Print

Please login or register.
1 Hour 1 Day 1 Week 1 Month Forever
Login with username, password and session length

[KentuckyHarleyDude]

First of all, the dealer didn't make $11k in profit.  They have to pay commissions, plus salaries and benefits to the sales people and the finance guys that did all the paperwork for both sales.  Plus the salaries and benefits of every one of their employees that touch both bikes from the time they arrive.  Lord only knows how much overhead they have in taxes, utilities, insurance, maintenance, interest, etc.

I'm not here to defend dealerships, they make plenty of money.  But don't kid yourself, margin on the sale of a bike, a part, or a t-shirt is NOT pure profit.

Not all accountants screw things up Howie, some of us know what we're doing.  

THANK YOU GHOST BUT LETS TELL IT LIKE IT IS .... IN ALL HONESTY MOST DEALERS IN THE U.S. MAKE BIG MONEY ...THERE IS NO CANDY COATING IT ...BUT NO MORE THE MOST EXC. VICE PRES. IN A BIG CORP .... AND THE DEALER HAS HIS OWN MONEY INVESTED ...MOST OF THESE DEALERS ALMOST STARVED AND WENT BANKRUPT BACK IN THE MID 70'S AND 80'S ...NOW THEY ARE MAKING SOME BIG MONEY AND MOST DESERVE IT BECAUSE THEY ENDURED AND STAYED THE COURSE ...STAYED LOYAL TO THE MOCO AND THEIR CUSTOMERS ...IM NO OWNER ...JUST AN EMLPOYEE FOR A SMALL STORE ..A SALES MANAGER ...BUT THEY PAY ME PRETTY GOOD AND I LOVE THE PRODUCT AND THE PEOPLE ...

BUBBA

[Ghost Rider]

"Don't hate the player, hate the game."

I don't know who said it first, but my kids tell me that all the time.  Actually, I hate their coaches...idiots!   

[Midnight Rider]

Bubba, I do know you slightly, and appreciate the information you share with us here.  I may not agree with some of what you said, but appreciate the perspective, nonetheless.

I will not pay more than MSRP for ANY product.  My personal FEELING about that is that the MOCO sets a fair price for the bike at MSRP, and one that allows the dealer to make a decent profit margin on each sale.  The setup charge is basically a rip off, as from my understanding, the dealer gets that back from the MOCO, so we're paying twice...but I'll give them that.  Freight is freight...the same for every bike, so no problem with that.

Another feeling I have is that I think it is ethically wrong to charge more than MSRP, therefore I will not purchase the bike from what I consider to be an unethical dealership.  I may be forced to do other business with them, but if I have a viable choice, I will not.  My expectations as a customer are to be treated fairly, appreciated for spending my hard earned money with them, and to get quality product and service.  The dealer has little or no control over the product they offer, but they have direct control over the price they charge, and if that is over MSRP, I have not found anything I want that badly up to this point in my life.  They also have direct contol over the quality of their customer service, and it is disgraceful how some dealerships treat people.  I will go out of my way to be loyal to those who treat me fairly, or at least make an effort to do so.  But if a place ever screws me over on purpose, they have lost my business forever.

Bottom line is that everyone should just do the right thing...they know what that is 90% of the time.  If that happened, nobody would be complaining.

The MOCO has some serious problems right now with QC, and if not addressed, will cost them in the long run, and the dealers will suffer as they did back in the bad old days of AMF.  There is simply no excuse for shipping bikes with bad paint, motors that will not perform up to minimum expectations.  It's not the EPA's fault.  These laws have been in the pipeline for YEARS.  If the MOCO cannot product a large displacement motor that will perform adequately, not leak or blow up in one way or the other, then they simply should not market the product.  If the product needs to be changed dramatically to meet new mandates, then change.  Loyal customers will learn to love the new, just like they did when changes were made in the past. The CVO bike should be a standard that all others strive to equal....30 - 35 K is more than enough money to expect excellence.  Perhaps that is being naive on my part, but anything else is just not right.  Making money is what makes this country go 'round, but making obscene amounts of money, at the expense of the consumer, is just plain wrong.

That is just my opinion, and is how I try to live my life, both personally and professionally.

[Boatman]

Very well said and I agree totally with your above post TC..

