PALA, Calif. - In the opening presentation of the OEM's recent national dealer meeting, KTM North America president Jon-Erik Burleson cited a dramatic shift in powersports retailing trends that will likely change how the company does business for years to come.
With unit sales down, the move toward PG&A sales serving as major dealership profit centers is so profound, Burleson said, that it signals a dramatic shift in KTM's business focus. Already PG&A accounts for about 25 percent of the company's worldwide revenue, nearly double what it was five years ago. Another aspect of this change is a move toward getting more profit out of the service department, he added.
"That is a huge shift. You're talking about one of the core profit centers moving up in relevance," Burleson said before the group of dealers assembled for the June 7 meeting at the Pala Casino Spa Resort near San Diego, Calif. "It went from something nice to have to an absolutely essential part of our business. It's an essential part of the business to every dealership in this room.
Like a small handful of OEMs, KTM has been expanding its own brand line of PG&A for the past few years. Burleson's message underscored the importance of doing this, and emphasized that dealers should be moving to increase the parts and accessories offerings in their own stores.
Judges looking over entries for the 2009 Dealernews Top 100 competition noted that many dealers specifically noted the shift in the percentage of profits away from unit sales and into the parts and accessories department. Most pointed out that while the money wasn't comparable, it opened up the possibilities of capitalizing on this dealership profit center.
"I hope you're paying attention to this business shift and I hope you see the value in KTM spare parts and KTM accessories and I hope you see the importance of this business as related to new unit sales," Burleson said. "Back in the day when the market was going [up], we could sell units and make money, now it's a complete business cycle and we've got to make it on the front end and on the back end too."
In addition to the message about this emerging profit center, Burleson emphasized KTM's innovation and technology in building purpose-built products aimed at specific riding segments. Building one product that fits all isn't going to work any more, he noted.
The highlight of the dealer show? The new 350 SX-F, the company's motocross bike and the main new motorcycles many dealers in attendance were clamoring to see. The 350cc 4-stroke dirtbike was announced last year to much press hoopla, since then rider and dealers have been eager to see it in person and take it for a spin. (continued)