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Msrp ?

At one point when VW Jettas were hot (2000, maybe) there was a "dealer mark-up" of $500-$1000 over MSRP added to every car. Every dealer. No negotiation. Same thing when the Mazda Miata hit the market, if I remember correctly.

Mid-80's and Honda Accords came through with new sheet metal and were ultra hot. I snagged the 2nd unit to come out of this particular dealership and paid $1k over MSRP. Sometimes MSRP is nothing more than ink taking up white space on a piece of paper.
 
I can say that the MSRP of a K1300S ( no extras )
is approx 15% over dealer cost. This is in line with the RT
info Billy provided.
 
At one point when VW Jettas were hot (2000, maybe) there was a "dealer mark-up" of $500-$1000 over MSRP added to every car. Every dealer. No negotiation. Same thing when the Mazda Miata hit the market, if I remember correctly.

Around 1998 when the New Beetle went on sale, dealers
marked them up $2000. A couple of people found others that
had just purchased one and offered them $5000 to buy it
from them.

And don't forget about Harley Davidson's waiting lists of
a few years ago. A close friend would get his name on the
list every year and either would sell his place on the list
when he got close to purchase time for $1000 or take
take delivery of the bike and ride it a few times and then
sell it for between 1 - 2K over what he paid.
 
This would be 15% between dealer net and MSRP. That is quite a bit more than I thought.

Maybe, but the reality is many, if not most sales are negotiated therefore the transaction price is substantially less. To my knowledge no one is offering one-price (no haggle) pricing in the world of motorcycling. A good salesman who knows his product and knows how to make quality recommendations theoretically deserves a higher commission than a poor salesman. Of course, one-price pricing is probably viewed as more fair from a customer point of view although in car stores people still try to negotiate the price.

What do people on the forum feel is a fair margin on a motorcycle sale, or should fairness not enter the picture?
 
What do people on the forum feel is a fair margin on a motorcycle sale, or should fairness not enter the picture?

If I am putting myself in a dealer's position and would run a business, I would expect at least a 12% gross margin for a motorcycle sale.
It all depends what the mechanics of the transaction with the OEM are. If I have to pay and finance my inventory and may have bikes sitting on my shop floor for 6 months or longer, anything less would be suicidal.

As a customer, of course, you want the "best deal". You buy a car and you want $125.- "over invoice". While "invoice" is not what the dealer pays, there is little left. How does he pay his overhead and the salesman?
 
Maybe, but the reality is many, if not most sales are negotiated therefore the transaction price is substantially less. To my knowledge no one is offering one-price (no haggle) pricing in the world of motorcycling. A good salesman who knows his product and knows how to make quality recommendations theoretically deserves a higher commission than a poor salesman. Of course, one-price pricing is probably viewed as more fair from a customer point of view although in car stores people still try to negotiate the price.

What do people on the forum feel is a fair margin on a motorcycle sale, or should fairness not enter the picture?

As always, a "fair margin" is the point at which a (hopefully reasonable) seller and (hopefully reasonable) buyer execute a transaction. Every buyer and every seller has an independent and sometimes different view of that "transaction point". No one else can really decide this for them.
 
If I am putting myself in a dealer's position and would run a business, I would expect at least a 12% gross margin for a motorcycle sale.
It all depends what the mechanics of the transaction with the OEM are. If I have to pay and finance my inventory and may have bikes sitting on my shop floor for 6 months or longer, anything less would be suicidal.

As a customer, of course, you want the "best deal". You buy a car and you want $125.- "over invoice". While "invoice" is not what the dealer pays, there is little left. How does he pay his overhead and the salesman?

Very realistic point of view for paragraph #1.

Paragraph #2: One of the ways a car dealer is substantially different is with something known as "absorption rate". If your fixed op's (a.k.a. Parts and Service) is capable of paying all of the overhead in a car store you have a 100% absorption rate. You have to be extremely good to pull this off. However, if you can do 100% absorption every car over the curb represents bonus money so to speak. For car dealers big enough and good enough you may see 200 to 400 units per month being moved. The gross profit margin may be somewhat slim despite possible spiffs and/or holdback money but given the fact the place was paid for due to absorption the dollars can be pretty reasonable.

However, like any business dollars are not necessarily the entire game. You need percentages to cover for mistakes and whatever. Look at big oil. Newspapers always publish the big profit number from a dollar point of view. They never state the gross margin in the headline or the rest of the story usually. The somewhat low gross margin will not shock and setoff the average citizen as they can't relate to that. The billions of dollars will however set off a storm of protest just as quick as a wildfire in Arizona. You really need that gross profit margin before you say a business is "raking it in".

