In April, ThunderRoad Financial LLC became the second powersports lender in the industry to issue a securitzation backed by prime and subprime motorcycle retail installment loans — previously only done by Harley Davidson Financial Services.
The Reno, Nev.-based lender has also grown to a dealer base of more than 300 across 30 states since the company launched in January 2014, and has ambitious growth plans for the future, Donal Hummer Jr., ThunderRoad’s president and chief executive, told Powersports Finance.
“We finance street bikes, motorcycles, ATVs, UTVs, domestic and the Japanese metrics, all of it,” Hummer said. “We have about 375 dealers right now and that keeps going up every day. We’re shooting to get around 600 dealers by the end of the year, that’s what our goal is and we seem to be on target for that.”
Although the majority of the company’s portfolio is more on the prime side, ThunderRoad extends loans across the credit spectrum, Hummer said, in an effort to be more accessible to dealers. “It kind of makes it easier for them because we’re like a one-stop shop,” he said. “Dealers don’t have to go to various places for subprime deals or prime deals, they can just come to us,” he said. “And since we finance basically all makes and models it’s really easy for them to do business with us.”
Powersports Finance spoke with Hummer about ThunderRoad’s plans for growth, where consumer demand is headed in the industry, and the company’s future plans for the Capital Market. The following are edited experts from the interview.
Powersports Finance: ThunderRoad finances many different types of powersports vehicles, but are there any specific vehicles gaining in popularity recently?
Donal Hummer Jr.: Over the last few years we were seeing big strides in the popularity of ATVs and UTVs, but that seems to have stabilized a little bit. It’s a good market, but I don’t think it’s in anyway an underserved market anymore. There aren’t a lot of new things out there, there are some hybrid bikes — the Polaris Slingshot, the Can-Am Spyder — as an alternative to a trike, and I think that that sector of powersports is still developing, but frankly I don’t really know how that’s all going to turn out.
PF: Why is it difficult to foresee the future for those newer products?
DH: We’ve seen some interesting things on those products. What we saw with Harley three wheelers and Indian trikes was basically a more mature rider going up in age and not wanting to balance a heavier bike but still go on the road. The slingshot and the Can-Am Spyders are completely different customers. They’re kind of flashy, a younger customer, it’s somebody that maybe hasn’t ever ridden a motorcycle but saw this, and went to get their license. But at the same time, we’ve seen some odd things with some of the slingshots, we’ve seen some older riders — and I mean much older riders — make kind of a bucket list type of purchase. So that’s why I say it’s tough to figure out where that market is going, you’ve got two real extremes.
PF: You issued your first securitization this year, what did you learn throughout the process?
DH: What we learned was that there’s not a lot of data out there at all, except for Harley. As we went to market a lot of new questions were being asked, because we don’t finance just Harleys, we also have a lot of Japanese metrics, and European metrics. So, people didn’t really know what to do with us, it was interesting to go through that process and lay out how these loans perform and get the metrics and get them comfortable.
PF: What are your plans for future issuances?
DH: We’re probably going to be looking now at the first quarter of last year, in order to get a large enough securitization together. We started to go down that road last fall and to be honest, not a lot of things happen in the capital markets between Thanksgivings and the first of the year. So we said, “Let’s do it next year and do a bigger one.” We’re also looking into other types of facilities — we’re in negotiations for those — to actually allow us to grow substantially next year.
PF: Looking out at the second half of this year, where do you think the industry is headed?
DH: I think demand is going to continue to rise. Manufacturers are coming out with such great products now: They are fuel-efficient, they’re fun, and they’ve got more technology features. Bikes used to just have speedometers and turn signals and now they’ve got a fully interactive display — even on street bikes. So for the customers that like that — which I think is a growing customer base — I think we’re going to see an increase in volume. I also think you’re going to see that customer are going more high-end, than low-end. We’ve seen over the last couple of years that our average ticket has gone up about $1,500. So, obviously customers are migrating towards fancier products, products with more features, and higher performing products.