Unlike the auto business, the motorcycle market is now on the rise, and therefore, if there is a desire to develop in this direction and financial opportunities, the sale of motorcycles will be an excellent niche for business.
The official statistics on sales of new cars in Russia for the past 2019, published recently by the Association of European Businesses (AEB), do not inspire optimism. The general trend for most manufacturers is a drop in demand and, as a result, a decrease in sales. On average, at the end of the year, the market sank by 2%, but for a number of car brands, the losses are even higher. For example, Honda sales fell by 64% compared to the eighteenth year, Ford, who left Russia, missed 43%, and the majority of the “Chinese” are doing badly …
But in the motorcycle segment against this background, the situation is much rosier. The results of the year will be known a little later, however, according to the results of the three quarters of 2019, the Avtostat agency data suggests that the motorcycle market is experiencing a real boom – plus 38.7 percent! The top ten brands of motorcycles that sold well in Russia include relatively expensive BMWs and Chinese brands such as Racer, Motoland, and Kayo.
In this regard, for entrepreneurs who decide to open their business selling equipment, the sale of motorcycles may turn out to be even more promising than the more common format of car dealerships. In today’s material, we propose to consider in more detail the nuances of selling motorcycles.
Which business format to choose
First, you need to decide on the segment of motorcycles in which you will work.
- Official dealer. Some salons work as official dealers of famous brands. Despite a number of advantages (exclusive rights in the region, staff training, support with the supply of spare parts for the service), this format also has a certain disadvantage – an impressive threshold for entering the business. Manufacturers, as a rule, strictly regulate the size and design of the premises for a motorcycle showroom, the availability of the necessary product stocks in the warehouse, and the standards of work of sales and service departments.
- The sale of used motorcycles is another area of \u200b\u200bthe “two-wheeled” business that can be developed. The demand for used bikes is comparable to the hype for new motorcycles while requiring much fewer start-up costs. Many start with a banal outdoor playground and a simple hangar, eventually growing into an impressive business with good sales volumes.
- Custom studio. Custom studios stand apart in the sale of motorcycles – these guys do not sell equipment in large volumes, but rather specialize in the implementation of exclusive projects. This business format is closer to tuning, although motorcycles are not always made for any particular client. In recent years, the impetus for the development of the custom sales direction has been the growing interest of potential buyers in such types of motorcycles as cafe racers and scramblers. These are “iron horses”, stylized as retro, which is made on the basis of popular classic models.
Today we will consider a business development model for the sale of motorcycles using the example of a dealership of an inexpensive Chinese brand and the sale of used equipment.
Starting a business
To open your own salon selling motorcycles, you need to register an LLC with the following code according to the OKVED classifier:
- 45.40. Trade in motorcycles, their parts, assemblies, and accessories; maintenance and repair of motorcycles.
To organize a salon selling motorcycles, a covered room with an area of 200-300 square meters, located next to the main transport routes of the city, is suitable.
Purchase of motorcycles for further sale
To form stocks of a motorcycle dealership, it is necessary to conclude an agreement with an importing company. It is highly desirable to have the entire range of your chosen brand in stock for a demonstration to customers and test drive. If we are talking about the Chinese motorcycle industry, most of the equipment will be presented in the budget segment – the cost of new motorcycles, depending on the class, will average from 100 to 300 thousand rubles.
Doing business with used equipment is a little more difficult – you will either have to negotiate with the trade-in departments of large federal networks, or be puzzled by finding suppliers in other countries. Depending on the brands, these can be states in southern Europe or Japan.
The ideal option is if you manage to find your representative in the region of your choice so that he can inspect the motorcycles live before buying them and delivering them to Russia. Nevertheless, large modern auctions allow you to almost completely avoid the pitfalls when buying motorcycles – the Land of the Rising Sun is especially famous for this. The Japanese are quite scrupulous in evaluating motor vehicles for sale. At the same time, all officially available information on maintenance, accidents, and service intervals of the selected motorcycle will be presented in the auction database.
