The light at the end of the tunnel isn’t a mirage: things really may be on the up and up for the Canadian powersport industry, especially if federal and provincial initiatives from industry advocates and the Canadian Powersport Dealers’ Association make headway in the year to come. And considering where the country just came from economically, it’s safe to say the only way to go from here is up.

The Motorcycle and Moped Industry Council (MMIC) and Canadian Off-highway Vehicle Distributor Council (COHV) intend to keep up the work of advocating on behalf of industry and riders in 2010.

“Initiatives aimed at engaging federal and provincial governments in supporting the right to enjoy riding of all varieties are on the table, and the membership feels positive,” says communications manager for MMIC and COHV, Jo-Anne Farquhar.

MMIC/COHV funds programs to assist in the promotion of safety and training, trail development, and tourism opportunities across Canada.

“Industry experienced an eight per cent growth in 2008, but unfortunately can’t boast those same numbers for 2009,” she says. “The encouraging news is that fourth quarter year-to-date sales for 2009 were holding stable at minus -27 per cent. Industry is looking for small single digit growth for 2010. There are strong indicators that the economy is coming back.”

Although 2009’s recession is of global scope, Canada has fared out better than the US and some places in Europe—another important reminder of the importance of perspective.

As a new image of motorcycles, mopeds, and even some offroad vehicles emerges—the inevitable shift from luxury item to eco-friendly, uber-responsible, and perfectly necessary mode of transportation—consumers are viewing the industry with new eyes.

“MMIC and COHV consider on-road motorcycles and scooters as a cost-effective, fuel-efficient, and environmentally-friendly alternate mode of transportation to four-wheel vehicles,” says Farquhar, adding that ATVs and off-road motorcycles can be used as utility vehicles by industry and agriculture as well as recreational vehicles.

Participation at MMIC / COHV’s seven motorcycle and ATV shows across Canada remained stable at the end of last year, and is looking good for January and February 2010. As the only shows where major manufacturers get together to introduce hundreds of new 2010 models to the riding public, they are generally regarded as must-see events.

Another important initiative from MMIC for 2010 is the recommendation from member manufacturers and distributors of the implementation of SAE J2825 stationary sound test procedures for on-highway vehicles across Canada.

“Being proactive and leading the way with safe and accommodating new policies such as implementation of the SAE J2825 allows motorcycles and scooters to reach their full potential,” says Farquhar. “This is just one more positive step in supporting industry in these economically uncertain times.”

As a member of the National Trails Coalition (NTC), the COHV is actively involved in the implementation and injection of $25 million into Canada’s trails sector in partnership with the Government of Canada.

“The NTC’s $25 million has been a resounding success, triggering over $60 million invested to create, upgrade, and sustain trail infrastructure for motorized and non-motorized trail use across Canada,” says Farquhar.

Stuart McCarthy, executive director for the Canadian Powersport Dealers Association (CPDA), says the industry probably saw the bottom of the recession in 2009 and is hoping for a return to stability or even modest growth in 2010, although tightened credit and access to financing will continue to be an issue for both dealers and customers.

The good news is, although OEMs have reported anywhere from a 15% to 60%+ drop in sales (depending on the product line), typically they say sales in Canada were, on average, well above sales in the U.S.

“Not being economists ourselves, we have to rely on the same information and reports you’ve been seeing, which don’t provide much in the way of clarity,” he says. “What this tends to do is make people a bit more conservative in their spending habits. Some analysts say we are in a ‘jobless’ recovery, which means that a lot of people are still hurting, two-income families are now one-income families, and people will generally be saving for a rainy day.”

As far as dealers go, 2010 will bring much more caution in terms of volume being stocked, says McCarthy. “This means as manufacturers continue to roll out numerous new models, the challenge will be for our dealers to really know what their customers want and stock accordingly.”

“Unfortunately,” he adds, “there will still be a number of dealership closings and other forms of rationalization, either of the dealer’s choice or forced by the manufacturers.”

At the top of this list for the Association this year will be working with government and manufacturers to protect the interests and financial well-being of dealers – the paramount importance of which was heightened by the collapse of the automobile market and the impact on dealerships there.

Unlike automotive dealers and franchisees, powersports dealers do not have defined trade areas, and distributors can terminate dealership agreements without cause with only 30 days notice. Powersports dealers often do not have rights to sell their dealership without prior approval from their distributor. Additionally, powersports dealers have been subjected to unilateral actions by distributors, which have threatened the viability of their businesses. Some of these include: unilateral changes to, and cancellation of distributor and authorized reseller agreements; being forced to participate in moneylosing programs or face losing authorized distributor status; being left with unsold inventory without vendor support, service support or marketing benefits; having dealers placed in adjacent provinces or even neighbouring communities, at a disadvantage due to different territorial/provincial pricing and discounts; having authorized distributorship agreements rescinded from dealers and establishing a new, competing authorized dealership within the same neighborhood; and not being reimbursed fair value for warranty work.

