Following years of powersports finance industry expansion — including new entrants and growing dealer networks — lenders are targeting geographic growth in an effort to compete.
The powersports finance industry will experience more growth next year, despite some “unevenness” in the space lately largely driven by weather-related conditions, MotoLease LLC Chief Executive and President Maurice Salter said at PowerSports Finance 2017.
“Will there be a recession? Maybe or maybe not,” Salter told attendees. “Overall we think there will be growth next year. I think there is growth for everyone. If there is [growth], the industry will take advantage of the fact that we are bringing new products, new ideas, and new methods to industry to help it grow.”
As such, several powersports lenders have announced their plans to expand into additional states, and some even nationally.
Here are five lenders with geographic expansion on the roadmap:
Huntington Bank continues to focus on its recreational lending business, following the expansion of subsidiary FirstMerit Corp. into 17 additional states earlier this year, according to the bank’s recent third-quarter earnings call. Huntington Bank continues to “execute on the significant revenue enhancement opportunities,” which includes RV and marine lending expansions, Steve Steinour, Huntington’s president and chief executive, said on the call late last month.
In August 2016, Huntington completed the acquisition of Akron, Ohio-based FirstMerit for $3.4 billion to enhance its footprint in the Midwest.
“We really like the boat and RV book,” added Daniel Neumeyer, Huntington’s senior executive vice president and chief credit officer. “We think that is a real plus that we picked up through the acquisition, a business model and a team that is very skilled. We’ve supplemented that with external hires who have experience in the business.”
MotoLease LLC is targeting nationwide expansion, but there are a few states where leasing “is not the best option” due to tax laws, Managing Partner Emre Ucer previously told Powersports Finance. “I don’t think we will get into those states because we don’t have the advantage compared to regular laws,” he said. “We will probably end up with 40 to 42 states all in.”
Some states require sales tax upfront in a full amount, which “defeats the purpose of leasing because you want to be taxed on the payment you make,” he said. “In some states, you are taxed on the total amount of payments, and a few states like that are challenging for leasing.”
However, the Los Angeles-based leasing provider is on tap to expand into several more states, potentially by yearend. MotoLease currently has 1,000 dealers in its network, covering 31 states across the U.S., “with Florida, Texas, Georgia, Arizona, California being the biggest ones,” Ucer previously said. “My goal for our dealership base this year is to cover seven more states, particularly in the northeast.”
Roadrunner Financial will officially become a national lender after launching into South Dakota and Vermont within the next few months, President Jason Guss previously told Powersports Finance. South Dakota and Vermont are the final two states on Roadrunner’s continental U.S. expansion list. Roadrunner will continue to evaluate opportunities for expansion into Alaska and Hawaii, Guss said.
New York, N.Y.-based Roadrunner — which was founded by the same team behind Octane Lending Inc. — specializes in financing customers with “less-than-perfect credit, and who otherwise would be declined from traditional, legacy lenders,” according to a company press release. Roadrunner is currently partnered with 13 OEMs and more than 1,000 dealers. The near-prime lender makes loans for consumers with Fico scores as low as 550, and loan terms can go as low as 24 months.
Speed Leasing is now originating leases for customers who live in Oklahoma, with plans for further expansion into seven additional states, Director of Sales Frank Dionisi told Powersports Finance. Oklahoma brings Speed’s active state count up to eight. Next up are Indiana, Tennessee, Illinois, Ohio, Alabama, Nevada, and New Mexico, Dionisi said.
The Pompano Beach, Fla.-based startup, which exclusively leases pre-owned Harley-Davidson bike, began originating leases in April.
ThunderRoad Financial aims to expand nationwide next year, pending the company’s new funding program and another OEM partnership that is under discussion, Chief Executive Donal Hummer Jr. told attendees at PowerSports Finance 2017 recently. The full-spectrum powersports lender makes loans for 450 dealers in 30 states.
The company’s nationwide expansion will depend on the funding program it is trying to develop and the “type of financing we are able to put in place,” he said. Reno, Nev.-based ThunderRoad Financial is setting up a program to provide enough liquidity to fund growth through 2019 without the need to “constantly go back to the capital markets,” he said. The funding program will include a warehouse line and a flow agreement.