Selling new bikes not worth it?
Discussion
Stopped off at a BMW dealer this morning as part of my ride. I asked about the new 1300RS to be told they no longer sell new bikes - just 2nd hand and servicing. I was told that BMW wanted them to make a big investment but I was told that average profit on a new bike sale in the UK is just £54 so not worth it. Can that be true? If yes then no surprise dealers going bust left right and centre.
Talking to a dealer in Poole and the up front costs and margins paid in selling new bikes is not viable. The public buy products that are offered online with discounts, then use financing. This can only be offered by big brand/owned dealerships. Not independents, surely? You can earn 10% normally just buying index trackers and staying in bed ! The only money now is in servicing. We just closed our Specialized ebike shop for exactly the same reasons.
I'd say bull....
Dealers have targets to meet and margins agreed, if they cannot meet the targets then they will loose their franchise.
I know of one KTM dealer many years ago (around 2006) sold both road and off-road bikes, they had targets set by KTM for both, I was buying a 950SM and they informed me they hadn't met their road bike targets and once whatever they had in stock had sold that was it for road bikes. They're still around today on off-road sales alone.
Dealers have targets to meet and margins agreed, if they cannot meet the targets then they will loose their franchise.
I know of one KTM dealer many years ago (around 2006) sold both road and off-road bikes, they had targets set by KTM for both, I was buying a 950SM and they informed me they hadn't met their road bike targets and once whatever they had in stock had sold that was it for road bikes. They're still around today on off-road sales alone.
Sounds like nonsense. £54 is about 1% of the retail price of the new 1300RS. A dealership can't stay afloat making that little margin, despite servicing and commission from Finance deals. Most brand dealers like a BMW Motorrad dealer probably sell single digit bikes per month. Even a Honda/Suzuki dealer is probably doing well to put 20 new bikes a month through the books. At 10 a month that's £540. 20 is £1,080.
Even if you add in incentives from the manufacturer, Finance commission etc you're likely not even clearing the rent on the site, never mind pay, utilities, shop supplies and everything else. I get that dealers are closing all over the place but if finances were really like this then there'd be no dealers at all.
Even if you add in incentives from the manufacturer, Finance commission etc you're likely not even clearing the rent on the site, never mind pay, utilities, shop supplies and everything else. I get that dealers are closing all over the place but if finances were really like this then there'd be no dealers at all.
I don't think the margin per bike is necessarily much higher from that (heard 2nd hand so hopefully a dealer will be along soon). However, if targets are met then significant bonuses are paid, and it is these which the dealer needs. So if you meet your target you might get a £250 bonus per bike sold, and I believe they are tiered so the higher the target you meet the higher the bonus per bike. Not sure on the numbers but that's the process I heard. It is reported in the press that it's often worth buying bikes at the end of the quarter as you will get a better deal if the dealer if close to a target.
I knew someone who bought a Triumph, and the dealer told him that his was the lowest margin they'd ever made on a bike at £27, but they needed to sell 3 more bikes to meet a target and it was near the end of the quarter. They clearly wanted to sell the bike for the bonus not the individual margin.
I knew someone who bought a Triumph, and the dealer told him that his was the lowest margin they'd ever made on a bike at £27, but they needed to sell 3 more bikes to meet a target and it was near the end of the quarter. They clearly wanted to sell the bike for the bonus not the individual margin.
Also, I'd imagine the margin/kick-back is on the finance to the dealer and that's where they make their money. BMW being a car manufacturer probably have this model down to a tee. It's not about selling a product it's about selling finance for the product.
Dealers also make more on taking in and selling on a 2nd hand bike, there's margin at both ends and margin on the new bike that they are selling also.
Dealers also make more on taking in and selling on a 2nd hand bike, there's margin at both ends and margin on the new bike that they are selling also.
Freakuk said:
Also, I'd imagine the margin/kick-back is on the finance to the dealer and that's where they make their money. BMW being a car manufacturer probably have this model down to a tee. It's not about selling a product it's about selling finance for the product.
Dealers also make more on taking in and selling on a 2nd hand bike, there's margin at both ends and margin on the new bike that they are selling also.
Which is why, you'd expect at least, fostering a good relationship with your Customers and any new prospective buyers who walk in to look at your cars and bikes would be a huge priority but this and other forums are chock full of stories about being ignored in dealers when looking to buy and dealers not keeping promises like call backs which do nothing but drive away their customers into the hands of ever willing indy specialists. You might not get that fancy coffee, but you are saving 20-30% on your final bill.Dealers also make more on taking in and selling on a 2nd hand bike, there's margin at both ends and margin on the new bike that they are selling also.
Skeptisk said:
Stopped off at a BMW dealer this morning as part of my ride. I asked about the new 1300RS to be told they no longer sell new bikes - just 2nd hand and servicing. I was told that BMW wanted them to make a big investment but I was told that average profit on a new bike sale in the UK is just £54 so not worth it. Can that be true? If yes then no surprise dealers going bust left right and centre.
Think we know the same dealer if you are in Suffolk? By the time you've factored in stocking costs for models that don't shift quickly (R1800's etc) cost of running demo bikes, paying commission to sales team I can believe you'd be left with not much chassis profit, before finance & back end money is taken into account.Add in the fact that you can't retail something like a 2 yr old Triumph Explorer that comes in p/ex for a GS, that's another opportunity to make a few ££ gone.
As a single outlet family run dealer they couldn't justify the six figure sum BMW wanted them to spend to renovate the premises up to the latest dealer standards so it was a no brainer to let the sales franchise go.
podman said:
I know the profit from the sale of my M1000R was just over £800, around 4.5%. Not much for all the administration of the sale, commision and a 200 mile round trip for the salesperson…but a lot more than £54
Is that gross profit (sales price less purchase price) or net profit after deducting all the direct sales costs eg interest on financing stock whilst waiting to sell? Probably a significant difference between the two.While on the subject of BMW, just to illustrate how skewed things are, AFAIK, on a new bike over 1000cc there is a mandatory "delivery charge" of £500 to get it here from Germany plus a PDI charge if c £250 , neither of which the dealer keeps.
On a used bike they *Have* to stick a £450 BMW warranty on it (which they buy).
...and then every few years someone from Munich will come into your showroom to advise you that it no longer conforms to current "branding standards" and so you need to spend £1m or so updating it!
It's not an easy business.
On a used bike they *Have* to stick a £450 BMW warranty on it (which they buy).
...and then every few years someone from Munich will come into your showroom to advise you that it no longer conforms to current "branding standards" and so you need to spend £1m or so updating it!
It's not an easy business.
I went with a mate of mine for him to buy a £15k bike yesterday (used) from a main dealer (Kawasaki, apparently this is the only main dealer actually owned by Kawasaki, Greenham near Newbury). He tried, very politely, to get £250 off (and he’s usually a tough negotiator) but the dealer principal was there and said they only had £400 in the bike overall so he’d only knock £100 off.
KurtFlew said:
Used bikes must be making good profits. Superbike factory had my ZX10 for £1300 more than they paid me and it sold in a week.
Yes and no...VAT £260
Collection £100
Advertising £100
Staff costs £200
Showroom £150
I'm probably a bit light on the costs and that's assuming zero prep and gives a gross profit of £490
KurtFlew said:
Used bikes must be making good profits. Superbike factory had my ZX10 for £1300 more than they paid me and it sold in a week.
You've got to shift a lot of bikes every year to pay the bills.As well as KTMsm's list of costs, you need to allow for a certain % of bikes to have problems and be returned.
With a dealer's responsibilities under the CRA,
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