PowerNews TM 2014 INDUSTRY RECAP : BACK IN BLACK NPA Revs Into 2015! VOLUME 4 • JANUARY 2015 www.npauctions.com IN THIS ISSUE 2014 Industry Recap Editor’s Note Partner Profile - GE Capital NPA’s Future Riders Time to pop the corks and celebrate a New Year! More importantly, it is time to toast the powersports industry’s return to growth. After the financial crash of 2008, the market has been struggling… no secret there, but in 2014, several key segments began to recover. Everything from exotic European motorcycles to home town heroes like Polaris RZRs experienced sales increases on the OEM side, while the pre-owned business bounced back as well. Crank up the AC/DC as we are back in (the) black! According to the most recent Motorcycle Industry Council retail sales figures through September 2014, on-highway motorcycle sales are up 2.2%, while dirt bikes (which had been devastated for most of the past decade) were up 5.6%. MIC data shows U.S. motorcycle sales for the first three quarters were up, totaling 394,640 new units through Q3. This compares very favorably with the 385,256 units sold through Q3 of 2013 and reinforces the rebound theory. On a by-brand basis, BMW, Ducati and Harley-Davidson are on a roll with high end motorcycle sales all posting measurable gains. Meanwhile “found money” is coming from new products, particularly for Polaris which introduced the Slingshot three-wheeler and the Scout model to broaden the appeal of the re-born Indian Motorcycles brand. BMW Motorrad USA closed the 2014 year in style, reporting an increase of 11.9% above the total motorcycles sold in December 2013. The new-for-2014 R 1200 RT was the best performing model in the month, helping drive growth of 17% in R-Series sales compared to a year ago. BMW Motorrad finished their best performance in more than a decade and 5.4% ahead of last year. With an energized dealer network and three new models set to debut in January, BMW Motorrad is well positioned to start 2015 with a bang. Ducati celebrated the sale of its 1 millionth motorcycle in 2014 and is poised to bring a whole new crowd of hipsters into the market with the launch of their 2015 Scramblers. After being bought by Audi, Ducati has continued to build on its sales base. According to Audi, Ducati sold 2.9% more motorcycles than in the same period last year. With the early release of the Scrambler and the Monster 821 as well as the launch of the flagship 1199 Panigale, that surge should continue through 2015 and beyond. More than 25% of all street bikes sold in North America - and over 50% of new street bikes over 750cc retailed in the U.S. - come from Harley- Davidson. With the success of the Rushmore initiative and the launch of ‘world market’ models like the 500cc and 750cc Street, Harley expects to see sales continue to increase globally. Dealers worldwide sold 73,217 new Harley-Davidson® motorcycles in the third quarter of 2014, compared to 70,517 motorcycles in Q3 2013. Sportsters accounted for 21% of Harley’s new unit sales, Customs accounted for 23% and top-tier touring bikes represented 45% of The Motor Company’s sales. This supports why Harley brought the higher priced Road Glides back into the mix for 2015. “With the successful launch of the 2015 motorcycles in late August, including the return of the Road Glide models and the outstanding efforts of our dealers, third-quarter retail Harley-Davidson motorcycle sales topped the strong growth of the year-ago quarter,” claims Harley-Davidson, Inc. Chairman, President and CEO Keith Wandell. “A rebound in Sportster motorcycle sales from this year’s second quarter and increased availability of the Street 750 and Street 500 motorcycles also contributed to these positive results,” added Wandell. Shifts in production from Japan to the U.S. for some key models have JAMA production figures artificially low, but even with that in mind, Japanese motorcycle production rose for the first 6 months of 2014. Overall production increased by 12% and was up for every manufacturer except Suzuki, which was down approximately 10.4%. For the first three quarters of 2014, Honda production remained relatively unchanged while Yamaha and Kawasaki production figures are up. The global leader in motorcycle sales, Honda reports revenue increased 19.5% from the same period last year. MIC sales numbers are up for the Japanese Big Four overall, with the exception of see 2014 Industry Recap p2 Harleys at the Hard Rock MIC Snapshot AIMExpo Charity Auction Promoting Within
