Ever thought about becoming a motorcycle dealer?

[RandyO]

I've often wondered how much capital it would take to get into the business and try to build a franchise based on superior customer experiences at every level."

impossible, too many customers have unreasonable expectations and think that dealers are in business for their benefit rather than to make a profit

you will always be known as a "stealership"

[tonyd]

I worked in dealerships for 8 years. (Surprised I survived, lol)

Dealerships dont give a fuck because theres a whole new crop if 18 year olds buying GSXR's and R6's every year.

The dealerships make less and less on the actual bike each year. They hit fucking home runs on finance and in service.

And to the orig poster, you would get the life sucked out of you as an owner in the dealership everyday. I say this because in my experience, there are a lot of motorcycle customers that are just complete fucktards.... (of course, nobody here) The manufacturers are VERY high pressure for you to stock more and more every order period, no matter what the sales trends are. Each bike costs anywhere from $30 to $80 PER MONTH when you 'floor plan' them from the manufacturer. Unless you can pay cash for them up front, then 100 bikes X $xx.xx per monht can be 3, 4, 5 maybe 8 or 10 grand a month just in finance charges. Then pay your help, utilities, parts inventory, etc, etc. Then your used inventory has to be bought and paid for. What kinda bike are you going to sell? Anything nice will cost you $3000 to $7000 to buy and hopefully some asshat dosent come in spend 5 hours looking at your stuff, taking up time, you kissing his ass, making friends, promising the world and Mr. customer gose and finds one in fucking Timbucktoo for eleven cents less.

So, unless you got like 2 million liquid, youd be out of business in like 5 months.

I realize you want to provide a 'nicer' experience. This is good, beacuse you are correct...some dealers around here suck donkey balls.

So start a dealership? Id rather punch myself in the nuts 25 times.

A very successful local franchise owner and I were talking about this two weeks ago. They buy Michelin and Motul from me.

He's been in this since the '80's. It was all good until about 2007.

The key phrase in that conversation - "No sane person is opening a Powersports franchise right now. You might get the rich guy who wants a place to go each day and doesn't mind losing his shirt for five years, but the investment and headaches far outweigh the profit potential."

These guys are on the money, it always was a tough business and with the current market conditions you would have to be an idiot to jump in now. Do some research on overall motorcycle sales in last decade.
Gross margin on jap bikes is about 17% if you can sell for retail and do it before you pay any interest on it. Now try buying inventory, setting up a facility and staffing it where you can sell parts and access. to compete with a warehouse online. Sure chat up your customers, they'll come back for the free coffee but most will buy the helmet online if they can save $10.

I think you'll need about $300,000 to $500,000 PER BRAND to get any manufacturers to talk to you. Many don't want to be in a multi-line shop anymore and are not looking to open new shops now because the ones they have open are still struggling.

[slammp]

Ok, I did not read every response so if this is a repeat then sorry for that: but have you considered that we are in NE and it is difficult at best to fund an operation that no matter what you do or say will see a significant drop in business for at least 5 if not 6 months out of the year. Now try staffing said business with quality employees (front desk, management, tech's) knowing that they will either be laid off or receive significantly fewer hours during the winter months. Finally consider the cost of rent and your other expenses (fees to manaufacturers, licenses, etc) which do not care that it is the slow season and simply need to be paid.

In addition to all this you will see very little in retail sales outside of actual bike because almost everybody shops on line these days because of the saving that can be had (i'm not making it right Im just stating the obvious).

I dont know what the answer is or the right mix to make it work -I tried my own business (restaurant) a few years back and vowed I would rather dig an eye out with my thumb then try that again -I am very content to work for an organization I do not own.

I think that the same business model in CA or FLA would have considerably better chances to succeed.

[ThisBitch]

I think what it comes down to is that you aren't going to be able to afford to pay your floor staff the wage that would be required to really retain top quality people. Sure, you'll get 1 or 2 that have spouses with great jobs and don't need the money, but if you look around NESR at the people that are really knowledgeable and are enthusiasts, most of them have 6-figure day jobs that afford the luxury of this hobby.

Being a motorcycle enthusiast, especially a sport bike enthusiast isn't cheap. I know a lot of guys that work at shops that are nice guys, but they work with a bunch of idiots and most of them would get out of the industry if the economy weren't so shitty. I just don't think the finances work in your favor enough to be able to hire the kind of quality staff it would take to make a successful dealership work.

[Falko]

With any luxury item, you aren't selling a product, you are selling a lifestyle. HD definitely gets this along with Ducati and BMW. Go into the higher line bike shops and the staff is much more professional. If there is one thing I can not stand is going into a business and not being able to identify those that work there versus customers. Many of the "jap" bike stores have younger sales staff wearing whatever they woke up in, hats on sideways, etc. While that might attract a younger crowd, it doesn't do much to attract the older crowd that is typically on the prowl to actually buy. That said, I've been pretty satisfied with the shop I've been dealing with, crooked hats and all...

[Speed Demon 828]

These are all good responses. Truth is a good business person is a good business person in any field.