[Fired00d]

WELL IF THAT IS A TRUE STATEMENT THEN dOOD OLE BUDDY YOUR ONE IN A MILLION  ....IF THATS TRUE ILL TELL YOU WHAT ILL DO ..ILL MAKE YOU A GOD FATHER DEAL ...IF YOU WILL TAKE 2500 LESS THEN YOUR BIKE IS WORTH ON TRADE ...ILL SELL YOU MINE AT MSRP ...THEN WE BOTH CAN FEEL GOOD ABOUT OURSELF 

BUBBA

BUBBA

You're getting it a little twisted. What I said is I wouldn't take 3-5K more for my bike just because I could (like those dealers that are selling 3-5K over MSRP because people will pay it). To me that's would be like a robber standing up in court trying to justify that it was alright to stick a gun to someone's head and take there money because they could. I would expect fair market value for my bike (BTW - I don't as a norm trade in a vehicle I sell it outright for the simple fact that most vehicle dealers (car/motorcycle/etc) want to make a profit out of them).

In regards to feeling good about oneself, that's up to the individual. I can't make you feel good about yourself, and you can't make me feel good about myself.

I guess the thing that bothers me (and probably a lot of the others that are responding) is the fact that you come here and want to justify paying more then a product is worth as all right. That in a nutshell is what is confusing to me. But as I stated earlier if you feel good about yourself doing that so be it.

 
Ride Safe,
Fired00d
 

[skreminegul07]

First of all, the dealer didn't make $11k in profit.  They have to pay commissions, plus salaries and benefits to the sales people and the finance guys that did all the paperwork for both sales.  Plus the salaries and benefits of every one of their employees that touch both bikes from the time they arrive.  Lord only knows how much overhead they have in taxes, utilities, insurance, maintenance, interest, etc.

I'm not here to defend dealerships, they make plenty of money.  But don't kid yourself, margin on the sale of a bike, a part, or a t-shirt is NOT pure profit.

Not all accountants screw things up Howie, some of us know what we're doing.  

Sorry I meant gross margin which is still excessive.  I think we should get together and have a telethon to raise money for them.
There are a lot of profitable businesses that operate on a much lower margin.  That's why it's ridiculous when they ask for freight and setup.  That's part of their costs associated with the sale.  There have been dealers that have actually stated that the MSRP is what the dealer paid for the bike.  Come on now.  They take advantage of a market with (i hate to say) no competition among dealers.  They protect their turf for the most part.  We had local dealers that never sold above MSRP even in the bad years.  We try to always do business with them.

[KentuckyHarleyDude]

Bubba, I do know you slightly, and appreciate the information you share with us here.  I may not agree with some of what you said, but appreciate the perspective, nonetheless.

I will not pay more than MSRP for ANY product.  My personal FEELING about that is that the MOCO sets a fair price for the bike at MSRP, and one that allows the dealer to make a decent profit margin on each sale.  The setup charge is basically a rip off, as from my understanding, the dealer gets that back from the MOCO, so we're paying twice...but I'll give them that.  Freight is freight...the same for every bike, so no problem with that.

Another feeling I have is that I think it is ethically wrong to charge more than MSRP, therefore I will not purchase the bike from what I consider to be an unethical dealership.  I may be forced to do other business with them, but if I have a viable choice, I will not.  My expectations as a customer are to be treated fairly, appreciated for spending my hard earned money with them, and to get quality product and service.  The dealer has little or no control over the product they offer, but they have direct control over the price they charge, and if that is over MSRP, I have not found anything I want that badly up to this point in my life.  They also have direct contol over the quality of their customer service, and it is disgraceful how some dealerships treat people.  I will go out of my way to be loyal to those who treat me fairly, or at least make an effort to do so.  But if a place ever screws me over on purpose, they have lost my business forever.

Bottom line is that everyone should just do the right thing...they know what that is 90% of the time.  If that happened, nobody would be complaining.

The MOCO has some serious problems right now with QC, and if not addressed, will cost them in the long run, and the dealers will suffer as they did back in the bad old days of AMF.  There is simply no excuse for shipping bikes with bad paint, motors that will not perform up to minimum expectations.  It's not the EPA's fault.  These laws have been in the pipeline for YEARS.  If the MOCO cannot product a large displacement motor that will perform adequately, not leak or blow up in one way or the other, then they simply should not market the product.  If the product needs to be changed dramatically to meet new mandates, then change.  Loyal customers will learn to love the new, just like they did when changes were made in the past. The CVO bike should be a standard that all others strive to equal....30 - 35 K is more than enough money to expect excellence.  Perhaps that is being naive on my part, but anything else is just not right.  Making money is what makes this country go 'round, but making obscene amounts of money, at the expense of the consumer, is just plain wrong.

