after Harley-Davidson Financial Services — to issue a securitization backed by prime and subprime motorcycle retail installment loans. The Reno, Nev.-based lender has grown its dealer base to more than 300 across 30 states since it launched in January 2014, and has ambitious growth plans for the future, Donal Hummer Jr., ThunderRoad’s president and chief executive, told Powersports Finance.
“We finance street bikes, motorcycles, ATVs, UTVs, domestic and the Japanese metrics, all of it,” Hummer said. “We have about 375 dealers right now, and that keeps going up every day. We’re shooting to get around 600 dealers by the end of the year, that’s what our goal is, and we seem to be on target for that.”
Although the majority of the company’s portfolio is more on the prime side, ThunderRoad extends loans across the credit spectrum in an effort to be more accessible to dealers, Hummer said.
“It kind of makes it easier for them because we’re like a one-stop shop,” he said. “Dealers don’t have to go to various places for subprime deals or prime deals, they can just come to us,” he said. “And since we finance basically all makes and models, it’s really easy for them to do business with us.”
Powersports Finance spoke with Hummer about ThunderRoad’s plans for growth, where consumer demand is headed, and the company’s future plans for the capital markets. The following are edited experts from the interview.
Powersports Finance: Which specific vehicles have gained popularity recently?
Donal Hummer Jr.: Over the last few years, we were seeing big strides in the popularity of ATVs and UTVs, but that seems to have stabilized a little bit. It’s a good market, but I don’t think it’s in any way an underserved market anymore. There aren’t a lot of new things out there, there are some hybrid bikes — the Polaris Slingshot, the Can-Am Spyder — as an alternative to a trike, and I think that that sector of powersports is still developing, but frankly I don’t really know how that’s all going to turn out.
PF: Why is it difficult to foresee the future for those newer products?
DH: We’ve seen some interesting things on those products. What we saw with Harley three-wheelers and with Indian trikes was basically a more mature rider going up in age and not wanting to balance a heavier bike, but still go on the road. The Slingshot and the Can-Am Spyders have completely different customers. They’re kind of flashy, a younger customer, it’s somebody that maybe hasn’t ever ridden a motorcycle but saw this, and went to get their license. But at the same time, we’ve seen some odd things with some of the Slingshots; we’ve seen some older riders — and I mean much older riders — make kind of a bucket list type of purchase. So that’s why I say it’s tough to figure out where that market is going, because you’ve got two real extremes.
PF: ThunderRoad issued its first securitization this year. What did you learn from the process?
DH: What we learned was that there’s not a lot of data out there at all, except for Harley. As we went to market, a lot of new questions were being asked, because we don’t finance just Harleys, we also have a lot of Japanese metrics and European metrics. So, people didn’t really know what to do with us.t was interesting to go through that process and lay out how these loans perform and get the metrics and get them comfortable.
PF: What are your plans for future issuances?
DH: We’re probably going to be looking now at the first quarter of next year, in order to get a large enough securitization together. We started to go down that road last fall and, to be honest, not a lot of things happen in the capital markets between Thanksgivings and the first of the year. So we said, “Let’s do it next year and do a bigger one.” We’re also looking into other types of facilities — we’re in negotiations for those — to actually allow us to grow substantially next year.
PF: Looking out at the second half of this year, where do you think the industry is headed?
DH: I think demand is going to continue to rise. Manufacturers are coming out with such great products now — they are fuel-efficient, they’re fun, and they’ve got more technology features. Bikes used to just have speedometers and turn signals, and now they’ve got a fully interactive display — even on street bikes. So for the customers that like that — which I think is a growing customer base — I think we’re going to see an increase in volume.
I also think you’re going to see that customers are going more high-end than low-end. We’ve seen over the last couple of years that our average ticket has gone up about $1,500. So, obviously customers are migrating towards fancier products, products with more features, and higher performing products.
—L.P.
Donal Hummer Jr., President and Chief Executive,
ThunderRoad Financial LLC
Q&A
WE KNOW. THEY’RE MORE THAN FACES IN THE CROWD.
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NON-PRIME CONSUMERS DESERVE CREDIT, TOO.
3Q 2016 7
IS CITI GEARED UP TO FILL THE VOID?
Revolving Credit
With Capital One Financial Corp. exiting the powersports industry —
allowing its revolving credit arrangements with OEM partners to gradually expire through the first quarter of 2017 — industry leaders are speculating which lender will fill the void. As of September, no lender had thrown its proverbial hat into the ring. It seems Citigroup Inc., however, may be in the strongest position to enter the space.
