The powersports market has been trying to find a way to bring in new riders to boost sales, but AZ Auto RV, an independent dealership in Mesa, Arizona, has noticed that lenders are pulling back from first-time buyer programs.
“We’ve seen some of those [first-time buyer] programs go away,” Finance Director John Duncan told Powersports Finance. “The OEMs are picking them up on the manufacturer credit cards. They can capture those first-time buyers where we (the independent dealer) have kind of lost that. We’ve still got a couple of other programs out there, but it seems like lenders are really cutting back.”
As the name suggests, first-time buyer programs are designed to help consumers who have never received a motorcycle loan. Millennials make up a portion of that customer base, but the fact that these consumers often have never received a loan before means that they’re viewed as being a risk. However, these programs have merit for an independent dealership who doesn’t have the support of a large OEM to fall back on.
“First-time buyers programs were really beneficial,” Duncan said. “I understand the risk that is involved there for a lender. There’s just no track record, good, bad, or indifferent. I used to watch lenders get pretty aggressive with those, but it just seems like fewer and fewer people want to take that risk with powersports whereas cars and trucks, I’ve got a handful that will do that first-time buyer.”
Across the indusry, he’s also noticed that lenders are tightening up their loan values, Duncan added. Whereas before the dealership was getting 135% to 145%, lenders have pulled back to 110% to 120%.
AZ Auto RV is an independent dealership that sells motorcycles, RVs, cars, and trucks. The dealership specializes in used vehicles, but it also sells new CF Moto vehicles. AZ Auto RV works with several local credit unions through CUDL, a credit union lending network. It also works with Synchrony Financial, who provides loans for CF Moto.
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