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PowerNewsTM
2014 INDUSTRY RECAP: BACK IN BLACKNPA RevsInto 2015!
VOLUME 4 • JANUARY 2015www.npauctions.com
IN THIS ISSUE2014 Industry RecapEditor’s NotePartner Profile - GE CapitalNPA’s Future Riders
Time to pop the corks and celebrate a New Year! More importantly, it is time to toast the powersports industry’s return to growth. After the financial crash of 2008, the market has been struggling… no secret there, but in 2014, several key segments began to recover. Everything from exotic European motorcycles to home town heroes like Polaris RZRs experienced sales increases on the OEM side, while the pre-owned business bounced back as well. Crank up the AC/DC as we are back in (the) black! According to the most recent Motorcycle Industry Council retail sales figures through September 2014, on-highway motorcycle sales are up 2.2%, while dirt bikes (which had been devastated for most of the past decade) were up 5.6%. MIC data shows U.S. motorcycle sales for the first three quarters were up, totaling 394,640 new units through Q3. This compares very favorably with the 385,256 units sold through Q3 of 2013 and reinforces the rebound theory. On a by-brand basis, BMW, Ducati and Harley-Davidson are on a roll with high end motorcycle sales all posting measurable gains. Meanwhile “found money” is coming from new products, particularly for Polaris which introduced the Slingshot three-wheeler and the Scout model to broaden the appeal of the re-born Indian Motorcycles brand. BMW Motorrad USA closed the 2014 year in style, reporting an increase of 11.9% above the total motorcycles sold in December 2013. The new-for-2014 R 1200 RT was the best performing model in the month, helping drive growth of 17% in R-Series sales compared to a year ago. BMW Motorrad finished their best performance in more than a decade and 5.4% ahead of last year. With an energized dealer network and three new models set to debut in January, BMW Motorrad is well positioned to start 2015 with a bang. Ducati celebrated the sale of its 1 millionth motorcycle in 2014 and is poised to bring a whole new crowd of hipsters into the market with the launch of their 2015 Scramblers. After being bought by Audi, Ducati has continued to build on its sales base. According to Audi, Ducati sold 2.9% more motorcycles than in the same period
last year. With the early release of the Scrambler and the Monster 821 as well as the launch of the flagship 1199 Panigale, that surge should continue through 2015 and beyond. More than 25% of all street bikes sold in North America - and over 50% of new street bikes over 750cc retailed in the U.S. - come from Harley-Davidson. With the success of the Rushmore initiative and the launch of ‘world market’ models like the 500cc and 750cc Street, Harley expects to see sales continue to increase globally. Dealers worldwide sold 73,217 new Harley-Davidson® motorcycles in the third quarter of 2014, compared to 70,517 motorcycles in Q3 2013. Sportsters accounted for 21% of Harley’s new unit sales, Customs accounted for 23% and top-tier touring bikes represented 45% of The Motor Company’s sales. This supports why Harley brought the higher priced Road Glides back into the mix for 2015. “With the successful launch of the 2015 motorcycles in late August, including the return of the Road Glide models and the outstanding efforts
of our dealers, third-quarter retail Harley-Davidson motorcycle sales topped the strong growth of the year-ago quarter,” claims Harley-Davidson, Inc. Chairman, President and CEO Keith Wandell. “A rebound in Sportster motorcycle sales from this year’s second quarter and increased availability of the Street 750 and Street 500 motorcycles also contributed to these positive results,” added Wandell. Shifts in production from Japan to the U.S. for some key models have JAMA production figures artificially low, but even with that in mind, Japanese motorcycle production rose for the first 6 months of 2014. Overall production increased by 12% and was up for every manufacturer except Suzuki, which was down approximately 10.4%. For the first three quarters of 2014, Honda production remained relatively unchanged while Yamaha and Kawasaki production figures are up. The global leader in motorcycle sales, Honda reports revenue increased 19.5% from the same period last year. MIC sales numbers are up for the Japanese Big Four overall, with the exception of
see 2014 Industry Recap p2
Harleys at the Hard RockMIC SnapshotAIMExpo Charity AuctionPromoting Within
The powersports market is rebounding for new units and the wholesale market for pre-owned units is growing even faster. However, the word “auction” still has a negative stigma for some of today’s powersports dealers. These dealers say they have never “needed” an auction, as if it is a last resort to be used only in an emergency. “The economy has been tough, but we have never been that desperate,” proclaims the average auction naysayer. Yet many dealers use the auction and auction data as a regular part of their process, so who is right? Best business practices call for proper inventory management. In fact, we agree with Mr. Naysayer… using an auction when you are desperate is not optimal. Desperation is usually a high volume, low frequency approach that is not well-planned. Instead, healthy auction use is usually more frequent with lower volume because inventory can be more efficiently managed to stay in-line with market values and ever-changing consumer demand. The need to liquidate inventory, whether it’s unwanted trade-ins or underperforming units, is a dealership fact of life. Direct dealer-to-dealer wholesale transactions inevitably leave money on the table by having only one “bid” and multiple units for a single buyer. Auctions offer a competitive platform with hundreds of buyers. Two tips to consider, whether you use auctions or not: Tip #1: Even if you don’t use auctions, pretend you do. Place colored stickers on aged units, or use signage on them for a limited time stating something like “going to auction week of June 9th”. The word “auction” implies ‘bargain’ and the date creates a sense of urgency for consumers and your sales team. Tip #2: Be data-driven. As the saying goes, the “money is made in the buy” and the price things sell for at auction is the ultimate benchmark. Using NPA Value GuideTM when taking a trade or acquiring inventory provides the insight you need to buy right. Plus, a proven 3rd-party resource like NPA Value Guide can also help customers feel like you are treating them fairly. Know what your inventory turn times are and control them rather than letting them control you. The bottom line is that smart use of a powersport auction for acquiring the right inventory or liquidating unwanted trades or aged inventory is a very healthy business practice. “Auction” is not a 4-letter word after all!