Selling used motorcycles as a business is also beneficial because the markup will be higher than for new vehicles. If when selling a new bike you earn your commission of an average of 10%, then on a used moto you can get 20% or more.
Before purchasing motorcycles, carefully read the terms of delivery of motorcycles in accordance with international Incoterms rules (EXW, CIF, etc.) in order to clearly understand who will be responsible for what during transportation and customs clearance of equipment.
Used bikes from Japan, as a rule, are transported in sea containers to Russian ports, after which they are reloaded onto trucks and transported to their destination. In Europe, everything is usually simpler – motorcycles are loaded onto a trailer or truck, which will deliver them directly to your warehouse. The most popular countries for imports are sunny Italy, Germany with its smooth autobahns, as well as Belarus, captivating by its close location, through which the lion’s share of imported motor vehicles passes.
Related destinations
Sale of equipment. When selling motorcycles, most salons offer to purchase equipment (helmets, turtles, gloves, specialized equipment). Such products can be ordered directly from China through online stores, or bought from wholesale importers in Moscow. For the first time, you can limit yourself to purchasing equipment for 300 thousand rubles, the average mark-up, depending on the brand, will be from 20 to 50%.
HUNDRED. You can’t do without a service station for motorcycles – a motorcycle, like any other high-tech motorcycle, requires high-quality and timely maintenance at least once a year, at the beginning of the motorcycle season. To do this, you will have to maintain at least the minimum required a number of spare parts and consumables in stock.
Credit and trade-in. When opening a motorcycle dealership, services such as credit and trade-in will always be in demand. The first one will allow you to buy a bike without having all the necessary amount at once), the second one will allow you to exchange an old motorcycle for a more modern and powerful one right at your place.
When looking for partner banks for motorcycle loans, it is necessary to take into account the fact that not all financial market players agree to work with two-wheeled vehicles. Compared to traditional car loans, the risks in this segment are higher. When selling a motorcycle on credit, you will receive your commission from the bank for the referred client. When buying a bike on credit, insurance is required – usually banks themselves offer this service “in addition”, however, if you wish, you can conclude an agreement with insurance companies.
The latter is especially true for those who are “in the saddle” recently – many people buy simple models up to 200 cubic meters for a start, and after a season or two, they are sure to change to more powerful options – with engines of 400, 600 cubic meters and more. Considering that the average sale term of a motorcycle is much higher than that of a conventional passenger car, this will greatly simplify the exchange for your customers and will allow you to earn money on it. The cost of repurchasing a motorcycle when handing it over to a trade-in is usually at least 20% lower than the market – you can earn about the same margin by selling a device handed over to the salon after a while.
Sales and marketing
Two-wheeled vehicles are a product that is often bought on emotions and in an effort to get a new driving experience. That is why you cannot do without a friendly, competent, trained, and professional sales department. A big plus of working with official manufacturers is the opportunity for internships for employees involved in sales and marketing at the representative office.
To streamline calls to the motorcycle dealership, we recommend that you implement CRM without fail. This will not be very expensive compared to other investments in the business, while it will allow you to systematize the flow of leads and facilitate the work of both the sales department and the manager. The cost of CRM for a motorcycle dealership will be about 25-30,000 rubles.
The costs of online promotion are as follows:
- Website (10,000 – 15,000 rubles);
- Launch of contextual advertising campaigns “Direct” and Adwords in the network (20,000 rubles);
- Maintaining thematic groups of your business in social networks (you can spend about 5,000 rubles per month on paying a remote SMM employee);
- Advertising on thematic motorcycle forums of the region (about 10,000 rubles);
- Offline advertising costs;
- Placement of banners on advertising structures and billboards in the city (30,000 rubles);
- Making a sign: 50,000 rubles;
- Development and printing of POS materials (brochures with a description of the model range, flyers with a presentation of lending services, etc.).
It would not be superfluous to conclude an affiliate program with driving schools that provide category A training services. most of the students are potential clients of the salon, and therefore, in agreement with partners, you can hold the so-called Open Day.