That is just my opinion, and is how I try to live my life, both personally and professionally.

TC I RESPECT YOUR OPINION AND I AGREE WITH 95% OF WHAT YOU HAVE SAID ...WE ARE AN MSRP STORE ON ALL REGULAR PRODUCED BIKES BUT WE DO GET A PREMIUM ON CVO'S ..... OVER MY 30 YEARS IN RETAIL SALES I HAVE FOUND THAT MOST CUSTOMERS LOYALTY RUNS ABOUT $250.00 DEEP ....IF I'M $250.00 HIGHER THEN THE HD STORE 40 MILES AWAY THEN THAT "LOYAL" CUSTOMER IS GONE DOWN THE ROAD .... FUNNY THING ABOUT "LOYALTY" IT SEEMS TO BE ITS ALWAYS THE DEALER WHO IS AT FAULT IF THAT BOND IS BROKEN ... WE SEEM TO ALWATS BE THE BAD GUY ....ITS NEVER THE PENNY PINCHING CUSTOMER WHO WILL DRIVE 300 MILES TO SAVE $300.00 .... I PERSONALLY THINK "LOYATY" IS EARNED AND ITS A TWO WAY STREET...LET ME GIVE YOU AN EXAMPLE ....I HAVE A "LOYAL" CUSTOMER COME IN WANTING TO TRADE HIS BIKE ...WE HAVE SOLD HIM TWO OR THREE BIKES IN THE PAST ...ALWAYS TOOK CARE OF HIM IN SERVICE ...GIVES HIM A DISCOUNT IN PARTS BECAUSE OF HIS "LOYALTY" ... NOW LETS SAY HE HAS A NICE CLEAN ROAD KING AND WANTS A NEW ULTRA ...ITS AT A TIME WHEN I HAPPEN TO BE HEAVY IN USED ROAD KINGS SO I OFFER TO ALLOW HIM X AMOUNT OF $$$$ FOR HIS TRADE ...HE DRIVES OVER TO "LOW BALL HARLEY-DAVIDSON" IN PODUNC KY AND THE DEALER THERE HAS NO USED ROAD KINGS AND OFFERES HIS $500.00 MORE ON HIS TRADE THEN I DID ... DO YOU HONESTLY THINK THAT 95% OF THE "LOYAL" CUSTOMERS ARE GOING TO DRIVE BACK TO MY PLACE AND PAY ME $500 MORE JUST OUT OF "LOYALTY" .... NOPE ...ALL THAT GOOD SERVICE WE GAVE HIM ..ALL THOSE DISCOUNTS ON PARTS ... IS FORGOTTEN ABOUT OVER THE $500.00 HE CAN SAVE ON BUYING THAT NEW BIKE...LIKE I SAID LOYALTY IS EARNED AND IT IS A "TWO WAY STREET"

BUBBA
BUBBA

[skreminegul07]

TC I RESPECT YOUR OPINION AND I AGREE WITH 95% OF WHAT YOU HAVE SAID ...WE ARE AN MSRP STORE ON ALL REGULAR PRODUCED BIKES BUT WE DO GET A PREMIUM ON CVO'S ..... OVER MY 30 YEARS IN RETAIL SALES I HAVE FOUND THAT MOST CUSTOMERS LOYALTY RUNS ABOUT $250.00 DEEP ....IF I'M $250.00 HIGHER THEN THE HD STORE 40 MILES AWAY THEN THAT "LOYAL" CUSTOMER IS GONE DOWN THE ROAD .... FUNNY THING ABOUT "LOYALTY" IT SEEMS TO BE ITS ALWAYS THE DEALER WHO IS AT FAULT IF THAT BOND IS BROKEN ... WE SEEM TO ALWATS BE THE BAD GUY ....ITS NEVER THE PENNY PINCHING CUSTOMER WHO WILL DRIVE 300 MILES TO SAVE $300.00 .... I PERSONALLY THINK "LOYATY" IS EARNED AND ITS A TWO WAY STREET.
BUBBA
BUBBA

I agree with that. 

[Boatman]

I PERSONALLY THINK "LOYATY" IS EARNED AND ITS A TWO WAY STREET.

BUBBA
BUBBA

Not much loyalty left any more rather we're talking motorcycles, boats, cars, trucks.  But it is a very true statement.

