By Sam Dantzler, Garage Composites
Look inside.
As we look forward to what 2025 brings, the word that's in everyone's minds is uncertainty.
Uncertainty for various reasons, some self-induced and others perceived on the consumer's end.
At the time of this writing, the scare of tariffs between multiple countries has OEMs panicked at the cost of their goods and what it means ultimately for retail pricing. Whether those tariffs will play out or be simply a point of leverage remains to be seen.
Interest rates have come down with a forecast that they should continue to come down throughout the calendar year, but has it really caused the payment sensitive buyer to re-engage yet? Or maybe it has nothing to do with interest rates?
Maybe it's that OEMs have simply outpriced the average consumer with our basic products and offerings? Sport bikes are one of the three best-selling categories right now, but good luck getting a new sport bike for under $10K.
What does that mean for the pre-owned space, and what effect does that have on already stretched flooring accounts on our dealers’ showrooms?
Boat shows have typically been a great barometer for what calendar year offerings will be in the “want-based” space. But boat shows have been an absolute hit or miss this year, depending on where in the country and the timing. The one common denominator about boat shows is that they are preparing in advance with appointments set to drive momentum from the start. But if you can't count on the boat shows, what do we hang our hat on next? Again... uncertainty.
I have another perspective that I'd like to share. Look inside. What if 2025 looked exactly like 2024? I know that causes heartburn for many NPDA Dealer Members, but bear with me. What if you had no more additional virtual door swings, no more additional physical door swings, and no more transactions than you did in 2024? What COULD your result have been? Let me take you backwards through your departments — from the back of the house up to your major unit sales — and let’s look at what 2025 COULD look like for the average dealer.
The average service department in the Harley-Davidson space lost $180,000 in lost labor. That's the difference between hours available and hours billed, multiplied by your labor rate. Do you think the Metric dealers fared better? There was $340,000 of lost labor for the average Metric dealership! For both of those two groups, the average amount of parts and accessories per repair order was $309 for Harley dealers, and $218 for Metric dealers. The biggest of those numbers ($309) is the total amount of parts we could average on every repair order going through a Harley-Davidson dealership. How is this possible when it seems like everything I want to put on my motorcycle costs more than $300?
Let's go back into the parts department which includes A&L (MotorClothes) for the Harley dealers, and look at the performance. Two simple metrics I want you to focus on include “line items per ticket” (LIPT) and “dollars per ticket” ($:Ticket). In the Harley space, the average LIPT was 2.23 with the Metric dealers coming right behind them at 1.96. That’s basically only 2 items on every transaction that happened in those departments. The average $:ticket for the Harley space was $149 and $152 for the Metric dealers. Again, how is this possible if we have people even attempting to sell in those departments? The example I frequently give is a GoPro Camera. What goes with the GoPro? SIM cards, extended batteries, multiple mounts, multiple charging stations, different lenses, extended microphones, and on and on and on. How is it possible that a customer leaves the building with an average $:ticket spent of only $150? How much headroom is in that department alone?
Now let's go up to the finance department where the average Harley dealer is producing $1825 per unit sold (PUS) and the average metric dealer is producing $787 PUS. Two years ago we decided to include a data point coming out of our marine groups, which is “F&I as a percentage of sale.” You can imagine if one H-D dealer sells primarily touring bikes in the and the other selling primarily sportsters, the PUS number is far less effective for an apples-to-apples comparison as opposed to a “% sales.” On the Metric side of the fence, the average “% sales” is 5.6 yet the benchmark is 8.5. That's a difference of about 3 points or half again as much money (PUS) than if we were playing at the benchmark. On the H-D space, the PUS national average is 8.5% with a benchmark of 11.2%. That's almost a three-point difference which is almost 33% again more money for the average Harley dealer by getting to the benchmark standard. As a reminder for those of you unfamiliar with Garage Composites, our “Benchmark” consists of the average of the top 20% of dealers performing in that category. When you multiply the delta in the finance department by the number of units sold for the calendar year, 428 for H-D and 751 for metric, you start getting into the hundreds of thousands of dollars of quantifiable headroom.
Then we get to the biggest delta of all, major unit sales. Our transactional data is very accurate at predicting how many units could have been sold at any one facility and for any time frame. The average H-D dealer with 14,157 transactions delivered one major motorcycle for every 32.6 transactions. Had he delivered at the benchmark instead, he would have delivered 661 units as opposed to the 428 he did deliver. For the metric dealers out there, the average dealer who sold 8,472 transactions delivered at a rate of one major unit for every 12.5 transactions. Had the average metric dealer delivered at the benchmark of one unit sold for every 6.3 transactions, he would have delivered 1,344 major units instead of the 751 he did deliver.
The exercise I've just run you through is what we call the theory of lost income (TOLI), and yes it hurts. The average dealer mentioned, either H-D or Metric, had the opportunity to put near an additional $1M of operating profit to the bottom line had he or she performed at benchmark categories in all departments. Now you don't get to that status by simply writing a memo, and it's an exercise in incremental gains as opposed to any one single thing that's a glaring deficiency with any department. At the end of the day, we need to remember that nobody needs the products we sell.
Former Speaker and Trainer Zig Ziglar said it the best. “Sales is a transfer of enthusiasm!” He didn't say it's a transfer of best price, best location, or fastest machine. It's simply a transfer of enthusiasm. As we make our way through 2025 with uncertainty, it's easy to allow yourself to get caught up in the apprehension of “looking out there,” when our attention should truly be on “looking inside.” Just a quick reminder from Team Garage Composites that enthusiasm isn't taught, it is caught.
Happy selling.
Sam Dantzler is President of Garage Composites. Contact him at sam@garagecomposites.com. NPDA Dealer Members who found the information above valuable can take advantage of 50% off their first year of membership in Launchpoint, the new 20 Club Lite product from Garage Composites.
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