Mike Vaughan

One thing that becomes obvious is that the surge we saw last year in the sales of scooters and small-displacement motorcycles has receded significantly, and short of another huge uptick in fuel prices, this segment probably won't recover.

Looking at sales on a state-by-state basis, almost every state is suffering from the decline, but there are three — Rhode Island, Vermont and Iowa — that have sales ahead of last year's, mostly attributable to an increase in touring sales. Then there are states that have seen a modest increase in the sales of certain brands or types of motorcycles. Unfortunately in most cases, this is mostly offset by a plunge in sales for other brands or categories.

When a market is in decline, one of the only way to keep your head above water is by taking sales from someone else, and it would seem that the time is ripe for that. As pointed out a few months ago, the number of dealers rises and falls in sync with the number of units sold. If the market is down by 30 percent, then we can reasonably expect to see the number of dealers decline by about the same percentage, which would mean that about 2,000 dealerships that sell new product this year will be out of the picture by next year.

This creates an awful lot of "orphan" customers who can no longer go back to the dealer from whom they purchased their motorcycle. (This likely includes all those consumers who bought from your competitor the very brand you carry.) It's a good opportunity to win adherents to your brand(s) and, more importantly, to your store.

The question is, what do you do to take advantage of this situation?

At the annual MIC meeting in Indianapolis back in February, longtime industry observer Dr. Paul Leinberger of TDi Consulting had some interesting things to say about weathering the storm of a contracting market and coming out stronger on the other side.

As many studies have documented — studies that he reinforced — it is now more critical than ever to continue investing in your business and marketing activities. Those who do so, Leinberger noted, tend to end up in a much stronger market position when the market recovers than those who don't.

As I peruse my notes from his talk, three words constantly emerge — look, listen, react. In other words, in this environment it's important that you look around and see what's going on with other businesses as well as your competitors. Are they expanding, contracting, focusing on a different segment or going out of business? If so, why? You need to listen to what your customers (and competitors' customers) are saying and take to heart their opinions and views as you plan your market strategy. Finally, you need to react by retuning your approach to the market based on the input you're receiving.

With the shift in the economy, people are making changes in virtually every aspect of their lives, from how they view government involvement in business to what they believe should be the right-sized house and car. According to Leinberger, these changes are fundamental and mark a long-term shift in attitudes and values.

On the positive side, while it's expected that consumers will become more conservative with their spending habits, the money they save in what's perceived as nonessentials — buying store brands versus name brands as an example — will be spent to sustain their lifestyle activities (read: motorcycling). However, just as value judgments will be made concerning groceries, housing and automobiles, so too will the value of your products come under greater scrutiny. Remember, it's not just about product — it's also about your business environment and how customers are treated. Consumers want to be assured that they're receiving maximum value for the dollars they're spending, and you need to be seen as giving it to them.

Finally, be optimistic. Things are seldom as bad as they appear. Not everything you read is necessarily accurate, and what's true for one geographic area might not be true for another. Optimism is infectious, and I for one would be more willing to spend my money with someone who's upbeat than with someone who's not.

Mike Vaughan is the former publisher of Dealernews. You can reach him at mvaughan@mikevaughan.com
or via editors@dealernews.com