[miker]

Earned is the key word...I have been dimissed too many times from more than several dealers over many years...
I am no idiot aside from my HD addiction.  Methinks they will reap what they have sown.  The stock has been a good short for me the last 2 weeks, I will cover today and may jump it again.   

Miker

[grc]

WELL IF THAT IS A TRUE STATEMENT THEN dOOD OLE BUDDY YOUR ONE IN A MILLION  ....IF THATS TRUE ILL TELL YOU WHAT ILL DO ..ILL MAKE YOU A GOD FATHER DEAL ...IF YOU WILL TAKE 2500 LESS THEN YOUR BIKE IS WORTH ON TRADE ...ILL SELL YOU MINE AT MSRP ...THEN WE BOTH CAN FEEL GOOD ABOUT OURSELF 

BUBBA

BUBBA

Actually Bubba, the 'd00d isn't one in a million in this case.  There are plenty of us who believe in treating others fairly and not taking advantage of them.  I for one have never "made money" selling a vehicle.  Back when I used to sell my vehicles privately (nowdays I just trade them in), I would look up the book retail and wholesale prices and then ask for the average of the two.  I didn't expect full retail, since I wasn't a dealer and I wasn't offering any extra services, warranties, etc. and didn't have to pay commissions and salaries.  I also disclosed any and all known issues with the vehicle, assuming there were any I hadn't already repaired.  As the 'd00d commented, perhaps that's why I would never make it in sales.

I do agree with your comments about why things are the way they are, and as long as folks with more money/credit than brains continue to throw it away at their "friendly Harley dealer" there will be no incentive for anything to change.  The MoCo will continue to provide substandard products at inflated prices, and many dealers will continue to gouge their customers until they bleed.  Those of us who refuse to continue to support this madness will wind up sitting on the sidelines for awhile, or finding alternate brands to feed our motorcycle addiction, while the "faithful" population continues to dwindle as age takes it's toll.  Eventually the MoCo and it's dealers will have to change, or the younger generation will just blow them off like they have many other venerable American brands.  Oh, and BTW, if you mean you'll buy the trade at $2500 less than what it's worth RETAIL and then sell the new bike at MSRP, that sounds like a fair deal to me.  Unfortunately, I know exactly what you really mean, since it seems to be the standard method used by lots of dealers.  $2500 under WHOLESALE for the trade, which would translate to a $7500 gross on the trade-in once you resell it at retail book (example '05 SEEG, $20k trade-in, $25k retail book values).

BTW - to get back to your original reason for this topic, the MoCo made public statements earlier about reducing production due to slowing domestic sales.  Why are they now telling you it's due to vendor issues (I always love that one, blame someone else but don't divulge the name and the problem details)?  And why are they reducing production if there are really that many dealerships like yours who want the extra product?  It makes no sense to reduce production if they really have dealerships looking for additional product.  It sounds more like they just have a distribution system that doesn't adjust well when going from a "shortage" mode to an "oversupply" mode.  They should be making every effort to divert product from those who don't need or want it to the places like yours which seem to still have excellent sales growth, without making the dealers go around the system with dealer transfers.  Just one more example of the complacency of MoCo management perhaps?

Jerry

[RJ749]

BTW -   And why are they reducing production if there are really that many dealerships like yours who want the extra product? 
Jerry

I can field this one I believe.

I sat in a meeting yesterday with a group of auto dealers and nearly every "smaller" dealer was crying for product.

The over supply issue is when business begins to slow it is felt in the high volume locations long before it is felt in the outlying markets.  The way it usually goes is the small guy can get "hot" product only once the demand drops off.

The dealers that will do the best manage their inventory daily to maintain a "proper" days supply of product.  If this means you sell a few bikes at or below MSRP to keep the showroom floor looking like demand remains, then so be it.  I beleive the biggest issue here in regard to inventory is that too many dealers have been able to hide/warehouse bikes and still manage to sell them off in an orderly fashion by model year changeover.

The big difference this year is it isn't happening as there are not enough willing buyers to absorb the excess.

Also, back on the sidebar of a dealer's profit for a minute, it was pointed out that there is big overhead (true) and some feel the dealer's are making big (excessive) profit.

Let me ask, what is a good return on your investments?  Would it be 2, 3 or 4 percent?  No, I think a "good" return is more like 7 or 8.  Some would then argue a great return is 11 or better.  When you consider the risk involved with being in business, any business, also consider these dealers could have the money in secure instruments returning 5 or 6 percent.  With some risk they may get better but this risk wouldn't be anything near the risk of running their dealerships.

