Powersports lenders are struggling to adapt to millennial buyers entering the market as the baby boomers age out, which has spurred more pressure on dealers in the F&I office.
One of the larger issues with a younger generation of buyers is that they want to “get too much bike” for little money and with little to no credit, David Goff, Westlake Financial Services‘ assistant vice president of marketing, told Powersports Finance.
For example, a millennial buyer might have a friend who owns a Kawasaki Ninja 1000, and the buyer immediately wants to purchase that particular motorcycle, Goff explained. Unfortunately, because the buyer has no credit or thin credit, that person qualifies for an older or lower-cost bike, such as the Kawasaki Ninja 300 or 600.
The No. 1 challenge for Ross Motorsports is getting millennial buyers approved, General Manager Ryan Williams told Powersports Finance, which is why the Lufkin, Texas-based dealer is having to “train” the younger buyers to understand that the vehicle they want, isn’t necessarily the vehicle they can get approved for.
“A lot of them may not have any credit, or just have two lines of credit and small little credit cards, but they don’t have any kind of installment credit in their past history,” Williams said. “They come into the dealership and they are thinking they can start their credit on a recreational vehicle when the truth is that a recreational vehicle is a little bit harder to obtain approvals, versus a house or a vehicle.”
Anytime a lender makes a loan for a buyer who is “buried in their credit ability,” it causes a bad structure where it’s going to require a lot more down payment, Goff said.
“The good dealers know how to prequalify that customer up front and show them the alternatives and say, ‘Look, to do this you’re going to need X amount down to prequalify,’” Goff said. “If you don’t have enough we can look at this smaller bike and get you riding today and in a year or two or three you trade that bike back in, we’ll get you on that big bike when you’re credit comes up.”
Ross Motorsports, for example, has been opening up more conversations with the younger buyers to rehash deals and let those consumers know that they need to have comparable trade lines before purchasing a $20,000 side-by-side, Williams said.
However, despite the challenges, 2017 is going to be a “big year” for the powersports industry, and millennials will be a big part of that, Goff said. “Let’s be honest, it’s the growing segment of the world and it’s the place you need to be.”
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