Only a small percentage of today’s powersports dealers either need, or are in a position, to implement in-house financing programs, said Jim Woodruff, chief operating officer at National Powersport Auctions, which leaves “significant opportunities” for traditional, established lenders to fill the void.
For smaller dealerships with lower priced vehicles, the need for alternative financing is the greatest, Woodruff said, “and a handful of enterprising dealers have initiated in-house programs to fill the void, despite their thinner capital resources.”
However, larger dealers that have more financial leverage — and more high-dollar units — are less likely to do in-house financing, he said, which opens the doors for their lender partners to take advantage of that marketshare. “The reason is that most are franchised and have ready access to numerous lenders that can handle the majority of their needs,” Woodruff said. “Also, bigger dealers are generally less likely to take on the risks associated with being their own lending arm in the current regulatory environment.”
Calculated Risk Motorcycle Group — the management team for the Adam Smith Harley-Davidson dealership family — for example, is not interested in an in-house financing program. CRMG is “very comfortable” with its 15 lender partners, Neil Noble, business partner to Owner Adam Smith told Powersports Finance in June.
“Until you have maxed out the upside growth in areas that are your main focus, moving into a new business area is distracting,” Noble said. CRMG has “a lot of room to grow” but once it “maxes out” its core business areas, the in-house financing idea may be revisited. “For right now, we’ve got great lender relationships,” Noble added.
CRMG has seven Harley-Davidson dealerships across Texas, including its flagship location in Bedford, Texas.