2014 Industry Recap: Back in Black

PowerNewsTM www.npauctions.com VOLUME 4 • JANUARY 2015 2014 INDUSTRY RECAP: BACK IN BLACK NPA Revs Into 2015! 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 last year. With the early release of the Scrambler and of our dealers, third-quarter retail Harley-Davidson the first three quarters were up, totaling 394,640 the Monster 821 as well as the launch of the flagship motorcycle sales topped the strong growth of the new units through Q3. This compares very 1199 Panigale, that surge should continue through year-ago quarter,” claims Harley-Davidson, Inc. favorably with the 385,256 units sold through Q3 2015 and beyond. Chairman, President and CEO Keith Wandell. of 2013 and reinforces the rebound theory. More than 25% of all street bikes sold in North “A rebound in Sportster motorcycle sales from this On a by-brand basis, BMW, Ducati and America - and over 50% of new street bikes over year’s second quarter and increased availability Harley-Davidson are on a roll with high end 750cc retailed in the U.S. - come from Harley- of the Street 750 and Street 500 motorcycles also motorcycle sales all posting measurable gains. Davidson. With the success of the Rushmore initiative contributed to these positive results,” added Wandell. Meanwhile “found money” is coming from new and the launch of ‘world market’ models like the Shifts in production from Japan to the U.S. for products, particularly for Polaris which introduced 500cc and 750cc Street, Harley expects to see sales some key models have JAMA production figures the Slingshot three-wheeler and the Scout model continue to increase globally. Dealers worldwide artificially low, but even with that in mind, Japanese to broaden the appeal of the re-born Indian sold 73,217 new Harley-Davidson® motorcycles motorcycle production rose for the first 6 months Motorcycles brand. in the third quarter of 2014, compared to 70,517 of 2014. Overall production increased by 12% BMW Motorrad USA closed the 2014 year in motorcycles in Q3 2013. Sportsters accounted for and was up for every manufacturer except Suzuki, style, reporting an increase of 11.9% above the 21% of Harley’s new unit sales, Customs accounted which was down approximately 10.4%. For the first total motorcycles sold in December 2013. The for 23% and top-tier touring bikes represented 45% three quarters of 2014, Honda production remained new-for-2014 R 1200 RT was the best performing of The Motor Company’s sales. This supports why relatively unchanged while Yamaha and Kawasaki model in the month, helping drive growth of 17% Harley brought the higher priced Road Glides back production figures are up. in R-Series sales compared to a year ago. BMW into the mix for 2015. The global leader in motorcycle sales, Honda Motorrad finished their best performance in more “With the successful launch of the 2015 reports revenue increased 19.5% from the same than a decade and 5.4% ahead of last year. motorcycles in late August, including the return of period last year. MIC sales numbers are up for the With an energized dealer network and three new the Road Glide models and the outstanding efforts Japanese Big Four overall, with the exception of models set to debut in January, BMW Motorrad is see 2014 Industry Recap p2 well positioned to start 2015 with a bang. Ducati celebrated the sale of its 1 millionth IN THIS ISSUE motorcycle in 2014 and is poised to bring a whole new crowd of hipsters into the market with 2014 Industry Recap Harleys at the Hard Rock the launch of their 2015 Scramblers. After being Editor’s Note MIC Snapshot bought by Audi, Ducati has continued to build on its sales base. According to Audi, Ducati sold Partner Profile - GE Capital AIMExpo Charity Auction 2.9% more motorcycles than in the same period NPA’s Future Riders Promoting Within SAN DIEGO • DALLAS • CINCINNATI • ATLANTA TOLL-FREE 888.292.5339 WWW.NPAUCTIONS.COM IS AUCTION 2014 INDUSTRY RECAP continued from cover A 4-LETTER scooters. (See page 4 for the Q3 2014 MIC data). price points to consumers. With innovation as a Though Polaris’ new Indian Scout and Slingshot high priority for OEMs, we should see more new WORD? didn’t hit dealership sales floors until the tail end customers walking into dealerships.” Good news of 2014, the Minnesota-based OEM still had an for the industry as a whole. Two Tips To impressive third quarter, reporting an 18% sales It isn’t