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7 Executives Offer Predictions for 2018

Despite lagging sales and natural disasters last year, 2018 is projected to be a solid year for powersports finance, according to several executives.

From potential new-entrant lenders poised to join the industry, to technology enhancements and the newly passed tax bill, a lot is expected to stir in the industry this year.

Powersports Finance asked seven executives, “What are your predictions for powersports finance in 2018?” The following are edited excerpts from their responses:

Andrew Hewitt, Director of Motorcycles, American Credit Acceptance:

  • New lenders will enter the powersports finance space in 2018.
  • Used bikes financed will have a greater increase year over year than new bikes financed.

Ben Donnarumma, Managing Director, American Cycle Finance:

  • The subprime powersports finance sector will see substantial growth over the next 12 months.
  • Powersports dealers will embrace and spend more resources training staff and upgrading systems.
  • The used-powersports space will show a sizable increase in sales driven by liquidity in the market.

Glenice Wilder, Vice President of Powersports, EFG Companies:

  • “The powersports industry saw similar challenges as the automotive industry in 2017,” Wilder said in an EFG press release. “Unit volume did not hit projections and we’re seeing more dealers sell inventory at or below costs just to keep it moving. To recoup this lost profit margin in 2018, dealers will be evaluating how to drive as much traffic their way as possible, and how to increase customer retention.
  • “We will see more powersports dealers use F&I products to meet both goals. They’ll focus their product menus and pay plans around those products that differentiate them in their given market and encourage repeat business in the service bay.
  • “Consumer demand for pre-owned inventory will continue to be higher than demand for new, as consumers are still wary of an uncertain economy. For this reason, dealers will utilize strategic CPO programs to differentiate themselves and increase their back-end profit.”

Maurice Salter, Chief Executive and co-Founder, MotoLease LLC:

  • 2018 will be a difficult year for the sale of new motorcycles. We have seen the beginnings of this in 2017 and that trend will continue. We think it is due to the ambiguity of the financial markets due to the new tax initiatives, natural disasters in 2017, and ineffective financing options.
  • 2018 will be a strong year for used-powersport vehicles sparked by greater availability and dealers moving to provide used inventory as a lower-cost option.
  • 2018 will be a year of innovation in how vehicles are financed, technology to support sales and borrowers, and refinement in how manufacturers, finance companies, and dealers deliver products to customers. In short, old practices will give way to innovation. MotoLease welcomes 2018 with its semi-monthly payments, more refined and effective credit analytics, more effective sales and marketing, and more competitive financing options.

Jim Woodruff, Chief Operating Officer, National Powersport Auctions:

  • Motorcycle sales will stay about the same, and side-by-side sales will grow as the economy strengthens; pre-owned sales will continue to grow.
  • Lending will remain healthy, with increased new and used availability from new and existing lenders, stable default rates, and programs such as second-look and tiered approval models.
  • Programs and promotions for new and returning riders will emerge, including joint marketing and experiments with alternative ownership models such as leasing or membership rental programs.
  • New software and services will emerge to leverage the power of data and provide alternative buying methods to consumers as powersports players rethink their traditional approach to the market.
  • At least one major OEM will announce an electric motorcycle model.

Donal Hummer Jr., Founder and Chief Executive, ThunderRoad Financial:

  • We see continued progress in the economy, lowering of unemployment, and higher wages, all of which is further enhanced by the tax reform bill that passed in December. What this means for the powersports industry is a strong and robust 2018 in terms of new and used sales because of more Americans having larger amounts of disposable income.
  • Stronger demand in the used-product sector is expected this year and will cause the products to sell at higher prices at auction reducing overall loss numbers.
  • A more pragmatic and healthier regulatory environment is expected this year, which results in a better and more productive relationship between the powersports finance industry and the various regulatory agencies.

Brian Landau, Senior Vice President and Leader of Auto, TransUnion:

  • “[Powersports] is something that we’re going to continue to look at in 2018 and beyond. There is a lot of movement here and I got a lot of that from the [PowerSports Finance 2017] conference in October. There are a lot of new lenders getting into the space trying to apply lessons from auto.”
  • Additionally, the newly passed tax bill could prove to be a boon for the powersports industry in 2018. “It means more discretionary spending,” Landau said. “More disposable income means more discretionary spending, which turns into more powersports vehicles being sold.”
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