A major lender appears to be “on the verge of announcing” that it will begin offering the revolving credit product, said Seth Woolf, research analyst at Northcoast Research Partners. “Citi has been quietly assembling the talent and building the infrastructure needed to operate a nationwide consumer credit platform for the powersports market,” he said.
Citi might have already begun the dealer on-boarding process, which could mean that a revolving product is “in the final innings of its buildout,” he said. A “full-scale dealer rollout” could happen as early as the end of the third quarter, Woolf added.
Citi declined comment for this story.
The bank’s potential entrance into powersports was reinforced by its online job board, which in August included four listings for field sales representative positions — specifically for powersports dealers.
The job listings stated that candidates would work with Citi Retail Services — Citigroup’s subsidiary that provides private-label and co-branded credit cards — to develop and manage dealer relationships, and to “execute action plans at district and store levels with focus on integrating credit into dealer culture,
driving increased credit sales, penetration, and new application performance,” according to the listings.
The field sales representatives are also asked to “attend dealer meetings and represent Citi at conferences, tradeshows, and other industry events,” the company wrote. Job requirements include experience in credit card or credit sales, private-label credit card sales or servicing experience, preferred experience in a dealer environment, and preferred experience in the powersports industry.
Establishing the NeedRewinding to August 2015, Capital One
told its OEM partners — Kawasaki Motors Corp., Polaris Industries Inc., Bombardier Recreational Products Inc., and Yamaha Motor Corp. — it would gradually reduce its investment in powersports financing.
Capital One’s revolving credit product came in the form of a private-label credit card deal with partnered manufacturers. The program provided consumers with access to credit that can be used for accessories, service, or powersports vehicles, and was designed to be paid off over a set term.
To that point, Capital One’s move to abandon powersports stirred concern across the industry, prompting challenges for the OEMs it served.
Polaris, for example, was seeking a replacement to fill the Capital One void, but the financing volume was “picked up by its other providers” in the meantime, Chief Financial Officer Michael Speetzen told Powersports Finance in May.
For instance, Polaris’s revolving credit agreement with Capital One — originally inked with HSBC Bank Nevada back in August 2005 and then sold — expired in February and was not renewed. The agreement called for HSBC — and then Cap One — to manage the manufacturer’s private-label credit card program, StarCard, for the purchase of Polaris products, according to Polaris’ annual report.
The StarCard program has yet to be replaced.
Although revolving credit comprises a “fairly small” portion of the manufacturer’s portfolio, “we would like to facilitate providing optionality for our dealers and consumers,” Speetzen said. Revolving credit was the preeminent lending source for Polaris consumers five years ago, but has become somewhat of a “niche market,” and “it is an option we’d still like to have in our portfolio,” he added.
The addition of a revolving credit product, especially if backed by a lender such as Citi, would be a “positive development,” Northcoast’s Woolf said. It could have “an immediate impact” on retail sales, particularly for Polaris, “given that many [Polaris] contacts have noted that a revolving credit product helps to generate incremental sales.”
Consumers financed 31% of Polaris vehicles sold in the United States in 2015 through the combined Capital One revolving retail credit and Synchrony Financial, Sheffield Financial, Chrome Capital, and FreedomRoad Financial installment retail credit arrangements, according to the report. The volume of Polaris’s revolving and installment credit contracts written in 2015 was $1.9 million, up 15% from 2014, according to company earnings.
3Q 20168
WORLD’S LARGEST POWERSPORT REMARKETER26 YEARS IN BUSINESS OVER FIVE-THOUSAND POWERSPORTS SOLD MONTHLY AUCTION SERVICES DEALER SERVICES LENDER SERVICES DEALER CONSIGNMENTS ONLINE TOOLS
Revolving Credit
Does Citi Meet the Mark?While no official announcement regarding
which company will replace Cap One in the market had been made as of mid-September, there could potentially be multiple replacements as everybody figures out what they are going to do, said Jim Woodruff, chief operating officer at National Powersport Auctions.
“Revolving credit is driven by OEMs, and the OEMs may all make different decisions about which way they want to go,” Woodruff said. “One solution being present for everybody would be great, but instincts tell me that there will be a couple different paths that OEMs will go down.”
However, several lenders have said they will not be offering a revolving credit product
— including Synchrony Financial and FreedomRoad Financial. Yamaha Motor Finance Corp. declined to comment on its potential involvement with revolving credit.
Citi would be a “great candidate,” Woodruff said. “We would love to have them in the marketplace, certainly on the revolving credit line, because they are a sophisticated revolving credit lender.” That “great candidate” criteria includes being a reputable brand, possessing strong revolving credit experience, and having experience in powersports, he added.
