Lead time creates challenges
WE'RE AT THE END of the motorcycle season, when the minds of most dealers turn toward inventory levels (if their attention ever wavered from them). Bill Shenk, an organizer of 20 groups, told me in July that his 80 dealerships were averaging a little more than a four-month supply of all vehicles, though he guessed the national average to be six months.
About this time I talked to a dozen owners of large multilines, asking them about their ATV inventories. Most were satisfied or had only minor problems, but these dealers were all winners of our Top 100 contest.
"The stronger dealers don't allow themselves to be buried in inventory," said consultant Ed Lemco in a recent conversation we had. He added that strong dealers are actually doing well as the inventory-heavy stores cut staff and hours.
Lemco, however, believes the standard ordering process for metric units is flawed, and he's spent years trying to persuade the OEMs to move toward a by-demand model. He's now helping state dealer associations push for protective legislation and (preferable to this) an open dialogue with the OEMs. He hopes to achieve this latter objective at a national conference in Indianapolis right before next year's Dealer Expo.
Even some of the well-off metric dealers with whom I spoke complained about ordering. "Right now I'm placing orders for Yamaha and Kawasaki product for the next 12 months," a dealer said. "That's a dumb way to do business. I don't know what I'll need next March or April."
Harley-Davidson has pretty much solved the problem. It ships bikes to its dealers continually. Plus, when calculating allocations, its software takes into account things such as whether the dealership sold an excessive amount of bikes outside its territory, and whether the store provides warranty service.
But Harley benefits from 100 percent domestic production and mostly single-line dealers. The importers often need a longer lead time and, because most of their stores are multiline, are driven to push inventory. If an OEM cuts back, that's just more showroom space for a competitor to fill.
Not surprisingly, it's another domestic brand, Polaris, that's stepped forward with a by-demand model. From what dealers are telling me, the OEM is experimenting with a system in which dealers order every two weeks. Polaris says the program is confidential at this point.
Nobody accuses the metric makers of intentionally flooding the market — not even Lemco, who admits to not having a solution himself. He just encourages the manufacturers to strive toward their own.
What's funny is that as I write these words, many dealers are facing shortages of scooters and small- to mid-displacement motorcycles. Besides the small stuff, many Suzuki dealers have run out of GSX-R models after the OEM cut allocation on certain models by more than 40 percent.
Speaking of Suzuki, it made a good move in summer 2007 when it upgraded to a Web-based system for obtaining and disseminating dealer inventory, sales and financial stats. Now dealers can see updated info daily (theoretically anyway: Last I heard corporate executives act as gatekeepers). Before this, the only data many Suzuki dealers saw were contained in monthly paper reports.
Better communication, in fact, seems to be the principle challenge — that and cooperation. Unfortunately, dealers seem hesitant to band together.
For example, one way metric dealers can at least alleviate their inventory problems is by transferring units. Shenk says his dealers make good use of the transfer program, but Lemco insists metric dealers in general have never been as good at it as Harley dealers.
ADP Lightspeed just launched a program in which users of its LightspeedNXT software can post inventory — parts, accessories and units — so that other users can see it. As far as floored units go, this would save multiline dealers time in not having to search each OEM's system separately.
A Web-based company tried something similar a few years ago without success. But ADP Lightspeed has a built-in audience, and today's demand for such a service is arguably greater. Then again, as margins fall and gas prices rise, transferring some units may become impractical. And there's always the stuff nobody wants.
Arlo Redwine Senior Editor email@example.com