Dealerships & New KTM's

[brian kirby]

Until KTM is willing to hire Ryan Villopoto or Ryan Dungey or another top rider, they will not win on the US MX scene. There is nothing wrong with the bikes, but at that level the rider makes the difference. Look at Honda, everyone knows their bikes are the best prepped in the pits but as much as I like Andrew Short he isnt at the level Reed, Villopoto and Dungey are at and having the trickest bike and best team isnt going to fix that. If Dungey or Villopoto went to KTM they would win, just like they do now. KTM is a threat in GPs because they hire the best riders, they are not a threat here because they wont/cant hire the best riders.

I'm not saying KTM isnt the best bike in the woods, but the reason they win so much is because they hire the best riders.

Brian

'72 Berkshire

[firstturn]

Just my $0.02 worth.

I think the original intent of this Thread was to discuss the loss of KTM dealerships in different markets?  Having been on both sides of the issue both working for Honda for 25 years and having very Good Friends that own dealerships I would just like to look at both sides.

Dealer Side:  A dealer has to make business decisions based on their capacity to keep a certain brand of motorcycles and the return on investment in dollars for New Unit Sales, Parts Sales (and the cost to inventory the parts) and Service Department as a profit center.  I have seen too many times that Dealers do not break down the Returns ($$$$$) for each center as a normal accounting practice so when times get tough they cannot tell what is making money and what center needs improvement?
  Add to this the money side of having a floor plan that comes due each month on bikes that are not sold and you have a picture of an accident waiting to happen.  The accident is brought to a head when it is time to order new units and they are overstocked and paying a big Floor Plan Bill each month.

Factory (or Distributor) Side:  The Factory has to project building new units each year and the Lead Time could be up to 1 year to be sure that the correct models are ready for dealers when the Season begins and Customers want to purchase.  There is also lead time for parts, and if you buy a race bike and cannot get a piston or rings when you need them The Dealer/Factory ends up with a black eye for not having parts support.  Also you have to plan for advertising ready which includes your Racing Budget (which is just advertising in its simplest form) with all of the support operations.
  When you send you District Mangers out to write orders they have a goal which includes each dealer having a goal to where you hope to sell all the units you produce?  So when you hear that a Factory is asking a dealer to take on too much inventory, the inventory has to go somewhere or the Factory is in default.  In Tough Economic Times there are so many variables that are needed to have a healthy and profitable Dealer Network that the Factory has to look at the big picture and any human side should be filtered by the District Manager to feed back to the Factory as to what is going on in the Market Place.  I have seen very successful Managers, but it comes at a price of many long days and many reports verifying what is happening where.  I will tell you from personal experience it was always hard on me when my Dealers weren't doing well and I tried to help with proper Business Planning before we had problems.

Summary:
All in all there are so many outside influences on Dealership success as we are seeing today with a Problem Economy, but I want the Factories to stay in business so I have to just go with the flow and drive or order my parts on line to take care of my consumer needs.  Sorry if this took up too much space, but I felt I should make a posts since most of my life has been dealing with this subject.  Thanks for your time.

Ron Carbaugh

[Larry Perkins]

Thanks Brother Ron.  Sometimes it helps things make sense when we walk in another's moccassins.  That was a good explanation of the factory side of survival.  To a certain extent if the factory does not survive it is of little consequence if the dealer was okay.

Larry P

[brian kirby]

I agree with Larry, thanks for your input Ron. I did not mean to slight the manufacturers in any way, working at a multi-line dealership we knew they had a job to do, which naturally is to get us to order and sell a certain number of units. Some models we wanted more than they would give us, some units we had to take more than we would like. Floorplan is a killer if you are not smart with running the business as you said. In the boom times floorplan is not a big deal because you sell most units before you even make the first payment, but in down times it can get ugly. In '07 when the downturn started my dealership between all the lines had almost 5 million dollars of inventory, probably 2/3 of that on floorplan. They were smart though, and paid off their building and have so far been able to keep the doors open. Now they have sold down their inventory to under a million between Kawasaki, Honda, Yamaha, Seadoo and Can-Am. Right now the Parts and Service departments are the only thing keeping the lights on.

Brian

'72 Berkshire

[firstturn]

Thanks Larry for pointing out the obvious....without the Factories survival of our sport is doomed.

Brian I didn't take it as a slight.  Actually input from you is so important because you, as a person in service, has to make a profit for your center and work to be the Parts Department's (another Profit Center) biggest customer.  Thanks for your input and for you and Larry's dedication to the Sport.

