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 fnancial 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 fgures 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 frst 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 fgures the Slingshot three-wheeler and the Scout model continue to increase globally. Dealers worldwide artifcially 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 frst 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 frst 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 fgures 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 fnished 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 Profle” 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 effciently 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 proftability 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 fnding 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. Place in our portfolio up double digits, reflecting dealer of many dealers’ trade / purchase valuation colored stickers on aged units, or use signage on them confdence and robust ordering. For the year, dealer processes. As shared by NPA during our portion for a limited time stating something like “going to auction inventory turn is running at over 2X and aging rates of the MIC’s “Data Driven Dealership” seminar week of June 9th”. The word “auction” implies ‘bargain’ are under 10%, which are signs of healthy network this Fall, it’s only a matter of time before dealers and the date creates a sense of urgency for consumers overall.”Gaur says the recovery should continue. “In have the data and decision support tools at their and your sales team. 2015, I look forward to seeing continued investment fngertips they need to make better decisions.

Tip #2: by the manufacturers in research and development, A critical component to new and used Be data-driven. As the saying goes, the “money is made focusing on bringing more variety of models and vehicle sales, retail fnancing is fnally making in the buy” and the price things sell for at auction is the a comeback as well. Lenders and their OEM ultimate benchmark. Using NPA Value GuideTM when partners bought deeper in 2014, and new taking a trade or acquiring inventory provides the insight CONTRIBUTORS lenders entered the market with subprime you need to buy right. Plus, a proven 3rd-party resource programs and other options for dealers to offer like NPA Value Guide can also help customers feel like their customers. NPA believes that this mindset you are treating them fairly. Know what your inventory www.npauctions.com will begin to take hold in pre-owned fnancing turn times are and control them rather than letting them NPA San Diego, 12400 Stowe Drive • Poway, California 92064 in 2015, which would further stimulate demand TOLL FREE 1.888.292.5339 • Fax 858.513.1599 for used vehicles sold by powersport dealers. control you. Copyright 2015, National Powersport Auctions Pre-owned or new, two-wheels or three, on- The bottom line is that smart use of a powersport auction SENIOR EDITOR ...... Robin Hartfel PRODUCTION EDITOR ... Ryan Keefe road or off-road, virtually every segment of the for acquiring the right inventory or liquidating unwanted ART DIRECTOR...... Efraim Manuel powersports market closed out 2014 with a trades or aged inventory is a very healthy business MANAGING EDITOR ...... Becky Sabala bang. Uncork that champagne and crank up practice. “Auction” is not a 4-letter word after all! SECTION EDITOR ...... Sara Spohr the AC/DC — 2015 sales are about to rock!

