Industry Consolidation Brings Big Banks More Business, Dealer-Operator Says

motorcycle moneyAs more powersports dealerships consolidate from standalone shops into dealer groups — a trend that is expected to continue this year — the larger banks and financial institutions will begin to see more dealer business, Ozzie Giglio, dealer-operator for The Windy City Motorcycle Co., told Powersports Finance.

Dealer acquisitions have been occurring more this year versus previous years. The Windy City Motorcycle Co. is also following in this direction, with the consolidation of multiple Harley-Davidson dealerships throughout the Chicagoland and Southern Wisconsin markets.

Originally, Giglio began in 2001 with just one Harley-Davidson location, employing 14 people. Now, The Windy City Motorcycle Co. has grown to 10 dealerships and three retail stores that employ more than 400 people, including its most recent acquisition in February of Woodstock, Wis.-based Woodstock Harley-Davidson.

As the dealerships consolidate, the lending institutions have to change because some of those financial institutions have size limitations, Giglio said. For example, “some of the banks we were able to do business with five to six years ago, we can’t today because of our size.” Because lenders have a cap for how much they are able lend, when a dealership exceeds that cap, that dealer has to switch to a bank with a higher lending capacity, he added.

“But having a financial institution that is bigger and broader, and has more lending capacity, that is a good thing for the dealer and the consumer as well,” he said. “Every dealership definitely needs some level of financial services support, and when you consolidate, you can use your size to reduce the expense in any one particular dealership.”

For example, Windy City has a chief financial officer overseeing the financial services operations of its 10 dealerships, he said. “We can have a highly sophisticated CFO because we can absorb the cost of that [salary] among the number of dealerships in the group,” Giglio said. “If you are a one-off dealership, that’s harder to do.”

The Windy City Motorcycle Co. is partnered with two financial providers: Harley-Davidson Financial Services and Rosemont, Ill.-based Wintrust Bank.

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