Distributor Update: LeMans Sees Signs of Growth

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The sour economy has had a negative impact on the entire motorcycle industry, including LeMans Corp., parent company of distributors Parts Unlimited and Drag Specialties. Still, LeMans officials say they believe there are markets experiencing growth and continued opportunities to sell.

“We’ve been through down cycles, and we’re in a down cycle right now,” LeMans Chairman Fred Fox said in a speech to 167 of the company’s vendors who assembled in Madison, Wis., for a five-day National Vendor Presentation (NVP). “We’re not publishing figures, and we never have, but our sales are going to be down this year.” NVP is the distributor’s annual major sales meeting.

“Some areas have had a bigger hurt than other areas,” adds Greg Blackwell, LeMans’ VP of sales. “People are only buying what people need to buy. We know people aren’t buying new motorcycles, and the trend is usually when you buy a new bike you buy a new jacket, you buy a new helmet, you buy new things.

“With that said, on the flip side, service items such as tires, brakes, batteries, chains, tools, cables and fluids have been doing really well this year, and we’ve seen dealers who have put efforts into their service departments growing. So we’ve focused on that business.”

Another trend Blackwell says he’s seen is consumers looking for greater value. ”So, when they’re going out and buying, maybe instead of buying that $300 helmet, they’re getting that $200 helmet. And we’re seeing that in tires, in helmets and in exhaust systems.”

A FOCUS ON THE POSITIVE
A distributor is nothing without its dealer customer. LeMans supplies product to approximately 9,000 dealers in the United States and an estimated 12,000 retailers worldwide. The company has implemented a program in which regional sales managers visit dealerships and coach them on how to continue operating through difficult times.

“When a guy comes through the front door of the shop, you don’t cry and whine how bad it is, or talk about politics or anything else. You tell him about the specials going on and open the door to the sale,” Fox said. “We try to coach them [the dealers] not to go for a knee-jerk solution and to stick to the basics.”

“We really believe that’s important right now,” Blackwell adds. “We know the dealers are having a tough time. We want [our reps] to go in there and try to lift [dealers] up, help them, and try to give them some ideas on things they can do to improve their business.

“You can still pry that money out of the consumers’ hands, but you’ve got to work for it a lot harder than you ever have. There are buyers out there.”

VENDOR INVENTORY
A downturn in consumer sales leads to a downturn in dealer purchases, which leads to difficulties for vendors. When that happens, production — and ultimately, fill rates — tend to be affected. To combat that issue, LeMans has increased its inventory by $10 to $20 million dollars in the past year. Why?

“Because we don’t know exactly what somebody else is going to run out of,” Fox said. “So our goal is to predict what may run short and to have our buyers look into what we estimated and whether we’re over or under.

“If everyone cuts back, somebody somewhere is going to cut too much. So it takes good forecasting, it takes good buyers, and it takes a review every couple of days.”

“Our fill rates are still extremely good right now, and that’s an area we continue to concentrate on,” Blackwell says. “What we’re doing, if a vendor is having a problem, is buying a four-month supply instead of a two-month supply. And if a vendor is really having a problem, maybe we’ll buy a six-month supply. So we’ve tried to watch that really closely.”

SPENDING WISELY
While LeMans is the largest distributor of motorcycle aftermarket products in the world, Blackwell says there are limits to what the company will spend money on.

“With this economy right now, I think we all know that we have to be responsible with what we do,” Blackwell says. “We’re trying to be as economical as any other company right now, and we’re really looking at how we spend our money. Our plan is to continue on with the events and the showcases that we do, the dealer events that we do, and the hospitalities that we do at the races. We will be doing all the things we have done, just more efficiently.”

This article is from the October 2009 issue of Dealernews.