VOLUME 4 • JANUARY 2015 • NPA POWERNEWS • WWW.NPAUCTIONS.COM • P2 GE Capital PARTNER PROFILE Commercial Distribution Finance NPA ON THE MOVE In Tune With The Dunes 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 In late November, a group of NPA staff trekked to Access GE program. It provides customers Gordon’s Well Sand Dunes in Southern California with a variety of tools and data delivered in hopes of fulflling a mission: Getting to do what through an exclusive web portal or one-on-one we love to do - ride! Almost all departments In recent issues, we have highlighted some of our engagements to help them tackle the issues were accounted for. Everyone from executives, dealers in our “Power Profile” features. This time that are unique to them.” marketing, media, we are shifting the focus to one of our financial While CDF is a massive operation, they are operations and sales partners who helps support powersport dealers: also “real people” and personally invested in loaded up their GE Capital, Commercial Distribution Finance. the powersports business. Take Gaur himself desert toys and set More commonly known as CDF, this division of for example. “My career and my personal life out for the sand. After GE is a leading provider of inventory financing. have allowed me to live on two continents in the short 3 hour trip, In 2013, CDF provided $34 billion in financing for three countries and learn a couple of different everyone gathered more than 30,000 dealers and more than 3,000 languages. I have enjoyed the various around the campfire distributors and manufacturers from a variety of industries and cultures I have been a part of, playing games and industries in the U.S. and Canada. but I have to say powersports is pretty cool. It tossing a few back. NPA and CDF have been working together the is fantastic to see the enthusiasm and passion We even had a few last decade. “We have done over $100M worth that is pervasive across the industry, which is guitarists serenade us into the early morning of business together, and this has been a great what got me hooked on riding as well.” hours. The next day the hot desert sun woke relationship for our customers,” explains Sameer Hooked is right - despite having to contend with everyone with enthusiasm for a morning ride. We Gaur, president of the Motorsports Group at GE winters in the Windy City, Gauer has become a jumped on our bikes, buggies, and side by sides Capital, CDF. “Our relationship with NPA allows motorcycle guy. “I ride a Triumph Street Triple. and spent the day in sand. The weekend was our dealers to get pre-owned inventory simply I am enjoying riding it on the weekends, but I spent enjoying one of our favorite hobbies, a few and easily. Whether they are bidding in person don’t have nearly enough miles on it… not to scrapes, bruises, and hangovers, our desert trip or via NPA Simulcast, dealers who win a bid can mention, it’s Chicago and the riding season is was an action packed success. Braaaap! get their inventory financed immediately with a short! I look forward to exploring more bikes as dedicated line of credit. Dealers can check their I become an experienced rider… just don’t tell balance and start bidding… It’s really that simple!” my wife!” CDF really does think of themselves as a partner CDF has served the powersports industry rather than a financial institution. “We think of for more than 30 years. For more details, visit: ourselves as more than just a lender — we are an www.gecdf.com/motorsports extension of our OEMs’ and dealers’ teams, and our Motorsports staff has decades of experience in the powersports industry,” Gauer says. “Our Tony Altieri Becomes NPA’s core product is inventory financing. We work with PROMOTING WITHIN Director of Business Development manufacturers on programs that enable dealers to stock the right amount of product.” In recognition of his contributions and the company’s strategic CDF also offers dealers pre-owned financing objectives, NPA recently promoted Tony Altieri to Director of on a separate line of credit and has simplifed Business Development. In his expanded role, Altieri will lead the the dealer application process. “Dealers can company’s strategic business development initiatives as set by apply for pre-owned lines on our online inventory the executive team and be responsible for managing major NPA management system called COMS, so it’s a lot accounts. In addition, Altieri will continue to work on process more user-friendly and seamless. Additionally, enhancements such as inventory management, marketing and we provide dealers with a separate auction line communication, and sales and partnership strategy. Prior to his that has 100% advance rates, making it easy for new role, Tony was Factory/OEM Manager and was instrumental in expanding NPA’s existing OEM business them to add to their pre-owned inventory