To my knowledge there is no such thing as a motorcycle dealer who runs a 100% absorption rate. Given the fact many motorcycle service departments lose money on an annual basis it is critical unit sales cover for the rest of the store. It's a much tougher business than people generally think.
 
As always, a "fair margin" is the point at which a (hopefully reasonable) seller and (hopefully reasonable) buyer execute a transaction. Every buyer and every seller has an independent and sometimes different view of that "transaction point". No one else can really decide this for them.

Absolutely true. What really counts is your average gross profit margin, not a unit by unit number. What was your monthly average? How did Q1 average? How about Q2 etc.? Some deals are losers and some are winners and the rest fall in the middle somewhere. Many things come into play for a dealer. The customer need not worry about much except if he was happy with the price.
 
If I am putting myself in a dealer's position and would run a business, I would expect at least a 12% gross margin for a motorcycle sale.
It all depends what the mechanics of the transaction with the OEM are. If I have to pay and finance my inventory and may have bikes sitting on my shop floor for 6 months or longer, anything less would be suicidal.

As a customer, of course, you want the "best deal". You buy a car and you want $125.- "over invoice". While "invoice" is not what the dealer pays, there is little left. How does he pay his overhead and the salesman?

Here are a few answers to your question...there are many more:

1. Salesman are usually paid a commission against a draw. Commission is usually a percentage of the gross profit on products sold...say 15%.
2. $290.00 fluid changes (called first service)
3. $500.00+ fluid changes w/valves and sync (labor rates of $75 to $100+ with wrench getting $15.00 to $25.00 an hour)
4. $900.00 top cases that cost dealer $500.00+
5. $16, $18 or $20.00 oil filters
6. $58.00 for liter of gear lube
7. $18.00 spark plugs
8. $350.00 tank bags
9. $1,000 jackets and $900.00 pants
10. $1,500 exhaust systems
11. $2.37 bolt and 85 cent nut with a 31 cent washer
12. $28 gaskets
13. $900+ per bag panniers
14. $2,000++ final drive units
15. $120.00 service manual CD
16. $200 battery
17. $20 light bulbs
18. Tires and on and on

I'm not complaining...just saying you pay to play and dealer is in business to stay in business. Again, profits from a bike sale can be just a drop in the bucket when it comes to the overall revenue stream from each and every customer. You have to look at the entire product and service line to market when calculating the potential for profit.
 
Here are a few answers to your question...there are many more:

1. Salesman are usually paid a commission against a draw. Commission is usually a percentage of the gross profit on products sold...say 15%.
2. $290.00 fluid changes (called first service)
3. $500.00+ fluid changes w/valves and sync (labor rates of $75 to $100+ with wrench getting $15.00 to $25.00 an hour)
4. $900.00 top cases that cost dealer $500.00+
5. $16, $18 or $20.00 oil filters
6. $58.00 for liter of gear lube
7. $18.00 spark plugs
8. $350.00 tank bags
9. $1,000 jackets and $900.00 pants
10. $1,500 exhaust systems
11. $2.37 bolt and 85 cent nut with a 31 cent washer
12. $28 gaskets
13. $900+ per bag panniers
14. $2,000++ final drive units
15. $120.00 service manual CD
16. $200 battery
17. $20 light bulbs
18. Tires and on and on

I'm not complaining...just saying you pay to play and dealer is in business to stay in business. Again, profits from a bike sale can be just a drop in the bucket when it comes to the overall revenue stream from each and every customer. You have to look at the entire product and service line to market when calculating the potential for profit.

Some of these items you list seem to be very typical for certain motorcycle brands/dealers and very untypical for others. What dealer, other than HD will sell a $1,500 exhaust sytem to a new bike customer??
And what Ducati dealer will sell a $900 set of "panniers".
And knowing the desire of BMW owners to perform all of their service work, even for a new bike themselves - as evident in may other posts in this forum - a BMW dealer will not have this revenue stream.

Seriously, if making money with a bike dealership would be a walk in the park, I would do it. I had the chance. Crunching the numbers ,including the initial investment, which has to be financed, I decided against it.
Even considering that there was a restaurant in the mix which would have helped to spread the building overhead.
I admire motorcycle dealers for their bravery to stay in business and put up with us as customers who think they all are entitled to a better deal than the guy who was in the shop just before them.
 
Some of these items you list seem to be very typical for certain motorcycle brands/dealers and very untypical for others. What dealer, other than HD will sell a $1,500 exhaust sytem to a new bike customer??