just new unit sales either. “Pre-owned Improving Profit On increase over 2013. “At Polaris, the third quarter is a great revenue generator for dealers,” Pre-Owned Inventory always tests our mettle, from the challenge of suggests Gaur, “and there is strong demand By Jim Woodruff pulling together increasingly large and complex for pre-owned by consumers moving into 2015. dealer shows and delivering on the high That’s why we have made it so easy for dealers The powersports market is rebounding for new units and expectations of our model year news to building a to have a separate line of credit for these the wholesale market for pre-owned units is growing even strategic plan that charts our course for the years products.” (See the “Partner Profile” on page 3 faster. However, the word “auction” still has a negative ahead,” said chairman and CEO Scott Wine. “Add for more details on ways CDF facilitates dealer stigma for some of today’s powersports dealers. These a global crisis or two, major moves in currencies transactions.) dealers say they have never “needed” an auction, as if and the inevitable internal and external issues NPA’s pre-owned sales volume grew 8% in it is a last resort to be used only in an emergency. “The that arise, and the quarter provides the perfect 2014, once again outpacing the growth in new economy has been tough, but we have never been that showcase for the tremendous leadership, agility unit sales. According to NPA’s Jim Woodruff, desperate,” proclaims the average auction naysayer. and teamwork that has fueled Polaris’ growth for “NPA’s auction volumes grew in every major Yet many dealers use the auction and auction data as a the past 60 years.” business segment, indicating both a healthy regular part of their process, so who is right? The Polaris Motorcycle Division (including dealer appetite for pre-owned product as well Best business practices call for proper inventory the Victory and Indian brands) reported a 28% as growing awareness of smart dealer inventory management. In fact, we agree with Mr. Naysayer… increase, while Off-Road Vehicle sales grew management.” To illustrate this point, the volume using an auction when you are desperate is not optimal. 17% and Snowmobile sales were up 13%. PG&A of units consigned by authorized Harley- Desperation is usually a high volume, low frequency sales increased 24%, making it easy to see how Davidson dealers grew over 30% in 2014 as a approach that is not well-planned. Instead, healthy Polaris could afford to buy Klim lock, stock and direct result of the joint education efforts of NPA auction use is usually more frequent with lower volume barrel in 2014. and Harley-Davidson Financial Services. Says because inventory can be more efficiently managed “Across our global business, innovation and Woodruff, “Dealers are continually improving to stay in-line with market values and ever-changing execution won the battle against volatility in the their use of the auction environment to keep consumer demand. third quarter, yielding an 18% increase in Polaris their inventory balanced and are improving The need to liquidate inventory, whether it’s unwanted third quarter sales to just over $1.3 billion dollars. their profitability and customer satisfaction as trade-ins or underperforming units, is a dealership fact North American retail sales remained high, posting a result.” of life. Direct dealer-to-dealer wholesale transactions an impressive 12% rise… and that’s without a single But with pre-owned, there is still a learning inevitably leave money on the table by having only one Scout or Slingshot sale,” concluded Wine. curve to finding the right mix of new and used “bid” and multiple units for a single buyer. Auctions It isn’t just the OEMs seeing signs of new unit sales inventory and optimal valuations for peak offer a competitive platform with hundreds of buyers. recovery. “We see continued health in the industry,” dealership performance. This is where NPA Two tips to consider, whether you use auctions or not: says Sameer Gaur, president of the Motorsports sees data playing a bigger role. For example, Group at GE Capital, Commercial Distribution NPA’s Value Guide was viewed just under half a Tip #1: Finance (CDF). “At the end of 2014, we saw volume million times in 2014, becoming a regular part Even if you don’t use auctions, pretend you do.

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