If a medium sized dealership has a value of $5 to $7 million and a large one is $15 to 20 million, even at a no risk return of 5% the dealer would be making $350,000.00 in the medium situation and $1,000,000.00 in the large one.

To many folks that is big money, but if you had your money on the line everyday, would it be an acceptable return?

How did we all feel over the last month when the market dropped and you lost 5% in your 401k?  Just keep in mind, when you make a dollar (net before tax) you probably keep 65 cents of it after tax.  When you lose a dollar, you lose the entire dollar.  

That said, if anyone is interested, I know of a dealership in New York that you can pick up that has an annual volume of approximately 350 to 400 units.  All you need is about $7,000,000.00 and your in business. Let me know if there are any takers and I can put you in touch with the guy that can make your dream come true.  Then you can be dealing with all of us on a daily basis. I'm sure we could all come to you to buy bikes cheap...parts too.

[KentuckyHarleyDude]

I can field this one I believe.

I sat in a meeting yesterday with a group of auto dealers and nearly every "smaller" dealer was crying for product.

The over supply issue is when business begins to slow it is felt in the high volume locations long before it is felt in the outlying markets.  The way it usually goes is the small guy can get "hot" product only once the demand drops off.

The dealers that will do the best manage their inventory daily to maintain a "proper" days supply of product.  If this means you sell a few bikes at or below MSRP to keep the showroom floor looking like demand remains, then so be it.  I beleive the biggest issue here in regard to inventory is that too many dealers have been able to hide/warehouse bikes and still manage to sell them off in an orderly fashion by model year changeover.

The big difference this year is it isn't happening as there are not enough willing buyers to absorb the excess.

Also, back on the sidebar of a dealer's profit for a minute, it was pointed out that there is big overhead (true) and some feel the dealer's are making big (excessive) profit.

Let me ask, what is a good return on your investments?  Would it be 2, 3 or 4 percent?  No, I think a "good" return is more like 7 or 8.  Some would then argue a great return is 11 or better.  When you consider the risk involved with being in business, any business, also consider these dealers could have the money in secure instruments returning 5 or 6 percent.  With some risk they may get better but this risk wouldn't be anything near the risk of running their dealerships.

If a medium sized dealership has a value of $5 to $7 million and a large one is $15 to 20 million, even at a no risk return of 5% the dealer would be making $350,000.00 in the medium situation and $1,000,000.00 in the large one.

To many folks that is big money, but if you had your money on the line everyday, would it be an acceptable return?

How did we all feel over the last month when the market dropped and you lost 5% in your 401k?  Just keep in mind, when you make a dollar (net before tax) you probably keep 65 cents of it after tax.  When you lose a dollar, you lose the entire dollar.  

That said, if anyone is interested, I know of a dealership in New York that you can pick up that has an annual volume of approximately 350 to 400 units.  All you need is about $7,000,000.00 and your in business. Let me know if there are any takers and I can put you in touch with the guy that can make your dream come true.  Then you can be dealing with all of us on a daily basis. I'm sure we could all come to you to buy bikes cheap...parts too.

BINGO !!! FINALLY someone who has a clue and tells it like it is !

Bubba

[Twolanerider]

BINGO !!! FINALLY someone who has a clue and tells it like it is !

Bubba

Bubba, actually most of us here have a clue.  Many of us either are or have been in business for ourselves.  Not just working in another's shop.  So we're familiar with everything Roger mentions and thoroughly understand the risks inherent when it's all on your dime (as opposed to simply your paycheck).

All that being said, there is still a history based on a very real foundation when it comes to the Harley shops.  There were many who marked up; a lot.  Were their consumers willing to pay it?  Sure.  Was it "wrong?"  Depends on the particular definition in question at the moment.

Please do not assume, however, that as a shop employee you're in a better position to "have a clue" as to all the exigent considerations of running a business and being responsible for all of its employees and their families than those many of us that have actually been there and done that.

[Free]

I think the real point here (or at least the one that resonates with me) is that the MOCO has had a 15 year run where their customers were willing to put up with mediocore to poor performance of their product. The real question is not whether there are good dealerships or bad dealerships - there are both (reminds me of the animal house line about "the question is not whether we took advantage of our female guests - We did!!").  The real question for me is will the next generation of riders be so forgiving and allow for an inferior product?  Will the mystic and intangibles of riding a harley offset the mechanical headaches we deal with for the next generation. That is the question that MOCO must face i suspect. 

Free