JOPLIN, Mo. – If he had it all to do over again, Garrett Paull says he probably would never have jumped into the powersports industry four years ago.
In 2008 the former airline pilot who attained the rank of captain before his retirement from United Airlines bought Powersports of Joplin. He kept the dealership in the Dealernews’ Top 100 Dealer list through this past competition, and was a top-ranked dealer in his district and beyond for Honda, Kawasaki and Suzuki.
On Aug. 7, the dealership closed for good.
“It just breaks my heart, but it’s a true statement,” said Paull. “I just don’t see any light at the end of the tunnel.”
Paull acknowledges, in hindsight, that he got into the business at the most difficult possible time for the powersports industry. But the triple whammy of the financial collapse, and distant twin weather events last year – the tornado that swept through Joplin, devastating the local economy, and the tsunami that shattered Japan and crippled production at many OEMs during the rebuilding process.
“The effects [of the tornado] are certainly lingering. The U.S. economy is not good. The European economy is not good. The economists are saying we might be heading into another recession. Best Buy is about ready to go out of business. Furniture & Fixture Outlet has closed,” Paull said. “July was terrible. And after I started looking at things, I just said ‘I don’t see the light at the end of the tunnel.’”
Paull hasn’t decided whether or not he’ll have liquidation sales. This week he’s helping OEMs transition vehicles to other dealerships and winding down the store. He had already reduced staff from his peak of 22 to about 12 employees, all of whom will be out of work.
With substantial equity in the dealership property, Paull has listed it for sale for $2.85 million. Even his equity in the property didn’t help him find a solution.
“I talked to SBA people, especially after the tornado, and they were not helpful at all,” he said. Changes in banking regulations and the lending environment also worked against him.
“Because my P&Ls are bad, I can’t refinance. That is because of banking regulation changes,” he said. The ability to refinance “was true my whole life” until recently. “In 2009, rather than looking at equity, they looked only at P&L. They told me the bank regulations have changed and they can’t do that [lend based on equity] any more.”
In addition, OEMs were tightening their belts and limiting shipments “Suzuki pulled way back, they needed to,” Paull said. “We weren’t getting the product that might have helped us, then the tsunami hit.”
As a franchisee for Japanese OEMs, he was only able to catch part of the side-by-side sales wave.
“We don’t have Polaris,” he said. “We’ve got the Rhino and the Big Red that are outstanding machines, but we don’t have a four-seater and I can’t offer you one.”
The drought frying the Midwest to a crisp this summer was the last straw.
“We haven’t had rain for about six weeks,” he said. “Everything’s dry and people don’t want to ride motorcycles right now.”