Motorcycle Dealers
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Industry Overview
Motorcycle dealers include about 4,500 stores with combined annual revenue of $15 billion. No major companies dominate; most dealers have a single retail outlet. The industry is highly fragmented: the 50 largest companies represent just 10 percent of industry sales.
Competitive Landscape
Discretionary personal income and interest rates drive demand, since motorcycles are high-ticket purchases and often financed. The profitability of individual companies depends on volume and sales of higher-margin goods like heavyweight motorcycles. Large dealers have advantages in broad inventory selections and negotiating power with manufacturers. Small dealers can compete effectively by providing superior customer service or offering unique services, like bike customization. Annual sales per employee average $300,000.
Major competitors include private market sellers, other recreational vehicle dealers, service center chains, and independent service shops.
Products, Operations & Technology
Major products include new and used motorcycles, scooters, motorbikes, ATVs, and snowmobiles. New motorcycles, scooters, and motorbikes account for 60 percent of sales; used products for 15 percent; ATVs, snowmobiles, and golf carts for 15 percent. Other products include boats, jet-skis, and go-carts. Apparel, parts, and accessories are known as aftermarket products. Most products sold by motorcycle dealers are known as power sports products. Many dealers offer repair, maintenance, customization, installation, or insurance services.
Touring and cruiser motorcycles are designed for comfort and long distance rides. Custom motorcycles emphasize style and owner-selected features. Performance or sport motorcycles are designed for superior handling, acceleration, and racing. Dual motorcycles are designed for both on- and off-road use. The strength of a motorcycle engine is measured in cubic centimeters (cc’s) and ranges from 50cc to 2300cc. Heavyweight bikes have engines with 650cc or greater.
New motorcycle dealers have dealer or franchise agreements with major manufacturers, which give the dealer the exclusive right to sell new vehicles within a given territory. Depending on the manufacturer, franchise agreements may require dealers to prepare vehicles for sale, achieve specific customer satisfaction ratings, provide repair service, or follow pricing guidelines. While most dealers represent an average of two franchises, 80 percent of Harley-Davidson dealers carry Harley products exclusively. Used or non-franchised motorcycle dealers are generally smaller than new. Used dealers derive the majority of revenue from parts, accessories, and apparel.
A typical dealership averages 25,000 square feet, and may include offices, showrooms, and service facilities. Similar to retail superstores, large dealers may exceed 100,000 square feet and stock hundreds of motorcycles. New dealers generate about $5 million and sell about 250 new and used motorcycles annually, according to the Motorcycle Industry Council. Used dealers generate $500,000 annually and sell about 20 used motorcycles annually.
Most dealers carry multiple brands at various price points to appeal to the widest range of customers. New dealers carry an average of 80 motorcycles, used dealers average 15. New dealers try to limit sales of carryover products, or products in inventory after the release of new models. Limiting carryover qualifies dealers for manufacturer rebates to help clear old inventory.
New dealers buy directly from major manufacturers or distributors. Honda, Harley-Davidson, Kawasaki, Yamaha, Suzuki, and BMW dominate the motorcycle manufacturing industry. High-volume sales allow large dealers to qualify for additional marketing funds and sales incentives. Used dealers buy from individuals, distributors, and through the Internet.
Most new dealers use computerized Dealer Management Systems (DMS), like Proquest Sports or MIC Software, to support administrative, financial, sales, service, and parts management functions. Many DMS are capable of transmitting point-of-sale (POS) transactions directly to manufacturers or distributors.