Admittedly, that third part — experience in powersports — is not something Citi has, but Citi could utilize third-party partnerships, such as an OEM or a remarketing partner like NPA, to help “bridge the gap,” Woodruff said.
Whichever lender chooses to offer the revolving credit product — whether it’s one, two, or three lenders — the need is there, Woodruff added. Many lenders have not jumped into the space yet because “revolving credit is a whole different animal” for powersports, he said.
Powersports lending, no matter what type of loan is offered, requires domain expertise and strong infrastructure, said Keith Mait, vice president and industry leader of powersports at Synchrony. “It’s really hard to succeed in
powersports when you only have one of these [traits], and it’s really hard to build either in a short amount of time.”
There’s no shortage of interest in the revolving credit space, but “it’s a higher risk area for a lender, and it’s a lot more work they [lenders] have to do to get comfortable,” Polaris’s Speetzen said.
Revolving credit is unsecured, meaning it’s a credit card people are using to buy units and other bolt-on accessories and F&I products. Another part of the equation is to understand that default rates and credit profiles are different than a traditional monthly installment lending model, Speetzen said. Financial providers have to understand the market before they can launch a program, and “how they administer it and go through the approval process — it’s a lot of work behind the scenes,” he added.
At the end of day, whether one or multiple lenders take over Cap One’s marketshare, “it’s OK, because dealers will have options, and OEMs will have options,” NPA’s Woodruff added. “The hole will get filled, and everybody will be just fine and come out ahead.”
—Natalie Mattila
3Q 2016 9
Ride Today Acceptance
BOSTON — The only sounds heard inside Ride Today Acceptance’s Beverly, Mass.-based office are the clacking of keyboards and friendly
phone calls as employees busily field inquiries from customers and dealers. Papers are practically spilling off the desks — hopefully a sign of success, and certainly a sign of the subprime lender’s hardworking team.
Located in the outskirts of Boston, the startup company set up shop just 18 months ago and is on track for continued growth in the subprime market, thanks to an executive team that brings 20-plus years of dealership subprime experience to the table, said Ben Donnarumma, the company’s partner and director of sales and marketing.
Subprime powersports financing is a risky business and still in its “infancy” — years behind the auto industry, Donnarumma said, which is why some startup subprime lenders that enter the powersports space may not succeed.
However, Ride Today Acceptance — a subsidiary of Encompass Consulting LLC — currently operates in 29 states and makes loans for new and used on-road powersports vehicles, including some off-road and side-by-side units. The lender funds an average of $700,000 in loans each month, and is on track to hit its monthly loan originations funding goal of $1.5 million by July 2015, according to National Sales Manager Jason Sheeley.
Ride Today also has a “conservative goal” to bolster its dealer count to 400 by April 2017, Sheeley said. Ride Today Acceptance signed on a dozen dealers in August, with another 15 “in the works,” he added, bringing the company’s dealer network to 261.
The company considers itself “years ahead” of its competition, thanks to the staff’s prior experience selling motorcycles and discussing finance options with consumers in the F&I office, Donnarumma added.
Developing a Winning FormulaDonnarumma and his colleagues at Ride Today have operated
motorcycle and auto dealerships since 1993, up until recent months when they shifted their focus solely to motorcycle financing. “I started selling motorcycles and cars, but there was never really any subprime financing for motorcycles,” he said.
After years of dealing with credit applications at the dealership level, the Ride Today team came up with a formula for financing motorcycles to subprime borrowers based on research, experimentation, and their combined knowledge of the market, he added.
Utilizing all the data from their sales experience — including how the loans perform and subprime consumers’ buying habits — Ride Today Acceptance mapped out a program that the company hoped would suit each party’s needs.
Startup Maps Plan to Address Dealers’ Subprime Dilemma
3Q 201610
Ride Today Acceptance
THE LENDER THAT HELPS DEALERS SELL MORE
Full Credit Spectrum Programs | New & Used Financing | Installment & Revolving Programs | Personalized Service
“We call it the ‘smoke in the wheel,’ it takes three pots to keep the wheel going,” added Richard Snyder, director of underwriting. “The program has to work for the customer, the lender, and the dealer. If one pot doesn’t work, the wheel doesn’t turn. If you make it a bad deal for the consumer, it falls apart.
We learned that from the auto industry, and we’ve been adapting that to the motorcycle industry. We have to put it all together to make sure the wheel is always turning and keep all the pots working.”
While the executives at Ride Today Acceptance no longer operate retail motorcycle dealerships, “we’ve taken all of that experience and all of the problems that dealers typically would have with the subprime consumer, and we are attempting to solve them for dealers.”