scooters. (See page 4 for the Q3 2014 MIC data). Though Polaris’ new Indian Scout and Slingshot didn’t hit dealership sales floors until the tail end of 2014, the Minnesota-based OEM still had an impressive third quarter, reporting an 18% sales increase over 2013. “At Polaris, the third quarter always tests our mettle, from the challenge of pulling together increasingly large and complex dealer shows and delivering on the high expectations of our model year news to building a strategic plan that charts our course for the years ahead,” said chairman and CEO Scott Wine. “Add a global crisis or two, major moves in currencies and the inevitable internal and external issues that arise, and the quarter provides the perfect showcase for the tremendous leadership, agility and teamwork that has fueled Polaris’ growth for the past 60 years.” The Polaris Motorcycle Division (including the Victory and Indian brands) reported a 28% increase, while Off-Road Vehicle sales grew 17% and Snowmobile sales were up 13%. PG&A sales increased 24%, making it easy to see how Polaris could afford to buy Klim lock, stock and barrel in 2014. “Across our global business, innovation and execution won the battle against volatility in the third quarter, yielding an 18% increase in Polaris third quarter sales to just over $1.3 billion dollars. North American retail sales remained high, posting an impressive 12% rise… and that’s without a single Scout or Slingshot sale,” concluded Wine. It isn’t just the OEMs seeing signs of new unit sales recovery. “We see continued health in the industry,” says Sameer Gaur, president of the Motorsports Group at GE Capital, Commercial Distribution Finance (CDF). “At the end of 2014, we saw volume in our portfolio up double digits, reflecting dealer confidence and robust ordering. For the year, dealer inventory turn is running at over 2X and aging rates are under 10%, which are signs of healthy network overall.”Gaur says the recovery should continue. “In 2015, I look forward to seeing continued investment by the manufacturers in research and development, focusing on bringing more variety of models and
IS AUCTION A 4-LETTER WORD?
SENIOR EDITOR ..............Robin Hartfiel
PRODUCTION EDITOR ... Ryan Keefe
ART DIRECTOR. ...............Efraim Manuel
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price points to consumers. With innovation as a high priority for OEMs, we should see more new customers walking into dealerships.” Good news for the industry as a whole. It isn’t just new unit sales either. “Pre-owned is a great revenue generator for dealers,” suggests Gaur, “and there is strong demand for pre-owned by consumers moving into 2015. That’s why we have made it so easy for dealers to have a separate line of credit for these products.” (See the “Partner Profile” on page 3 for more details on ways CDF facilitates dealer transactions.) NPA’s pre-owned sales volume grew 8% in 2014, once again outpacing the growth in new unit sales. According to NPA’s Jim Woodruff, “NPA’s auction volumes grew in every major business segment, indicating both a healthy dealer appetite for pre-owned product as well as growing awareness of smart dealer inventory management.” To illustrate this point, the volume of units consigned by authorized Harley-Davidson dealers grew over 30% in 2014 as a direct result of the joint education efforts of NPA and Harley-Davidson Financial Services. Says Woodruff, “Dealers are continually improving their use of the auction environment to keep their inventory balanced and are improving their profitability and customer satisfaction as a result.” But with pre-owned, there is still a learning curve to finding the right mix of new and used inventory and optimal valuations for peak dealership performance. This is where NPA sees data playing a bigger role. For example, NPA’s Value Guide was viewed just under half a million times in 2014, becoming a regular part of many dealers’ trade / purchase valuation processes. As shared by NPA during our portion of the MIC’s “Data Driven Dealership” seminar this Fall, it’s only a matter of time before dealers have the data and decision support tools at their fingertips they need to make better decisions. A critical component to new and used vehicle sales, retail financing is finally making a comeback as well. Lenders and their OEM partners bought deeper in 2014, and new lenders entered the market with subprime programs and other options for dealers to offer their customers. NPA believes that this mindset will begin to take hold in pre-owned financing in 2015, which would further stimulate demand for used vehicles sold by powersport dealers. Pre-owned or new, two-wheels or three, on-road or off-road, virtually every segment of the powersports market closed out 2014 with a bang. Uncork that champagne and crank up the AC/DC — 2015 sales are about to rock!
