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How motorcycles can breathe new life into car dealerships

Are your customers petrol-heads or bikers? That question used to be fairly straightforward to answer – people were usually devoted to one or the other – but the lines are becoming blurred as car owners turn to motorcycles for weekend leisure or scooters for commuting necessity.

Born-again bikers and commuters have been fuelling a buoyant motorcycle market over the past five years with scooters enjoying a particular resurgence. Although growth has slowed this year, two-wheelers continue to offer car retailers a massive opportunity to diversify and boost profits.

The sector essentially falls into three camps: multi-franchise bike retailers who stock everything from Aprilia to Yamaha, single-franchise specialists like Harley-Davidson and dedicated scooter retailers.

Most opportunities for car retailers are from single-franchising sites and scooters. But while customers will often also be car drivers, they have a completely different mind-set when it comes to purchasing two wheels.

“Car salesmen have a set way of selling, but this concept doesn't work with scooter buyers,” says Mark Franklin, area sales manager for scooter maker Piaggio. “They tend to be anoraks, so the sales staff will need to have a similar level of product knowledge otherwise they will lose their confidence. It can often take a salesman several hours before agreeing a sale – this is no quick fix.”

Training is essential. A car salesman might be dealing with eight models, with a range of variants. But a motorcycle or scooter retailer might need to have in-depth knowledge of 30 to 40 different models.

Retailers who are looking to make a quick buck by plonking a few scooters in the corner of their car showrooms will almost certainly fail. Conservative industry estimates suggest at least half of car retailers who begin selling scooters flop.

Those that succeed either set up a separate showroom or create a dedicated sales area with committed, fully trained staff. Some become so successful that they even give up the car franchise. Why? Profits – bike margins can be much healthier than those of cars.

“Car retailers would be amazed at the money they can make from selling scooters – but only if they come to it with the right attitude,” says David Perceval, import sales manager at Peugeot importer Three Cross Motorcycles. “If the scooter side is seen as an afterthought to the car business, they won't sell any.” Perceval advocates boutique style display areas, with space to show a minimum of 10 scooters. Most car retailers go for one or two franchises – they want volume, not hassle – and a company like Peugeot that has a wide product range offers the best opportunities.

They can expect average margins of around £500 per scooter, not bad for a £1500-£2000 product, although part of this comes from selling accessories like helmets and leathers. The accessories opportunity is excellent, as many scooter customers are new to the sector.

Car retailers also have two key advantages over bike specialists: showroom premises and aftermarket understanding.

Mainstream car showrooms are generally of a higher standard than motorcycle stores, particularly the multi-franchised outlets, because retailers have to meet stringent franchise criteria. And although the gap is starting to narrow, dealers are also better prepared to provide an aftersales service – vital to build customer loyalty.

“The level of aftercare from car dealers is better because they are used to offering the service to their customers. For bike retailers it's a bit of a new concept, but they are waking up to it,” says Franklin. Investment requirements vary depending on the franchise. Piaggio estimates start-up costs of around £40,000 for a dealer looking to set up a dedicated sales area within an existing car showroom, but emphasises that “what you put in is what you get out”.

Aspirational brand Harley-Davidson, on the other hand, requires standalone premises which usually cost around £1m – investment includes cafes and clothes/accessories boutiques – although one London dealer has invested £3.5m.

“The investment is comparable to a car showroom but it pays off, the returns are available,” says Gary Brumfitt, Harley Davidson UK managing director. “Many of our dealers want to open a second site.” Around half of Harley's 27-strong dealer network (two more open in December) is affiliated to car retailers who are able to offer buyers a complete brand experience. Pendragon has four showrooms and Dixon Motors has one Big Rock operation. The biggest outlets typically retail around 300 motorcycles a year, with up to a third of those used bikes.

“Our customers want to be treated in a manner more akin to the car customer. Most bike showrooms are multi-franchised so there is less of a brand experience than at our centres,” says Brumfitt. “We rely on our dealers to present the total brand experience – customers get 'Harley-ed'.” He believes car retailers are more comfortable operating in a solus environment, rather than some rival multi-franchised 'pile 'em high and sell 'em cheap' operations.

That view seems to be shared by an increasing number of motorcycle suppliers. Honda is the latest to announce plans to set up a solus retail network – currently its bikes are sold from multi-franchised outlets – and is looking for retailers willing to specialise.

The Honda blueprint has already been established by Norton Way, which last year opened a flagship showroom in Chiswick, London, selling Honda cars, bikes and its range of power equipment products. Lifestyle brands like Harley offer a huge opportunity to sell accessories and clothing – its accessories brochure runs to 800 pages. Dealers on average boost revenues on each bike by around £2500 because customers enthusiastically buy into the whole brand experience.

Sales experts are employed from high street retailers to maximise potential returns from the clothing lines, which, similar to the fashion business, are split into four seasons. Further opportunities for Harley retailers are available. The company is targeting a full network of around 36 outlets.

“We want to increase the network where demand is highest – there are no gaping holes – and we want to work with existing dealers that have already made the investment and commitment,” says Brumfitt. He believes the extra volume will follow – Harley is becoming more acceptable as a “proper” motorcycle rather than just a lifestyle choice, particularly since the launch of the £13,995 V-Rod last year. “This opened up a new customer base for us,” he adds.

Harley retailer Dixon Motors is looking to grow sales across its wide motorcycle/scooter portfolio through rebranding and a reorganisation of the business. The 26 Carnell and Motorcycle City outlets – which retail nine brands, including Moto Guzzi, Suzuki and Piaggio – have this month been rebranded Riossi, in line with Dixon's own-brand motorcycle clothing range. Its Big Rock Harley showroom is not included in the rebranding.

The company is also altering showroom layout, setting up dedicated brand areas with expert sales staff specialising in each product range. “Customers prefer specific sales staff for each brand because they have greater product knowledge than someone working across five or more,” says a Dixon spokeswoman. It's a similar argument to the multi-franchised car showroom debate, but one that is new for many motorcycle retailers.

The expanding UK market has attracted a host of new entrants, particularly from the Far East. Shropshire-based Masco, importer of Japanese Kymco scooters, has been expanding over the past three years with the help of car dealers. Commercial director Mark Callaghan has set up a comprehensive support programme to help first-time retailers entering the scooter sector.

“Scooters are an ideal way for car dealers to recoup falling margins currently being witnessed in the car industry,” he says. “They offer dealers a low capital outlay but a high margin compared to cars.” Despite an onslaught of cheap Taiwanese and Chinese imports, suppliers of quality product have not been affected. Three Cross Motorcycles, for instance, says its market-leading Speedfight2 is one of its most expensive models, and it is usually sold with full specification – earning the dealer substantial profit. So, are your customers petrol-heads or bikers? As a retailer, perhaps you should be both.

Five steps to bike retail heaven

  • Be pro-active. Take the product to the customer by placing ads within publications that target your audience
  • Assess the local area. Before making a commitment, is your area affluent, do you have the right product for the market?
  • Have clean, customer-friendly premises. Important to encourage people who think a motorcycle/scooter showroom attracts studded, tattooed bikers. Born-again bikers are used to car showrooms
  • Aftersales care. Essential for long-term loyalty, but something that motorcycle/ scooter retailers have been slow to appreciate. Car retailers have the edge
  • Accessorise, don't just focus on the sale. Profits are boosted by selling helmets, leathers, clothes and other accessories.

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