David Damron’s office isn’t what you’d expect. It’s small, has no windows and is tucked away from his retail store. The desk is so normally sized that it warrants a space-saving contraption that, when prompted, sucks his computer monitor down into a compartment. The only memorable decoration is a wall display holding motorcycle scale models, remnants of a past hobby (he’s now into woodworking).
Again, not the workspace you’d envision for the owner of one of the largest, best-known dealerships in the country: Chaparral Motorsports in San Bernardino, Calif. But Damron, 60, prefers it this way. “My ego is totally in check,” he says. “I don’t need a palatial office. I keep a reasonably low profile. I don’t want people to think of my name whatsoever. I want them only to think of Chaparral.”
He usually doesn’t even grant interviews, he says. Accordingly, when I was first guided into his office, he looked up from his work with a less-than-eager expression. I was early, so I offered to come back. “No,” he responded, “I want to get rid of you as quickly as possible.”
Not a great way to start. But soon I realize that Damron’s sarcastic streak is harmless and really quite amusing. Glib and opinionated, he seems like the type of person who doesn’t suffer fools lightly, and likes to keep his nose to the grindstone. He may work 12-hour days, but don’t pity him. He’s also been on several bike-riding vacations in not only this country, but also South America, Europe and New Zealand. He’s always accompanied by longtime wife Linda, who holds an executive position at Chaparral, as do Damron’s sister, brother, two daughters and son-in-law.
And there’s a good reason why his ego is in check. Sure, there have been successes. He’s been a manufacturer, a distributor, and an owner of a racing team that won three AMA Supercross championships. He even introduced children’s off-road gear to the industry. But there also have been failures. The recession of early ’80s, for example, ended several businesses while precipitating another.
Today he again faces a bad economy, but this time his livelihood is safe. He long ago built his house of brick.
THE PATH TO CHAPARRAL
Damron’s father was originally a pharmacist. Then, after dabbling in manufacturing, he became a motorcycle dealer in the 1960s. This is how the younger Damron caught the bug.
After college, at the age of 21, Damron got married and decided to use his father’s good credit to open his own Suzuki dealership in nearby Riverside. He soon realized that no distributor carried a good selection of Suzuki accessories, so he started distributing them himself. He ended up buying a few of his suppliers after they went broke. “So in a matter of about a two-and-a-half- to three-year window,” Damron says, “I went from being a dealer to a distributor to a distributor/manufacturer.”
He closed the dealership to concentrate on his new ventures, including Ancra Motorsports, which back then made fairings and saddlebags. Damron expanded into many other products. Customers included Kawasaki, Yamaha and J.C. Whitney. Things were good.
Then the recession of 1980 hit, and interest rates skyrocketed above 20 percent.
According to Damron, J.C. Whitney filed for bankruptcy and stung him for a substantial amount of money. Kawasaki dragged its feet on paying its bills. Damron laid off everybody and closed down. He had a ton of leftover products. “What I did is I called the magazines and said, ‘Here’s the deal: I’m going to start a mail-order company. I have no money. If you’ll take an ad, as soon as I sell something I will pay my bill.’”
Cycle Guide took him up on the offer. “That’s when Chaparral was born,” Damron says, “out of sheer desperation, to put beans on the table. I was starting a family. My first daughter was born at the time.”
Damron built the business and opened two small retail locations. “We thought this may be the way to go,” he says, “but it turned out that it really wasn’t because we couldn’t offer enough product in a small store to do the whole thing justice. And since then, my philosophy has been ‘If you got it, put it out there and sell it.’”
He used 35,000 sq. ft. of his previous manufacturing space to open a shopper’s wonderland. He didn’t have much money for lighting, so he slanted the factory’s fluorescent bulbs back and forth in 45-degree angles to add some style. The look became a sort of trademark, so despite a designer’s pleading, he’s never changed it.
Once the store outgrew this space, Damron moved into today’s building on the other side of the freeway. He began with 60,000 sq. ft. and eventually added another 90K, all walk-in retail space. These numbers include a 35K sq. ft. tire center displaying 5,000 tires. Not included are stock rooms, office space, a separate 20K sq. ft. service department behind the store, and (in the city block directly behind the store) a 100K sq. ft. assembly building and a 60K sq. ft. mail-order warehouse with a conveyor system. When needed, employees tote parts from the warehouse to the retail store using Kawasaki Mules.
Damron began selling online in the mid-’90s. He also entered the vehicle market. At the time, he says, local dealers were focused on booming PWC sales because their stores weren’t big enough to show all powersports units well. “I was watching the motorcycle business erode in my own backyard,” he says. “Nobody was paying attention, so for my own self-preservation I decided to attempt to buy up the dealerships.” He bought the local Big Four dealer that also had Sea-Doo. He then added KTM and Polaris.