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2014 INDUSTRY RECAP
CONTRIBUTORS
MANAGING EDITOR .......Becky Sabala
SECTION EDITOR ........... Sara Spohr
continued from cover
Two Tips ToImproving Profit OnPre-Owned Inventory
In recent issues, we have highlighted some of our dealers in our “Power Profile” features. This time we are shifting the focus to one of our financial partners who helps support powersport dealers: GE Capital, Commercial Distribution Finance. More commonly known as CDF, this division of GE is a leading provider of inventory financing. In 2013, CDF provided $34 billion in financing for more than 30,000 dealers and more than 3,000 distributors and manufacturers from a variety of industries in the U.S. and Canada. NPA and CDF have been working together the last decade. “We have done over $100M worth of business together, and this has been a great relationship for our customers,” explains Sameer Gaur, president of the Motorsports Group at GE Capital, CDF. “Our relationship with NPA allows our dealers to get pre-owned inventory simply and easily. Whether they are bidding in person or via NPA Simulcast, dealers who win a bid can get their inventory financed immediately with a dedicated line of credit. Dealers can check their balance and start bidding… It’s really that simple!” CDF really does think of themselves as a partner rather than a financial institution. “We think of ourselves as more than just a lender — we are an extension of our OEMs’ and dealers’ teams, and our Motorsports staff has decades of experience in the powersports industry,” Gauer says. “Our core product is inventory financing. We work with manufacturers on programs that enable dealers to stock the right amount of product.” CDF also offers dealers pre-owned financing on a separate line of credit and has simplified the dealer application process. “Dealers can apply for pre-owned lines on our online inventory management system called COMS, so it’s a lot more user-friendly and seamless. Additionally, we provide dealers with a separate auction line that has 100% advance rates, making it easy for them to add to their pre-owned inventory supply through NPA.” Something that the industry might not be aware of is the fact that CDF also finances OEM parts, garments and accessories. “We realized there
was a need for this many years ago, so we offer this type of financing through the dealers’ inventory finance line.” According to Gaur, “We consistently invest in our technology and systems capabilities ensuring that they are contemporary and offer relevant insights to our customers. Having GE as our parent company means we can provide our customers with access to management tools, market insights and more through our Access GE program. It provides customers with a variety of tools and data delivered through an exclusive web portal or one-on-one engagements to help them tackle the issues that are unique to them.” While CDF is a massive operation, they are also “real people” and personally invested in the powersports business. Take Gaur himself for example. “My career and my personal life have allowed me to live on two continents in three countries and learn a couple of different languages. I have enjoyed the various industries and cultures I have been a part of, but I have to say powersports is pretty cool. It is fantastic to see the enthusiasm and passion that is pervasive across the industry, which is what got me hooked on riding as well.” Hooked is right - despite having to contend with winters in the Windy City, Gauer has become a motorcycle guy. “I ride a Triumph Street Triple. I am enjoying riding it on the weekends, but I don’t have nearly enough miles on it… not to mention, it’s Chicago and the riding season is short! I look forward to exploring more bikes as I become an experienced rider… just don’t tell my wife!” CDF has served the powersports industry for more than 30 years. For more details, visit: www.gecdf.com/motorsports
In late November, a group of NPA staff trekked to Gordon’s Well Sand Dunes in Southern California in hopes of fulfilling a mission: Getting to do what we love to do - ride! Almost all departments were accounted for. Everyone from executives,
marketing, media, operations and sales loaded up their desert toys and set out for the sand. After the short 3 hour trip, everyone gathered around the campfire playing games and tossing a few back. We even had a few
guitarists serenade us into the early morning hours. The next day the hot desert sun woke everyone with enthusiasm for a morning ride. We jumped on our bikes, buggies, and side by sides and spent the day in sand. The weekend was spent enjoying one of our favorite hobbies, a few scrapes, bruises, and hangovers, our desert trip was an action packed success. Braaaap!