Actually, many dealers. Exhaust systems sell well and they are usually expensive.

And knowing the desire of BMW owners to perform all of their service work, even for a new bike themselves - as evident in may other posts in this forum - a BMW dealer will not have this revenue stream.

The vast majority of owners do not self-maintain. We have many customers who do not know how to change a turn signal bulb. In addition, we did approximately 4,000 repair orders per year. And, the headaches that go along with that number. Say you have an average of 4 labor lines per repair order and you generate 4,000 repair orders a year. That's a MINIMUM of 16,000 opportunities to make a mistake!! To say nothing of the mistakes that can be made at a service counter. And, yes it CAN be fun!!

Seriously, if making money with a bike dealership would be a walk in the park, I would do it. I had the chance. Crunching the numbers ,including the initial investment, which has to be financed, I decided against it.
Even considering that there was a restaurant in the mix which would have helped to spread the building overhead.
I admire motorcycle dealers for their bravery to stay in business and put up with us as customers who think they all are entitled to a better deal than the guy who was in the shop just before them.

Car OEM's are very reluctant to allow people to buy a car store if they have zero car bussiness experience. It does happen but it's not common. Motorcycle OEM's are probably a bit more permissive in that respect but an interesting fact remains: Many car stores that own a bike store are not able to keep the bike store profitable. Although the 2 businesses are almost identical the differences can kill you if you don't have a motorcycle skill set. Having a well run dealership, or multiples thereof, can be exceptionally fun and challenging at the same time. I for one love the business!
 
Some of these items you list seem to be very typical for certain motorcycle brands/dealers and very untypical for others. What dealer, other than HD will sell a $1,500 exhaust sytem to a new bike customer??
And what Ducati dealer will sell a $900 set of "panniers".
And knowing the desire of BMW owners to perform all of their service work, even for a new bike themselves - as evident in may other posts in this forum - a BMW dealer will not have this revenue stream.

Seriously, if making money with a bike dealership would be a walk in the park, I would do it. I had the chance. Crunching the numbers ,including the initial investment, which has to be financed, I decided against it.
Even considering that there was a restaurant in the mix which would have helped to spread the building overhead.
I admire motorcycle dealers for their bravery to stay in business and put up with us as customers who think they all are entitled to a better deal than the guy who was in the shop just before them.

Not sure how far you looked into operating a motorcycle dealership..but here are a few routine items you questioned for BMW and Ducati bikes and yes people buy them. And I agree with Billy, BMW shops are chuck full of customer bikes, there for routine maintenance as well as repair. The vast majority of BMW riders do not do their own service work (other than possible crankcase oil changes) regardless of what you might assume from reading this forum.

I think you were smart in not entering the motorcycle business, especially one tied to a restaurant, neither is an easy path to success.


Exhaust - Staintune Collector / Muffler System - BMW R1100S
Staintune exhausts not only increase your bike's performance, but improve the way it looks and sounds. $2,250.00

Akrapovic Street Legal Exhaust System BMW S1000RR 2010-2013 MSRP $2,094.95 - $2,949.95

Jesse luggage for GSA - $1590

Full set aluminum luggage with locks, mounts from BMW has a $2,000 area potential.

Saddlebags / Panniers - 73 Liters - Ducati Multistrada 1200 - by Ducati Performance - $1,210.40
 
As the consumer, your job is to get the best price to maximize the value of your income.

Good point. But you need to maximize the value of your purchase as well. And that does not always boil down to dollars. Take care of those that take care of you. Why give business to someone who really shows no desire to take care of your long term needs? That's rewarding someone who doesn't deserve to be rewarded.
 
Good point. But you need to maximize the value of your purchase as well. And that does not always boil down to dollars. Take care of those that take care of you. Why give business to someone who really shows no desire to take care of your long term needs? That's rewarding someone who doesn't deserve to be rewarded.

And, how many of those "long term" dealerships has BMW taken care of? The motorcycles aren't an investment, they're a product. If one dealer or brand can't fill your repair needs go to another. That's how I ended up with BMW back in 1985. At that time, it was really difficult to get repair parts for a few year old Japanese bike, but BMW parts were available, at least, by mail order. However, my "local" dealership has changed several times in the 28-yrs;

Shollys - Harrisburg, PA (DEAD)
Franks BMW - Mountville, PA (DEAD)
Country Cycle - Williampsport, PA (DEAD)
???BMW - Windber, PA dealership (DEAD)
Heritage BMW - Mckeesport, PA (DEAD)
Velocity - Harrisburg, PA (OPERATING)
European MC of Pgh - Pittsburgh, PA (OPERATING)
Hermy's - Port Clinton, PA (OPERATING)
Kissel's - State College, PA (OPERATING)

Of that list, only Hermy's is a long term BMW dealer...................
 