Business was going so well that the store began sponsoring a Supercross team. Jeremy McGrath took home the championships in ’98, ’99 and 2000. Chaparral also had some success with an AMA road race team, but Damron says it didn’t translate into sales. The store today doesn’t own teams, but it does provide discounts to amateurs.
ADJUSTING TO THE NEW ECONOMY
Few dealers have been around as long as Damron. “Most people have only seen the roller coaster go up,” he notes. “They haven’t felt it go down. It does go down a lot faster than it goes up.”
The store’s unit sales peaked in 2006, when it employed about 225 people and could sell 250 to 300 units in a weekend. The following year the store retailed about 6,000 units (Damron declined to share recent sales numbers). The number of employees is down to about 175. Damron refers to a “core group” of 100-plus employees who have been with the store for years. The other employees are just passing through, he says, so he just stopped rehiring as much to reduce their number. Chaparral offers medical, dental and a 401(k), though it has stopped matching contributions. Other cutbacks: The store closed its boat showroom at the end of the previous season, and next year, instead of publishing six catalogs, it will print four: street, ATV, off-road and Christmas.
But the overall feeling at Chaparral is positive. So much so that Damron provided employees a reality check by showing them his $36,000 electric bill for the month. Most of the money coming into the store goes right back out, he wanted them to know.
Still, as recently as the 12-month period ending November 2008, online sales rose 15 percent. Plus, Damron says less than 10 percent of his inventory is older than 2009. He was one of the first dealers to dump old stuff, he says, adding he’d like his inventory to be even cleaner. “I don’t think in the very foreseeable future we’re going to see the motorcycle business come back to the thousand-unit-per-month dealership,” he says. “I think the OEMs are going to bring it down. They’re cutting production and availability to bring profitability and exclusivity back to their product lines. And it’s going to take a long time because everybody is going to dump the stuff they’ve got. So it will be a good year-and-a-half- to two-year cleanup. … One OEM rep came in here and told me that his order goal for his district was half of what I ordered last year, for his whole district!”
Even in the down economy, Chaparral has continued to invest in operations and promotions. Only a couple of years ago, Damron redid his flooring and walls, placing a cashier island in the middle of the PG&A showroom and creating pathways leading to it and the massive parts counter. The new layout also created definite departments for leathers, helmets, etc. A greatly expanded casuals department has its own cashier island.
The most important upgrade is a new proprietary computer system that soon will allow the store to scan and receive aftermarket stuff as it does OEM parts. Because Chaparral stocks both aftermarket and OEM, it handles roughly 170,000 part numbers, much more than the major distributors. Damron notes that when it comes to custom software, a dealer can easily spend more than $700,000.
Damron also plans to spruce up his website by posting more product videos and photos. And in addition to print advertising in the major magazines, Chaparral now sponsors a virtual bike show at www.sportbikeclub.com (owned by Dealernews’ parent company).
Damron hasn’t stopped spending on real-world promotions, either. In fact, this year Chaparral began hosting bike nights every other Wednesday, with a stunt show every other one. The events include giveaways, vendors, free food, a DJ and sponsors. Speed and Strength has showcased Aaron Colton; Yamaha has raffled off a scooter. One time the store built a huge white wall onto which it projected a stunt video. Another time it hosted a live band.
Bike night advertising, stunt show insurance, and dealing with various agencies isn’t cheap, Damron notes, but he’s hoping to win loyalty by giving back. “A lot of dealers take a stab at something, and if they don’t see immediate cash in the register, they fold. But this is a long-term investment.”
The largest event for Chaparral is its annual Monster Block Sale, which has grown so big over the past 23 years that it’s now held at a nearby ballpark. Last year 50 vendors displayed close-out and blemished products to 15,000 people, some of whom spent the night in line.
Chaparral also annually hosts the Supercross teams for autograph signing. Finally, as we went to press, Damron was preparing to sign the paperwork for a new rentals division. “None of us want to dig into our savings,” Damron admits, “but we’re going to have to.”
He thinks some other dealers have cut their promotional budgets and may be on credit holds. He resents suppliers that take extraordinary steps to keep failing stores alive. “I wish they’d chop some of these stores sooner instead of just letting them bleed out,” he says.
So Damron’s reward for saving money — a propensity he might have picked up after going broke in the ’80s — could be greater market share. “It’s kind of like the story of the three little pigs,” he says. “If you live in a little hay house, you’re going to be gone. But if you put the money away and built a little brick house, you’re going to be here at the end of this downturn.”
This article is from the October 2009 issue of Dealernews.