NPA ON THE MOVE In Tune With The Dunes
GE CapitalCommercial Distribution Finance
Tony Altieri Becomes NPA’sDirector of Business Development
In recognition of his contributions and the company’s strategic objectives, NPA recently promoted Tony Altieri to Director of Business Development. In his expanded role, Altieri will lead the company’s strategic business development initiatives as set by the executive team and be responsible for managing major NPA accounts. In addition, Altieri will continue to work on process enhancements such as inventory management, marketing and communication, and sales and partnership strategy. Prior to his
new role, Tony was Factory/OEM Manager and was instrumental in expanding NPA’s existing OEM business and developing relationships with key partners aligned with NPA’s vision. In addition to his powersport accomplishments, Altieri also worked with NPA’s partners at Penske to create a unique automotive auction platform. Altieri stated, “I am looking forward to focusing on the future of NPA and the motorcycle industry”. Prior to joining NPA in 2009, Altieri was assistant VP of Remarketing for Bank of America and is a graduate of Boise State University.
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MIC SNAPSHOTYEAR TO DATE
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Party at the Hard Rock! In November HDFS and NPA hosted “Harleys At The Hard Rock” in San Diego. The educational event focused on expanding opportunities for authorized H-D dealers in the pre-owned market. The two-day event also featured a closed HDDX Simulcast auction with more than 160 HDFS motorcycles from all around the
country. One of highlights of the seminar was a group exercise focusing on the trade-in actual cash value (ACV) process. In the session, small groups composed of dealers from all over the country, walked through the steps of evaluating non-Harley trade-ins. The group reviewed a number of different evaluation tools and guides, working as a team to collectively determine the most accurate value. When it was all said and done, the group had three important take-a-ways from the event:
1. When it comes to pre-owned, the money is made in the buy2. Use current wholesale (auction) prices for determining trade values3. Turn time is paramount, don’t let your inventory sit!
“Pre-owned motorcycle auctions are crucial for proper inventory management and maintaining the right model mix our customers want,” said Paul Gutman, Operator/Owner of Legacy Harley-Davidson. “Attending Harleys At The Hard Rock with HDFS and NPA in San Diego was truly an education on the important tools and data available to maintain the right inventory,” said Paul. “These tools will produce higher inventory turns and a better GMROI by not allowing non-moving aged inventory to continue to depreciate,” he added. “Using auctions to buy and sell inventory on a regular basis will make my pre-owned motorcycle sales more profitable.” Due to the overwhelming amount of positive feedback received from the attending dealers and the large number of non-attending dealers requesting information, HDFS and NPA are already making plans for pre-owned education events in 2015.
The motorcycle industry is on a roll… literally. According to the Motorcycle Industry Council Tire Sales Report more than 1.1 million motorcycle tires were sold in the first six months of 2014. This doesn’t include ATV/UTV tires and scooter tires, either. Furthermore, as shown above, Q3 new unit sales in 2014 were up 2.2% over 2013. Knowledge is power and the MIC has some of the most powerful tools available for forecasting information, such as the quarterly tire market reports and quarterly “Flash Reports” depicted above. Although NPA specializes in pre-owned inventory, we feel it is beneficial to share this data with you (with MIC’s permission, of course). More detailed figures, including make and model breakdowns, are available to MIC members, as is their comprehensive Statistical Annual and trend data from IHS. Dealers can now become MIC members and access much of the same data as the OEMs, including the Flash Reports and the aforementioned Tire Sales Report. For more details on the benefits of MIC membership visit: http://membership.mic.org
During the 2nd annual AIMExpo in October, NPA was asked to assist in the 2014 Cycle World Joseph C. Parkhurst Education Fund benefitting the Pediatric Brain Tumor Foundation College Scholarship Program. Over 30 items were sold varying from autographed posters to motorcycles. When the night was done,
NPA auctioneer Steve Holt helped AIMExpo attendees raise over $10,000, all directly benefitting the Pediatric Brain Tumor Foundation. You probably know the PBTF from the long-standing Ride For Kids events around the country that raise money to battle brain tumors in kids. The success of the auction is dependent on donated items that are unique, vintage, or historical to motorcycling - take a look around your shop and see if there might be some items that are gathering dust that could be turned directly into $$ for the scholarship fund. To donate, please contact Sara Spohr at 858.413.1138 or email at [email protected]
