Why are dealers facing tough times?

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Australian motorcycle dealers are doing it tough, with slow sales, tough franchise agreements and pressure from manufacturers, says Australian Motorcycle Dealers Association boss Stuart Strickland.

“I don’t think there is a motorcycle dealer in Australia who wouldn’t get out if they could. It’s really tough,” he says.

His comments follow a significant -41.% downturn in sales in the first half of the year, the first time there has been negative growth for two consecutive quarters in the industry since the global financial crisis of 2009.

They also come on the eve of the annual Aldi one-off motorcycle gear sale. (Read what Stuart thinks of the affect of the annual Aldi sale on dealers.)

“The industry is going through some interesting times and more needs to be done to get young people into buying motorcycles,” Stuart says.

Dealers face tough times says Stuart Strickland
Stuart (left) with Isle of Man racer Cam Donald and their wives at the TT

During his years as Honda Australia boss, the company invested heavily in training and motorsport. He says the industry has to do more, including securing more places for kids to ride as suburban tracks close down from the pressure of urban encroachment.

“Parents pick sporting activities for their children that are convenient and if you live in a capital city you have to devote a whole day to take your kids somewhere to ride,” he says.

Electric future

He sees electric motorcycles, scooters, dirt bikes and mopeds as a future saviour for the industry.

“Electric mini bikes will be great because they are quiet and we can go to local councils and say ‘why not let kids train on footy ovals in the summer time?’

“It would great training for them to acquire motor skills for later on when they are driving cars.”

He says electric bikes and mopeds will also help the commuter side of the business as most urban streets these days are posted at 40km/h.

“They have better lights, brakes and carrying capacity than a bicycle and are a great way for cities to alleviate their traffic problems. Urban infrastructure just isn’t keeping up with population growth

“There are growing incidences of road rage as people get frustrated because they can’t get around fast enough.

“The introduction of electric two-wheelers can cut traffic congestion.”

Avionics electric board tracker tough
Avionics electric moped

Franchise problems

Stuart identified one of the main issues facing dealers as the relationship with manufacturers and restrictive franchising agreements.

“They are so restrictive, the dealer has nothing to sell when they want to exit the industry. That means we’re not getting new entrepreneurs into the industry,” he says.

Stuart points out that some of the manufacturers’ demands, drafted by expensive lawyers, are “onerous”, including demands to hold excessive floor stock, pressure to shift stock and restrictions from becoming multi-brand dealerships.

“They virtually turn the retailer into an unpaid showroom for the manufacturer,” he says.

“Dealers don’t expect to make returns for up to 10 years, but most franchise agreements are from one to three years and that’s not good enough considering the level of investment required to run the franchise.

“Thankfully some are stretching out to five years now.”Win Harley jacket, watch at store opening tough times

Riders are the short-term winners

Stuart says that while dealers are facing tough times, riders are the winners because there is a wide variety of choice of motorcycle models and gear.

“The amount of people riding bikes versus the availability of motorcycles means they are over catered for.” he says.

“If you want to buy a motorcycle today, there are more models and choice than you can shake a leg at, all competitively priced with reliability we only dreamt about a few years ago!

7 Comments

  1. Making it more difficult to get a motobike license, in Queensland, does not help either.
    I learned more road sense in a week of riding, then i did in 40 years of driving.
    If one is deemed not to have enough road sense for riding a bike, then certainly such person should not have a drivers license either.
    By all means make it tough to get a motorbike license, but make it a prerequisite for getting a car license, not the other way around!

  2. I have bought 2 Yamahas off my local dealer, An R3 (which I have kept as the trade in offered was un-aceptable) and an MT07, the most recent. The MT07 cam back from its 1000km service with NO coolant visible in the resevoir.
    The R3 was subject to a recall (its second, for fuel tank and switch problems). I was told that they would contact me when they had the ordered parts. THAT WAS FIVE MONTHS AGO.

    Is it any wonder that this shop won’t get my custom in future if I have other options?

  3. Wages growth has been stagnant for some time now, meanwhile the price of basics like food and energy are continuing to rise. That is sure to filter through to consumer demand.

    1. So true Jeff. Isn’t a lot of spare cash left after the essentials are taken care of.

      I do wonder where retail will be in 5-10yrs

  4. “Stuart points out that some of the manufacturers’ demands, drafted by expensive lawyers, are “onerous”, including demands to hold excessive floor stock, pressure to shift stock and restrictions from becoming multi-brand dealerships.
    “They virtually turn the retailer into an unpaid showroom for the manufacturer,” he says.”

    Interesting comment from the man that ran one of those “onerous” corporations and probably was responsible for putting dealers into that situation!

  5. If you are a Triumph owner in Melbourne it is an issue that sales, parts and accessories are on one side of the city and dealer servicing is on the other side of town. This is made worse by the fact that if you want the dealer to fit an accessory, say an Arrow silencer, you have to go to the dealer’s shop to buy the accessory and then travel to the other side of town to the service area to have the accessory fitted.

    Then there is the Triumph Australia website, which is hopeless if you are trying to find available dealer supported accessories.

    Sounds like a whinge, but just saying things could be a lot better for Triumph owners if the sales and service functions were better integrated.

  6. Yes.. the downturn in sales is across lots of industries. Heard just the other day that 200 business entities have closed in the past 12 months in one regional town. And I for one would agree with “Support your local dealer”. Times are indeed tough and all small businesses are where your kids will hopefully get a job. Retail is the largest employer of people in this country.. so shop local!

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