During the event, you can present the model range available, and talk about the advantages and disadvantages of certain motorcycles – which ones are best for beginners. It is advisable to prepare a handout with the contacts of your salon so that interested customers can contact you after receiving the coveted crust, take a test drive of motorcycles and purchase the option they like.
Motorcycle dealership staff
The staff of a motorcycle dealership usually consists of at least 10 people.
- The manager of the salon supervises the work of employees, deals with their training, and solves administrative issues. This position requires a person with at least 3 years of experience in the motorcycle business since the field is quite specific. The KPI of the head of the salon will include indicators for fulfilling the sales plan in terms of revenue, marginality, the number of equipment sold, fulfilling the sales plan for accessories and services, as well as warehouse turnover.
- The sales department consists of 3-4 people, each of whom specializes in a certain area – this is the sale of new motorcycles of the presented brand, the sale of used equipment, and the sale of accessories. The team can recruit both specialists with experience in the motorcycle business, as well as beginners who want to develop in this area. Most of the salary of sales staff consists of a percentage or a fixed amount for the sold equipment and accessories.
- A Purchasing Expert is an employee responsible for thoroughly inspecting motorcycles when they are trade-in or when they arrive at the warehouse. Its tasks include checking for possible accidents, and malfunctions, as well as diagnostics for the replacement of consumables. If the motorcycle requires certain investments, it is better to bring it to perfect condition in the cabin and sell it for more than making a significant discount for the shortcomings to the buyer.
- A loan officer is engaged in the provision of financial services, as well as the sale of insurance products.
- Moto service staff. The duties of the service employees (technicians) include not only the repair and maintenance of motorcycles but also the maintenance of the available equipment in proper condition, as well as pre-sale preparation (washing, polishing, replacement, in agreement with the head of the necessary consumables.
Financial indicators
It’s time to go directly to the calculations.
Initial business costs:
- Rental of a covered warehouse (hangar): 100,000 rubles.
- Office rent: 30,000 rubles.
- Furniture: 100,000 rubles.
- Computers and office equipment: 200,000 rubles.
- The minimum required diagnostic equipment for service: is 200,000 rubles.
- Acquisition of licenses for the 1C base and the CRM system for the sales department: 50,000 rubles.
- Purchase of new motorcycles of the brand you represent: 4,000,000 rubles.
- Purchase of used motorcycles to expand the range: 3,000,000 rubles.
- Purchase of accessories and equipment: 500,000 rubles.
Total: 8,180,000 rubles.
The cost of acquiring new equipment directly depends on the brand that you plan to sell. Used motorcycles can also be of various prices – from 150 to 400,000 rubles. for a unit.
payroll fund:
- Motor show manager: 80,000 rubles.
- Sales manager: 50,000 rubles. (200,000 rubles subject to the work of 4 people)
- Expert in the purchase of motorcycles: 60,000 rubles.
- Loan specialist: 35,000 rubles.
- Technician: 40,000 rubles (120,000 rubles subject to the work of 3 people).
As a result, the financial indicators for the motorcycle showroom are as follows:
The main indicators of the business for the sale of motorcycles
| INDICATOR | AMOUNT, RUB. |
|---|---|
| Investments | 8 180 000 |
| Revenue, rub. (new + secondary + accessories) | 5,000,000 |
| Variable costs, rub. | 100,000 |
| Fixed costs, rub. | 650 000 |
| FOT, rub. | 495 000 |
| Net profit, rub. | 350 000 |
Net profit from the sale of motorcycles will be 350,000 rubles.
However, when calculating, it is important to take into account the seasonality of the business – for obvious reasons, sales fall significantly in the autumn-winter period. Therefore, the average payback period for a business will be about two and a half years.
So, compared to the traditional format of a car dealership, starting a motorcycle sales business will require about 3 times less costs. However, unlike passenger vehicles, the demand for motorcycles has a pronounced seasonality, this must be taken into account when opening a salon. The best time to start selling is the opening of the riding season in the spring.
In any case, the motorcycle market is now on the rise, unlike the auto business, and therefore, if there is a desire to develop in this direction and financial opportunities for investment, the sale of motorcycles will be an excellent niche for business.