Powersports dealers are struggling to fit “square-peg” consumers into “round holes,” or in other words, attracting subprime consumers with prime-targeted, OEM-sponsored incentive offers, Chris Clovis, dealer principle of Freedom EuroCycle Las Vegas and BMW Motorcycles of Las Vegas, told Powersports Finance.
The OEM-sponsored finance incentives that have come out in recent months are still the “same thing,” Clovis said, meaning its different financial providers chasing the same narrow credit band of the market — which is prime. “I just don’t see the benefit, even when they come out with a very compelling incentive,” he said.
For example, Triumph Motorcycles launched a promotion through FreedomRoad Financial in the fourth quarter of last year, which boasted no down payment and zero interest until April 2017. After April, the interest rate kicked in, but it was only at 3.99% APR, Clovis said.
“There was nothing bad about that program,” Clovis said. “It was a lender we are used to dealing with and we love, and it was very compelling. I’ve never seen a better promotion, but I did not put a single buyer on that program.”
Freedom EuroCycle was unable to find a buyer who could get approved through the promotion, Clovis said, because the program is only offered for prime or super-prime consumers. Even if the buyer could get approved, the monthly payment probably wouldn’t be what the buyer wanted because the program was only offered for up to a 48-month loan term, he added.
“We can pretty much assume that [promotion] was merely a means to get consumers into the dealership door, and at the end of the day, I am going to get them financed any way I can,” Clovis said.
Freedom EuroCycle projected to sell at least two dozen bikes through the program, but did not sell a single motorcycle using Triumph’s promotion, Clovis said. However, it did serve as a powerful marketing tactic, by drawing more foot traffic to the dealership.
“I encourage OEMs to do programs like that, I wish more took us up on those programs, but it’s really a marketing message,” he said. “It’s a great thing I was able to advertise. It’s designed to draw consumers in, and from that sense I was a fan.”
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