Wells Fargo Commercial Distribution Finance has shifted focus in the fourth quarter toward increasing technology investments and building up its staff to provide increased dealer support, after focusing on the company’s integration with Wells Fargo & Co. for most of 2016, said Jeremy Jansen, president of the company’s motorsports group.
Wells Fargo CDF is allocating more commercial resources toward getting representatives into the field to meet the
needs of its dealers and OEM partners following the acquisition, Jansen said. The company plans to add three new motorsports team members by yearend.
Additionally, in the first quarter of 2017, CDF will form a focus group with “key dealers” to find out where the company needs to make enhancements to Dealer Insights — its online resource tool, he said. Dealer Insights allows dealers to view floorplan end dates, manage aged inventory, and develop marketing strategies, among other things. Powersports Finance met up with Jansen at AIMExpo 2016 in Orlando to discuss the company’s top priorities and the state of the industry. Following are edited excerpts from the interview:
Powersports Finance: What is the state of the powersports finance industry today?
Jeremy Jansen: Today, the industry continues to be incredibly sluggish. Motorcycle and ATV sales are down low in the single digits, side-by-sides are up marginally, and for snowmobiles — it’s still too early to tell. Our portfolio has fared a little better than the industry because of the mix of businesses in which we work. We also have personal watercraft and outboard engines in our portfolio, and the marine business has been spectacular this year. So we have a little bit of a lift from that. We also have a favorable mix of OEMs in our portfolio. This year, some of the manufacturers are growing retail sales rapidly and we are fortunate enough to service them. Our results will be up a bit year over year, versus an industry that is going to be down a bit.
PF: What factors are driving the “sluggish” industry?
JJ: Oil and agriculture are big drivers in powersports. Back in 2013 and 2014, when oil was over $100 per barrel, there were 1,600 active rigs in the U.S. That number has since bottomed out at 400. Those local oil and gas economies, many of which are driven by small business owners, have really slowed.
When jobs on oil rigs decrease, oil rig employees, as consumers, may no longer purchase ATVs, those facilities may no longer use ATVs or side-by sides on-site in a commercial sense. This has had a huge impact to the industry. The 2017 question will be: As oil continues to stabilize, do those jobs and local economies come back? Does that consumer group come back, or will they be more cautious? Time will only tell. I am hopeful we will see some oil price stabilization in 2017 and 2018, and we are tracking various data points very carefully.
Another headwind is in agriculture. How much revenue a farmer is receiving for both crops and livestock — that index is off 12% year over year. Farmers are receiving less for crops and livestock, yet the price paid index continues to increase gradually or hold steady. Farmers’ expenses are gradually increasing, and prices received are coming down, and those lines crossed each other about 18 months ago. The gap continues to widen. That’s applying pressure, too.
PF: In what other areas are you allocating budget this year?
JJ: We’ve continued to increase our underwriting staff in our Atlanta; Irvine, Calif.; and Minneapolis offices. Underwriters make the day-to-day credit decisions and play an important role from a risk management perspective. The business continues to grow, and we need to make sure that we fully support the business on all levels.
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