Ron Carbaugh

[Dave Mitchell]

This isn't going to be popular but it has to be said.Basically I think the factories bear the brunt of fault on the current state of affairs.If I were to try and start racing as I did in 1970,on my own with very little support from anyone it couldn't happen.With the factories.media and just about everyone else loading everybody with all the fourstroke crap and leaving the cost issue of just keeping it running competitively for a season out of the picture.There more fickle they require more tools,and the parts are damn expensive.It's a dang shame that nowadays even more kids will never get the chance to experience what we did.I believe that added parts inventory cost makes it harder on the dealers.With the economy in the crapper it shure isn't helping things.
Dave

[Mark P]

I bought my first new motorcycle(a KTM 300) in 31 yrs last summer  from Munn's Racing KTM up in Waco.  Chip's KTM business is like the dealers I remember in the 70s that sold Penton, Husky, Ossa, Bultaco. The guy selling you the bike or the part ACTUALLY rode the bike and used the parts and the gear he was recommending.  I will buy my next KTM from Chip also.

I was in one of the big multi-line dealers outside of Austin looking for a dual-purpose bike and the young salesman told me he didnt even ride bikes. They were just something he sold and the customer was a transaction. He couldnt answer any technical or real performance questions about the bike either. This place was like the Sam's Club of motorcycles. Theres the product-you figure it out and I'll write it up when you're ready.

I hope KTM doesnt shoot itself in its foot. To me, it dominates a niche and I think its dealers and their long term relationship with their customers are its foundation.  I am a case study. I owned a 73 Six-day.  After a 35 yr break, I came back to bikes and bought a new KTM and will probably puchase another here soon.

[tomale]

I realize that everyone involved needs to make a profit for this thing to work but how does closing a dealership who could continue even if it means just selling parts, improve the bottom line.. If I have a bike and need parts I am going to go to the guy that sells me the parts, If he takes care of me.. If there is no dealer then I am more than likely to find a different brand to ride so that I do not have to travel half way accross the state to get parts or service... So you not only loose in the short run, you loose a loyal customer that would have more than likely bought another bike when the economy got better... This way you risk the chance that the customer just might find another sport to get involved in... I own my own business and I will tell you this, I stay a float because of service because customer who get treated well tell others who want the same kind of service... I will buy from suppliers who maybe a bit more money but in the long run because I am taken care of, it saves me money and time... which means I am spending less time looking for supplies and more time taking care of my customers, which improves my bottom line... It is an old fashion Idea but I would not trust a 4 year wonder to do my books or make descions souly on the bottom line.. It just not work on in the long run... We have lost the soul of the dealerships to big time finances and it will bite us in the end.. how do you think this country got into the mess we are in now,, not by putting the customer first... I think closing dealerships hurts the factory's too... Maybe we have to rethink the way we do business but closing a dealership because it is not selling enough product is a Knee jerk reaction... What about helping dealerships become profitable instead of watching them drown because of influences beyond their control or because they do not have the right tools to stay a float... I have a friend that is a dealer, He stays alive by taking care of his long time customers and by Internet connections.. He is involved locally in putting on races and clearing trails so that more riders will have trails to ride. It is tough work and he works 14 days 6 days a week but He would not do anything else... It was sad to see Him loose His KTM dealership because His market was too small to generate the kind of numbers the distributers wanted to see.. An unrealistic goal....  As I said before this kind of thinking hurts all of us who love dirt bikes...

Thom Green,Still crazy after all these years!
76' 250 MC5 (orginal owner)74'
250 hare scrambler (project bike)

[firstturn]

Thom,
  I like you post and on the surface it makes a great argument and one that I use to try and defend, but read on.

You said "I realize that everyone involved needs to make a profit for this thing to work but how does closing a dealership who could continue even if it means just selling parts, improve the bottom line.."

The real truth has a lot of hidden problems that deal with how much it costs the factory to keep each dealer location serviced with parts and service data and then when the small dealer doesn't keep up this these bulletins you move over into the LEGAL problems.  I did not make my posts to defend the factories, but facts are facts.  When I managed the Honda Parts Depot it costs us the same amount of time to answer a call from a big deal as it did a small dealer and since we had normal ship days for each dealers the small dealers were more often to be making special orders all the time.  Basically when you special order a part it takes a parts person to stop making normal orders and make sure this part gets special handling and make sure it goes out FedEx.  To back this up with actual real live situation look at what GMC and Chrysler did last year in closing dealership.

OK, I am finished for now, but believe me factories really do a much better job than people believe.  I cannot remember a single day while working at Honda that we didn't have a fire drill for some dealer/customer....but we handled the problems as best we could with the tools we had to work with and used these situations to improve our system.

Ron Carbaugh