Training Is a Necessity One of the biggest challenges with financing subprime consumers,
for example, is the “naivete” of a dealership’s F&I staff and salespeople, Snyder said. “Lack of training is definitely a big issue,” he said, especially for smaller dealerships without a dedicated F&I department.
“We know what it’s like to be in front of a customer, so we are really in tune with what the dealer has gone through or what the dealer goes through each day,” Donnarumma said. “We will help the dealer with training — whether it’s subprime training or sales training.”
Additionally, Ride Today does a lot of “outside-the-box thinking,” particularly when it comes to the dealer relationship and launching new
products, he added. For example, the company will roll out a virtual layaway program by November, aimed at helping its dealer partners sell more units and foster consumer engagement, Sheeley added.
Through the program, consumers can reserve a powersports vehicle by making installments on a down payment. The system provides a counter to track progress before customers can pick up their vehicles from the dealership.
Consumers can put a vehicle on hold throughout the winter months, then have the bike ready to go when riding season comes around, he said. The program also helps the dealerships by providing them more secured motorcycle sales during that off-season, when business is typically slower.
Dealers often have to let employees go during the wintertime, Donnarumma said. “We hope this program will help them keep more people on staff for a longer period of time, because they will still be selling motorcycles.”
Ride Today’s top priority is improving the dealer experience to “as best as we can get it,” Donnarumma added, and all of the data that the company has come up with over the past five to 10 years is a “consistent evolution” of what performs better when it comes to subprime.
“Financing is what drives everything — it drives the sales of cars, the sale of motorcycles, the sale of houses, everything,” he said. “So when we finally figured out what we were looking for in our subprime program — what performs and why they perform — that’s how Ride Today Acceptance got created.”
—Natalie Mattila
3Q 2016 11
Gauge
Average vehicle values dipped for the second straight month in September. The watercraft segment experienced the greatest month-to-month decline: 8.6%.
Vehicle Values by Segment
Source: Black Book
Average bike values declined 5.6% to $4,429 in September, from $4,689 a year ago. The largest year-over-year decline — 8% — came in the cruiser segement.
Bike Values by Segment
With cooler weather on the way, powersports lenders must prep for the “Hiding Season,” as it’s called, when borrowers pack away motorcycles and watercraft for the winter. In fact, November is historically the toughest month for recovery rates, in part because consumers allocate financial resources to holiday spending, according to Capital Recovery Group LLC. The chart at left distills a sampling of accounts from 2015 to show the performance variance of repossessions, cures, and total positives (cures plus repossessions) from the prior month — essentially, providing a seasonal overview.
Source: Capital Recovery Group
Powersport Recovery PerformanceVariance from Prior Month
Vehicle values across all segments have been dipping in recent months, as the warm weather of summer gives way to colder climates. “In the fall, as we head into winter, most of the on-road segments see fairly large declines,” said Scott Yarbrough, motorcycle and powersports editor at Black Book. “This is also the time that new models are introduced, which also has the effect of driving prices down.”
—M.B.
the Summary
Source: Black Book
Retention rates as a percent of MSRP for 2012 Can-Ams have slowly declined since the start of 2014, dropping out of sync with Harley-Davidson and BMW. Meanwhile, for Kawasaki, Suzuki, and Yamaha, retention rates have tightened
Motorcycle Model 2012 Retention Rates
% o
f MSR
P
Cure Variance Repo VariancePositive Variance
0
10
20
30
40
50
60
70
80
90
May Jun Jul Aug Sep Oct Nov Dec Jan.2015
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan.2016
Feb Mar Apr May Jun Jul Aug
Retention Rates by Brand
Harley-Davidson BMW Can-Am Kawasaki Suzuki Yamaha
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
Jan
Mar
May Ju
l
Sep
Nov Ja
n
Mar
May Ju
l
Sep
Nov Ja
n
Mar
ch
May July
Sep
2014 2015 2016
ATV Snowmobile Utility Watercraft
$0
$1,000
$2,000
$3,000
$4,000
$5,000
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$8,000
$9,000
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2014 2015 2016
Cruiser Dual Sports Off Road Bike Scooter Street
Power Sports FinanceFPO
Working forward to power your business, and their adventures.
What are you working forward to?
Every powersports dealer is different, but all share a common ambition: to succeed. And it starts by serving customers better. Synchrony Financial delivers payment solutions that help drive traffic, increase average transaction size, and develop long lasting relationships. Whatever you’re working forward to, we can help make it happen.
Engage with us at synchronybusiness.com/powersports or 1-855-433-5344.
Credit is extended by Synchrony Bank© 2016 Synchrony Financial
