Can used motorcycles be the saviors of the powersports industry?

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This story originally appeared in the Dealernews August 2010 issue.

Ya know, five years ago I took used bike sales for granted. They were a part of my business but not a huge factor in my day-to-day operations. Well, not today, boy! Man how times have changed.

Back then it was all about selling new motorcycles. They were our bread and butter. It was easier to control the inventory when we mainly focused on new bikes. You simply went through the OEM’s catalogs, ordered the make, model, accessories and paint you wanted on your floor, and POOF! two months later, here they come. You knew what you were gonna have in stock ahead of time, and you could actually do some pre-selling of the units you had on order. Back in the late ’90s, probably half of the new units I ordered were special orders from customers who actually put up $5,000 deposits to get the bike of their dreams.

Well, fast-forward to today, and it’s a whole different story! In my store, and I’m sure in many others, the winds of change haven’t been like a warm summer breeze. Instead it has blown through like Hurricane Katrina, taking many a good shop with it!

Remember the days of participation money? We used to average more than $800 a unit on participation money alone. In the old days, having a 550 credit score was not a problem. Now, if their score isn’t 700 or more, with a good debt-to-income ratio, they can’t get financing.

New bikes used to be 75 percent of my bike sales. Now, that number has flip-flopped. But ya know what? I’m OK with that. Used bikes are easy to come by and easier to sell. We get lots of people who have motorcycles sitting in their garages, but can no longer afford the luxury of owning one just for decoration. People are always e-mailing me pictures of their bikes, and most of them are willing to let them go for pretty cheap. Sure, there’s still that occasional cat out there with a 1995 Heritage that he bought for $15,000 and put another $20,000 into, so now he thinks it’s worth $25,000. (Well, that guy will be able to piss up a rope before any shop pays him that for his bike!) Luckily, most people get realistic about prices, especially after their ad on eBay or Craigslist doesn’t get a single hit.

Right now we are able to make some bread on used bikes that are reasonable enough to buy. My magic number is $2,000. That is the minimum profit I want to make from a used bike sale. If I can’t make that, then I’m just banging my ugly head against the wall. Sure, there are lots of times that I’ll take a skinny deal, but only after the bike has been sitting for a while. I have seen some shops around the country that are happy to flip bikes for $500 profit all day long. Those are the shops that ruin it for the rest of us. To those shops I say: If you are cool with making $500 per bike, then get the f--- out of my industry and go back to selling washers and dryers or tote-the-note used cars or wherever you came from! Let us do the real selling and you can wheel and deal somewhere else.

We get a lot of our used bikes from trade-ins and consignments. We love trade-ins. We give the seller clean trade value and resell them for retail. When I take a trade-in bike, my service department will thoroughly inspect the entire bike to make sure it is up to our standards. When we look customers in the eyes, shake their hand and tell them that this bike is A-OK and has been brought up to pristine condition, we gotta be sure that we have done exactly that — and we have!

Sometimes we buy bikes from the auction houses. Auctions are a great way to get a good stock of used bikes. The problem is that the dang prices can be so unstable at the auctions. Sometimes you can get them at really good prices where we can make a buck on our end, and sometimes other shops are paying full retail for used bikes. Idiots!

I also have some deals with local repo lots and banks to put in a buy bid on whatever they run across. Hey, it doesn’t matter how we get the used bikes in here; we just have to get them in here and at a price that allows us to make a profit.

We also try really hard to sell warranties with the used bikes. Typically it’s much easier to sell a warranty on a used bike than it is on a new one. After all, they are used, and no one can say for certain that you won’t ever have a problem. Unfortunately money has tightened up to the point where the buyer is watching every penny he is spending, so we aren’t selling them quite like we used to.

As far as trade-ins go, we’ll pretty much look at anything. Normally we trade for anything on two wheels (but I’ll consider four). We actually sell quite a few metric bikes outta my shop. Some people can’t afford a $10,000 Harley, but they can afford a $3,500 Yamaha. We do the same thing on metric trades. We offer clean or rough trade values (or less), and we try to sell for average retail prices (or more). I make sure that I have at least one metric tech on staff who is qualified to work on metrics. The cool part is, every time I sell a motorcycle, be it new or used, V-twin or metric, I gain a customer for my motorcycle shop, for my beer joint/grill, and maybe for my tattoo shop. So, at the end of the day, I am very thankful for used motorcycles. I believe they have helped save our industry! If you are not taking advantage of used motorcycle sales, then you might as well go do burnouts in the parking lot. The result is the same: a waste of time and money.