Tag: Route One

Moving to Powersports

Back in 2020, I contacted all the leading F&I administrators, pitching my plan for AI-priced service contracts.  As soon as the conversation touched on VIN decoding, they would invariably stop and ask me if I could get VIN data for powersports.  This turned out to be a trend.

Having been in automotive for many years, I was a little sniffy about powersports – although I had worked with Ducati, Harley, and RumbleOn during my tenure at Safe-Guard.  What I knew then was that powersports had only one DMS (Lightspeed), one menu system (Maxim), and no – there was no good VIN service.

When you’re in the powersports industry, you’re selling fun.

At $34 billion, powersports is dwarfed by the mighty auto market, but it has higher margins and better growth.  According to published financials, gross profit is around 20% for auto retail and 30% for powersports.  I expect that the 3% CAGR will perk up as the ecosystem improves, which is the topic of today’s post.

In automotive, we have a rich software ecosystem.  In powersports, not so much.  The ecosystem is complicated by a wide array of vehicles, from jet skis to snowmobiles, with the attendant challenges in standard process and vehicle ID.

The Powersports Market

There are roughly 17,000 car dealers in America, compared to 7,000 motorcycle dealers.  From a dealer’s perspective, powersports means less competition and higher margins, according to Mercer Capital – and it is terra nova for software vendors, as well.  Public auto group Sonic took Mercer’s advice, recently acquiring 13 powersports dealerships.

Here is another explainer, this one from SEMA, on the market structure of ATVs, UTVs, and motorcycles.  I am including it basically for this great quote from dealer consultant Rob Greenwald.  “When you’re in the powersports industry, you’re selling fun,” he said. “We sell lifestyle.”

Unlike buying a car, a powersports purchase is discretionary.  This means it’s more susceptible to economic downturns, but it’s also more fun.  People enjoy visiting the dealership, and that changes the technology model.

Digital retail, for example, is still important – but not to reduce time in the dealership.  It’s so that we don’t have to pull you out of that RZR to sign papers.

Crossover Software Vendors

A few of the website providers I wrote about are also active in powersports, like Dealer Inspire and Fox.  However, neither of these seems to have their digital retail solution in play.  One DR vendor that I recognize from auto is Joydrive, which made a strong entrance by partnering with Polaris and Octane.

Octane is the leading finance source in powersports, but there is a new entrant from the auto space, RouteOne founder Toyota Financial.  TFS is now the private label consumer and wholesale finance source for Bass Pro.

Another crossover vendor is Darwin which, after dominating the auto space, moved first into motorcycles – challenging Maxim’s lock on Harley-Davidson – and now into other powersports.  Speaking of menu selling, F&I providers here are Galt, Safe-Guard, and Protective.

Movement Toward Powersports

What I encountered in 2020 seems to have been a general movement toward powersports.  Lured by big groups like Bass Pro with its 170 locations, Marine Max (125), and RumbleOn (60), software vendors are extending into powersports.

There sure are a lot of motorcycles at this car show.

They will go where the dealers are and, as I walked the NADA show in Dallas, I had to smile at the untapped demand.  “Drop your business card and win this Harley,” offered one vendor.

“There sure are a lot of motorcycles at this car show,” I remarked.  And then there was the Kawasaki booth, enlisting car dealers looking to diversify – for fun and profit.

Old Friends and New at NADA

Walking through Chinatown, my wife and I gave a dollar to an old man playing Auld Lang Syne on his violin – the Chinese violin, called an erhu.  This year, NADA began with the Chinese New Year, which was especially nice in San Francisco.  The parade was the week after, though.  We missed that.

Walking past the Route One booth, I was hailed by CEO Mike Jurecki and my old friend Pat McPherson.  A dealer was asking them about bi-weekly payment plans.  I ended up demonstrating the sales tool I had designed for U.S. Equity, on a MenuVantage account, in a Route One frame.  “Mark helped us design our system, too,” Pat added.

I read the dealer’s business card and said, “you sell a Resource warranty and you recently stopped using MenuVantage.” He wants Flash in his menu, so I referred him to Impact Group.

My new friends include a number of menu systems – formerly competitors.  We have announced the deal with Impact Group.  Others are in the works.  This is part of my “many to many” strategy, making PEN the single connection between all product providers and all dealer systems.

Provider Network Expands

PEN-LogoI recently attended the F&I Conference in Orlando, where I spoke with leaders of Open Dealer Exchange (ODE), ADP and Reynolds’ joint venture for credit aggregation.  ODE will use the Provider Exchange Network (PEN), which I originally developed for MenuVantage.  They are still running the network in good earnest.  Route One is also a PEN user, so maybe there is room for “co-opetition” between the two aggregators.