The bigger picture

Mike Vaughan
Publish Date: 
Dec 16, 2013
By Mike Vaughan

THE INDUSTRY cannot move forward until dealers start talking to consumers and the industry starts talking to dealers.

A few weeks ago I attended the 15th Annual MIC Communication Symposium. I think I’ve been to every one of them since they started. Sometimes the link between what’s being said by the speakers is a little difficult to connect specifically to our industry, but by and large it’s interesting and educational, and I walk away with some insight or fact that I hadn’t considered before.

I've always been amazed at how little contact upper and middle OEM management have with dealers.

The symposium typically begins with an industry update by Tim Buche, MIC president and CEO, followed by an economist who talks about the state of the economy, and lastly some consultant who tells us how we can run our businesses better and what’s evolving in the larger world of retail trade.

The MIC has a new limited membership program for dealers and hopes to sign up at least one dealer member for each U.S. congressional district. This provides industry-friendly lobbying at the local level to help shape legislation. More encouraging is a plan to create a Dealer Advisory Council. Dealer input is critical for directing the fate of our industry.

Having spent 23 years of my career inside corporate OEM walls, I’ve always been amazed at how little contact upper and middle management have with dealers. Outside of the OEM’s sales force, almost no one visits or talks to dealers on a regular basis, and I have to admit that outside of my quarterly DM rides, I was as guilty of this as anyone.

Sure, most executives have their “pet” dealer, a guy they met on some junket or meeting who they chat with periodically. More often than not, however, it’s a dealer in California who’s doing well and who’s interested in maintaining their corporate contact. So the OEM exec gets a snapshot of a well run dealership that’s generally able to cope with most corporate policies. After all, who wants to chat with a dealer who’s pissed off about a program, or distribution, or warranty, or any of the other myriad problems confronting a dealership?

We can’t really address retail and other issues until all entities involved have an open, frank and ongoing discussion about them.

The MIC will issue its 2012 Owners Study by the end of the year. According to some early information, about 10 percent of dealerships have gone out of business since 2009, which doesn’t track very well with the 50 percent decline in sales since ’08. The good news is that the number of miles ridden, while still down from 2009 levels, seems to be on the upswing.

Who’s our customer? Well, it’s still the same person we’ve been selling to since the 1960s – baby boomers, though they’re a little older now. The nice thing is that the gain in the stock market and recovering housing prices have aided this boomers the most. Younger generations are still suffering from unemployment or underemployment, and have had no opportunity to latch onto either real estate or stocks or any other equity instrument that would give them the financial confidence to purchase a motorcycle.

Nearly one-fifth of dealers don't follow up with potential customers who do a test ride, according to a new study.

According to research from The Futures Company and Paul Leinberger, not as many consumers are concerned with their money-making capability. Indeed, consumers seem to be more confident now than they have been in several years, with more than 60 percent of them telling Futures Company researchers that they are “in control” of their finances. But they’re now more inclined to ask themselves hard questions before making a purchase – i.e. “Can I afford it? Is it in the budget? Is it worth the risk? How does it make me feel?”

Test rides, according to the MIC, remain the top reason behind a consumer’s choice to buy a certain vehicle, followed by fuel economy, and then his or her experience when visiting a dealer. But test rides and dealership experience have been top influencers for years.

What I find amazing is an estimate that 18 percent – nearly one-fifth -- of dealers don’t follow up with potential customers who do a test ride -- the ones who have already answered the questions above.

Nothing changes overnight, and not every prospect is a buyer. But dealers must be aware of what’s happening in their local economy, and they must adjust and find new ways to attract buyers – and follow up with the ones may be ready to buy.