“That is why we will be meeting with government officials in a number of provinces to raise the introduction of dealership protection legislation and amending franchise protection legislation,” says McCarthy. “This kind of business-tobusiness legislation is well entrenched for automobile and farm equipment dealers and franchises, so having it extended to powersports dealers should follow naturally.”

CPDA recently met with manufacturer representatives and government officials in New Brunswick on the issue of powersports dealer protection legislation, something dealers across the country have been looking for for years. A major point of interest was a new business model Polaris is using, called Max Velocity Program. Regional representatives meet with their dealers every two weeks and order more on a “justin- time basis,” reducing overstocking and pressure on dealers.

“Hopefully more manufacturers and distributors will move to this model, instead of a massive pre-season build-out and flooding dealers with product that might or might not sell,” says McCarthy.

The New Brunswick provincial government which recently brought in franchise protection legislation, established a working group on powersports dealer protection legislation. While the manufacturers and their industry association were vehemently opposed to this, the government made it clear at a meeting in Fredericton, that it was satisfied that there were certainly grounds for concern, just as the concerns of franchisees were recognized.

“What we’re looking for is essentially what is already being granted to agricultural equipment dealers, automobile dealers and franchisees in various Canadian jurisdictions, as well as powersports dealers in many U.S. states,” says McCarthy. “Some of the ley areas are fair dealing conditions; defined grounds for termination and recognition of what constitutes termination without cause; reimbursement and repurchase of inventory when a dealer is terminated; and fair value for business-to-business services. Above all regulations that provide avenues for remedy, action, and sufficient penalties for violations.”

McCarthy stresses the point that despite the issue of dealer protection, the overall relationship between dealers and manufacturers isn’t an adversarial one, generally speaking. “Many dealers have excellent relationships with their manufacturer’s representatives and manufacturers cannot exist without a retail presence and they need knowledgeable, financially healthy dealers as the primary channel to reach customers.”

CPSDA plans to meet with OEMs and their industry reps on an ongoing basis to identify areas for mutual improvement. “One area we see that is valuable is providing education programs for dealers to help them become better business people,” says McCarthy. “We are in the early stages of working on developing a series of seminars and training sessions to roll out across Canada. Manufacturer input and support will be quite valuable and together we can bring in third-party experts.”

There are other areas in terms of legislation, taxation, “green” incentives, environmental regulations, creating a better business environment, and more, where dealers and manufacturers have shared interests and definitely need to work together,” he says.

For dealers, controlling inventory will be a huge issue in 2010, as well as employing good financial practices. McCarthy says assessing the customers’ wants and needs is priority one, noting that most will be looking for great value and deals.

“On new equipment for instance, dealers might want to take a page out of the electronics business and create a value bundle with accessories that might have a higher margin. Trade-ins often offer an opportunity for higher margins as resales, especially if you add an in-shop warranty, oil changes, or other maintenance as a package, which can help maintain customer loyalty.

Or maybe a dealer could offer a free pick up and delivery service for customers needing repairs.”

Customer service and customer relationship management (CRM) are going to be very important and the value-add that this provides will be critical.

“Keeping track of customers, maintaining ongoing, proactive contact instead of waiting for them to show up on your door step, loyalty programs, service reminders, VIP sales notifications, and more, are vital,” says McCarthy. “It is always much easier to upsell and existing customer that attract a new customer.”

On the service side, dealers shouldn’t be afraid to raise their service rates to reflect the realistic value of the work they are providing and the parts they are ordering. This is just as important a profit and loss centre in the business as equipment sales are.

Marketing is also critical – especially smart marketing, says McCarthy. “Too many businesses make the mistake of cutting this out of their budgets in tough times when it is needed most. Customers need to know you are out there and appearing healthy and active instills confidence.”

He encourages seeking out public relations opportunities that are more cost effective than buying an advertisement, or sponsoring a community group or association.

“Maybe arrange for staff to give snowmobile, ATV, or boat rides to children at a local hospital or get together with a local charity and alert the local TV station or newspaper that such an event is taking place.

“The bottom line is whatever [the industry] can do together that results in more sales, healthier dealerships, job growth, more choice and better value for consumers, is a win for everyone.” CPT