I know a couple people who got rich off the motorcycle industry.(I've been in the business for over 15 years) Literally 2 people. They got in at the right time and weathered years of hard times and their commitment paid off. Most dealerships today are big money owners that made their money in other business ventures.


Owning a dealership is tough. Owning any business is tough. A big part of being successful is knowing how to solve problems. The other big part of being successful is having lots of money. Remember- It takes money to make money.

[Karaya One]

My strongest dealers are by far BMW and Ducati franchises. The customer is better off, and willing to buy into the cache of the Euro rider. And more often a much better trained staff. Their biggest issue is getting bikes!

My weakest are Japanese lines. The bikes are all over the 'net at cost or below. The mantra in a Japanese shop is not profit, but " get it off the floor plan." when it comes to bike sales.

My strongest customers are independent repair shops. And most don't even stock helmets / clothing. They are not effected by internet sales as strongly as dealerships, and the internet can't fix a bike. YET.

I have shops that want to stop carrying gear PERIOD. They do the right thing, stock the line, learn the product, and they still become try-on houses. You do a $25,000 spring order, 75% is still on the wall and everyone wants you to match Revzilla or such.

Do you just want to turn it over? Or do you want to make a profit and survive?

[Speed Demon 828]

My strongest customers are independent repair shops. And most don't even stock helmets / clothing. They are not effected by internet sales as strongly as dealerships, and the internet can't fix a bike. YET.

except for tires!!!!!!!!!!!!!!!!!!!!!!!

But we've talked about this until we're blue in the face!

[jcrawford]

almost all retail stores have been effected by the internet. Unless it's an I WANT IT NOW or I NEED IT NOW then the internet is there and cheaper. If I can wait I will wait to save money.

[Karaya One]

except for tires!!!!!!!!!!!!!!!!!!!!!!!

But we've talked about this until we're blue in the face!

When you get the Big Three distributors to stop supplying the net companies, sanity will return to the price structure. Until then, one day there will not be dealers to mount tires. Or try on product. Or buy bikes.

[Degsy]

Wirelessly posted (Mozilla/5.0 (iPhone; U; CPU iPhone OS 4_0_2 like Mac OS X; en-us) AppleWebKit/532.9 (KHTML, like Gecko) Version/4.0.5 Mobile/8A400 Safari/6531.22.7)

except for tires!!!!!!!!!!!!!!!!!!!!!!!

But we've talked about this until we're blue in the face!

When you get the Big Three distributors to stop supplying the net companies, sanity will return to the price structure. Until then, one day there will not be dealers to mount tires. Or try on product. Or buy bikes.

Amen

[SteveM]

Thre are so many great and thoughtful responses that it would be unfair to single out just one, but what the heck.

Big Dave FTW.

As I surmised, this business is not where any sane business person would choose to deploy risk capital right now, even if they do love motorcycles.

[breakdirt916]

OK, here's the plan:


so we should all take 6-figure day jobs, then use that cash to open, NOT a dealership, but rather an independent shop (with handpicked mechanics who are passionate about bikes) that only changes tires and does service in FL or CA?

the shop will also buy all the necessary parts online

and the shop will also be owned (not leased) on a property with residences for the owner (= no rent/overhead), and it also has extra garages/floor space that can be leased out to customers who want to start their own dealership

the profits will be re-invested into keeping up with servicing demands/expanding hours, and opening more shops...hence creating the motorcycle tire/servicing franchise, and you keep your day job the whole way to create your living, but on the side you create your dream.

[nhbubba]

Many of the "jap" bike stores have younger sales staff wearing whatever they woke up in, hats on sideways, etc. While that might attract a younger crowd, it doesn't do much to attract the older crowd that is typically on the prowl to actually buy.

I think you underestimate how many backwards hat wearing young people are ready to plunk down money on a new bike. Hell, I bought a new one when I was 24.

[Karaya One]

Thre are so many great and thoughtful responses that it would be unfair to single out just one, but what the heck.

Big Dave FTW.

As I surmised, this business is not where any sane business person would choose to deploy risk capital right now, even if they do love motorcycles.

Right now, no. The economy is not at all stable enough. In the USA bikes are toys. When the going gets tough, toys go first.

You would need a few years yet to see who is left standing. I deal with some smart dealers, who survived a lot. They have never seen what is happening now. The Internet pressure, financing, taxes, insurance, flooring, etc.

Save your money. Invest in something more stable like GOLD!

[SteveM]

Actual credit underwriting and real down payments combined with unemployment (both the buyer and former co-signer parents) have slowed that demographic way down.

[RandyO]

I think that the same business model in CA or FLA would have considerably better chances to succeed.

fwiw, New Hampshire is the #1 state in the country of motorcycle ownership per capita, CA has the highest number of illegals and FL is #1 in blue hair

[ThisBitch]

fwiw, New Hampshire is the #1 state in the country of motorcycle ownership per capita, CA has the highest number of illegals and FL is #1 in blue hair

That also means CA has the highest number of affordable gardeners and house cleaners.


Not having to clean your house or mow your lawn ever again = WIN!