Ducati Newport Beach: A boutique approach to used bikes

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This story originally appeared in the Dealernews August 2010 issue.

Mike Guerin opened his Ducati-only franchise in Newport Beach, Calif., in 2009 after spending 35 years in the auto industry. Guerin capitalized on the store’s coastal location by turning what had once housed a multiline shop into a sleek Ducati Retail Design pilot location. But (unfortunately) man can’t live on Duc alone. So looking at his auto industry experience, he knew that a store’s fixed operations can carry things when unit sales drop.

Dealernews: What is your philosophy on the pre-owned market?

Mike Guerin: I really push the service end [here], and that’s what I think helps sustain the store during the lean times when you’re not selling bikes. That leads into the pre-owned. It’s such a competitive market even with a little brand like Ducati. Your margins are very slim on the new products. Someone can virtually go anywhere and buy a Ducati. But the used, that’s different. They’re one of a kind.

Being a stand-alone franchise, you think about adding another brand, and of course that would upset your current manufacturer. … That’s why I look at the pre-owned as another franchise.

That’s the way I look at it. Primarily what’s nice about it is I don’t have to go and make the investment into tools, into parts, into training and all the BS you have to put up with with the manufacturer, and I make more gross.

DN: Why did you make the decision to jump heavily into the pre-owned market?

MG: There’s no competition. The bikes are basically one of a kind. It’s good for my service department, and I hold more margin on my used than I could ever think of doing on my new.

I’m averaging about 20 percent because I have some consignment. Many of these are from people who have bought bikes from us, and I make deals with them for less percentage. The goal is to hold 20 to 27 percent. That’s generally what we do on the units that we purchase. That would be my average.

DN: What is the ratio of unit sales new vs. used?

MG: Right now it’s one used to every four new. My goal short term is to go 1-to-1, long term, four used to one new. But realistically, it’ll probably be two used to one new.

DN: How do you market your pre-owned selection?

MG: Viral marketing is what I do in my store, period. What I learned in the auto industry is that the 2 percent return on print, and how expensive it is, just doesn’t work in the motorcycle market. So viral marketing and my website (www.ducatinewportbeach.com) are what it is. Every day we work on the website. That’s part of the sales staff’s responsibility so the website is always fresh. If you go to the pre-owned that’s on the website, you get detailed pictures. You can go in and look at them just like you can with new motorcycles. The other thing is we do Cycle Trader.

And, because I’m a stand-alone Ducati dealer in Newport Beach, Calif., I draw all kinds of people in here. It’s a destination. And people feel really comfortable buying a used Kawasaki from a Ducati dealership. That helps.

DN: How do you recondition pre-owned bikes?

MG: Every bike goes to my shop, and they do a complete safety check, and the technicians sign off on it, and it goes to the customer who buys the bike. The tires have to be 50 percent or better, the brakes 50 percent or better, or they’re replaced. And if it needs a service, it gets a service. Nothing goes onto the floor unless it’s been taken care of and the bike looks good. It’s detailed and then onto the showroom floor.

This is a boutique store. I’m not a fast lane where I’m taking bikes that have been totaled with salvaged titles. This is all quality product. And if you were to see my store too, all the used is on my showroom floor. I don’t put the used outside so that it’s new inside and used outside. My used are treated just like new. And they look new on my showroom floor.

DN: If it’s a boutique store, are you particular about the pre-owned bikes you carry?

MG: Absolutely. I do well with Harleys here, but I don’t have 10 Harleys. The whole concept is to have one or two and then they look like they’re special. That’s how it works here. Like I had a V-Rod in here, a 999R, a Desmo. It goes from anything that’s $5,000 up to $60,000. I try to make the selection look special, but I’m not afraid of metric bikes. I’m not afraid of carrying anything really. To be honest, I’ll put anything in here as long as it’s a nice bike.

That’s the attraction. It attracts people and gets them in here because they can feel a little bit intimidated. You can’t be narrow-minded about it or say, “I’m not going to put a Harley in here.” If it’s a good, clean bike, there’s somebody out there who wants it. The location, the name of the store, Ducati Newport Beach, is powerful. I use that to draw people in here.

DN: How do you treat add-on and accessory sales for pre-owned units?

MG: I’m not afraid of that. With metric stuff, I’ve had customers come in and I’ll sell them an exhaust, and definitely apparel.

I’m not afraid to put a Graves exhaust on a ZX-10R that we sell used, or even rear-sets. We’ve done that. But we’re a dealer, so we have to be cautious about doing anything that creates a mechanical ticket for the customer. We won’t do anything like that.

I carry a non-Ducati line of apparel and helmets for people who buy other than Ducati. And I have a lot of customers with other than Ducati motorcycles, so they aren’t stuck with wearing Ducati gear.

Related:

Pre-owned profits: The survey

Firsthand accounts on secondhand sales

Diving into pre-owned with NPA

Manheim contines to grow