supply and developing relationships with key partners aligned with NPA’s vision. In addition to his powersport through NPA.” accomplishments, Altieri also worked with NPA’s partners at Penske to create a unique automotive auction Something that the industry might not be aware platform. Altieri stated, “I am looking forward to focusing on the future of NPA and the motorcycle industry”. of is the fact that CDF also finances OEM parts, Prior to joining NPA in 2009, Altieri was assistant VP of Remarketing for Bank of America and is a graduate garments and accessories. “We realized there of Boise State University. VOLUME 4 • JANUARY 2015 • NPA POWERNEWS • WWW.NPAUCTIONS.COM • P3 HARLEYS AT THE HARD ROCK MIC SNAPSHOT THROUGH SEPTEMBER 2014 YEAR TO DATE 2014 2013 UNIT PERCENTAGE Party at the Hard Rock! In November VEHICLE TYPE GENERAL TYPE CURRENT PRIOR CHANGE CHANGE HDFS and NPA hosted “Harleys At ATV ATV 162,960 164,321 -1,361 -0.8% The Hard Rock” in San Diego. The MOTORCYCLE DUAL 28,509 27,280 1,229 4.5% MOTORCYCLE OFF-HWY 56,977 53,934 3,043 5.6% educational event focused on expanding MOTORCYCLE ON-HWY 280,671 274,575 6,096 2.2% www.npauctions.com opportunities for authorized H-D dealers MOTORCYCLE SCOOTER 28,483 29,467 -984 -3.3% in the pre-owned market. The two-day MOTORCYCLE TOTAL 394,640 385,256 9,384 2.4% event also featured a closed HDDX GRAND TOTAL 557,600 549,577 8,023 1.5% Simulcast auction with more than 160 MONTH 2014 2013 UNIT PERCENTAGE HDFS motorcycles from all around the VEHICLE TYPE GENERAL TYPE CURRENT PRIOR CHANGE CHANGE country. One of highlights of the seminar was a group exercise focusing on the ATV ATV 19,138 19,603 -465 -2.4% trade-in actual cash value (ACV) process. In the session, small groups composed MOTORCYCLE DUAL 2,373 2,259 114 5.0% of dealers from all over the country, walked through the steps of evaluating non- MOTORCYCLE OFF-HWY 5,233 5,182 51 1.0% Harley trade-ins. The group reviewed a number of different evaluation tools and MOTORCYCLE ON-HWY 27,488 26,109 1,379 5.3% MOTORCYCLE SCOOTER 2,935 2,926 9 0.3% guides, working as a team to collectively determine the most accurate value. When MOTORCYCLE TOTAL 38,029 36,476 1,553 4.3% it was all said and done, the group had three important take-a-ways from the event: GRAND TOTAL 57,167 56,079 1,088 1.9% 1. When it comes to pre-owned, the money is made in the buy The motorcycle industry is on a roll… literally. According to the 2. Use current wholesale (auction) prices for determining trade values Motorcycle Industry Council Tire Sales Report more than 1.1 million 3. Turn time is paramount, don’t let your inventory sit! motorcycle tires were sold in the first six months of 2014. This doesn’t “Pre-owned motorcycle auctions are crucial for proper inventory management include ATV/UTV tires and scooter tires, either. Furthermore, as shown and maintaining the right model mix our customers want,” said Paul Gutman, above, Q3 new unit sales in 2014 were up 2.2% over 2013. Knowledge Operator/Owner of Legacy Harley-Davidson. “Attending Harleys At The Hard is power and the MIC has some of the most powerful tools available for Rock with HDFS and NPA in San Diego was truly an education on the important forecasting information, such as the quarterly tire market reports and tools and data available to maintain the right inventory,” said Paul. “These tools quarterly “Flash Reports” depicted above. Although NPA specializes will produce higher inventory turns and a better GMROI by not allowing non- in pre-owned inventory, we feel it is beneficial to share this data with moving aged inventory to continue to depreciate,” he added. “Using auctions you (with MIC’s permission, of course). More detailed figures, including to buy and sell inventory on a regular basis will make my pre-owned motorcycle make and model breakdowns, are available to MIC members, as is their sales more profitable.” Due to the overwhelming amount of positive feedback comprehensive Statistical Annual and trend data from IHS. Dealers received from the attending dealers and the large number of non-attending can now become MIC members and access much of the same data dealers requesting information, HDFS and NPA are already making plans for as the OEMs, including the Flash Reports and the aforementioned Tire pre-owned education events in 2015. Sales Report. For more details on the benefits of MIC membership visit: http://membership.mic.org

Charity AIMExpo 2014 Auction NPA’S FUTURE RIDERS 1-27-14 • 19 ¾ inches 7 lbs 11 Shane Scott Stalder 5-8-14 • 21” inches 9 lbs 2 oz Silvano ArredondoRobert

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 oz

sold varying from 11-14-14 • 21 inches 8 lbs oz TylerColeman Wayne 7-24-14 • 23 inches 9 lbs 4 oz Marasso River William 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]

VOLUME 4 • JANUARY 2015 • NPA POWERNEWS • WWW.NPAUCTIONS.COM • P4