And, how many of those "long term" dealerships has BMW taken care of? The motorcycles aren't an investment, they're a product. If one dealer or brand can't fill your repair needs go to another. That's how I ended up with BMW back in 1985. At that time, it was really difficult to get repair parts for a few year old Japanese bike, but BMW parts were available, at least, by mail order. However, my "local" dealership has changed several times in the 28-yrs;

Shollys - Harrisburg, PA (DEAD)
Franks BMW - Mountville, PA (DEAD)
Country Cycle - Williampsport, PA (DEAD)
???BMW - Windber, PA dealership (DEAD)
Heritage BMW - Mckeesport, PA (DEAD)
Velocity - Harrisburg, PA (OPERATING)
European MC of Pgh - Pittsburgh, PA (OPERATING)
Hermy's - Port Clinton, PA (OPERATING)
Kissel's - State College, PA (OPERATING)

Of that list, only Hermy's is a long term BMW dealer...................

That's quite a few stores. I'm not familiar with PA to any degree. What is your definition of local?

What do you mean by your sentence: "And, how many of those "long term" dealerships has BMW taken care of?" BMW NA is not concerned with taking care of its customers?
 
And, how many of those "long term" dealerships has BMW taken care of? The motorcycles aren't an investment, they're a product. If one dealer or brand can't fill your repair needs go to another. That's how I ended up with BMW back in 1985. At that time, it was really difficult to get repair parts for a few year old Japanese bike, but BMW parts were available, at least, by mail order. However, my "local" dealership has changed several times in the 28-yrs;

Shollys - Harrisburg, PA (DEAD)
Franks BMW - Mountville, PA (DEAD)
Country Cycle - Williampsport, PA (DEAD)
???BMW - Windber, PA dealership (DEAD)
Heritage BMW - Mckeesport, PA (DEAD)
Velocity - Harrisburg, PA (OPERATING)
European MC of Pgh - Pittsburgh, PA (OPERATING)
Hermy's - Port Clinton, PA (OPERATING)
Kissel's - State College, PA (OPERATING)

Of that list, only Hermy's is a long term BMW dealer...................

Something else MAY be at play here. You probably have little to no need for a dealer. For those with less knowledge a good dealer becomes like a valued partner. A bad dealer becomes a waste of time. The fact that BMW dealers tend to be enthusiasts is a good thing. The fact that BMW dealers tend to be enthusiasts is a bad thing. Sometimes a very bad thing. Like any job you need skill sets. Not many have the skills to run a busy dealership. Just like many can't run an accounting practice or operate on people. Every one has their own skill set and people may need a helping hand for their hobby's. That's where a good dealer comes in handy.

Almost everyone who enters the motorcycle business starts out as an enthusiast. Many never make the transition to motorcycle business person. And, that's where the customer loses. And, maybe that is why you have had the need to travel the countryside to find a dealer?
 
Well stated Billy. Back in 1980's I did part time sales work for a very professional dealership. At that time they sold the top four Asian brands, BMW and HD. They had an excellent business model and it remains so to this day. However, they haven't carried BMW since '94 and now have only HD, Honda and Kawasaki.

The second dealer I was associated with was just the opposite when it came to having a sound business model and philosophy. It wasn't one aspect that closed this business. It was a combination of aliening customers with shoddy repair work, to some extent their pricing model on parts and accessories and a total lack of money management. They went so far as to alienate other BMW dealers when it came to inventory sharing (trading) and a general inability to build profitable relationships for all involved. My position was a perfect example...I worked 10 to 20 hours a week, IF I WANTED TO. I was there to be the BMW guy, but BMW was not really on their radar. It was so loosely ran that my showing up on an intermittent basis was quite acceptable. They had the BMW franchise for a number of years, but never developed it to any extent. They had an adversarial relationship with the BMW rep as well as their offsite parent owner.

It's amazing they lasted as long as they did. And they lasted that long because they offered new models at $500.00 over invoice - up front! All the customer had to do was act interested in the unit and the low offer, by the dealer, was made. They would sell AT A LOSS if a model sat there too long (some were there over two years). I found this a crazy way to do business, but they thought metric sales were the only profit center with meaning. Eventually they lost the franchise....I thought BMWNA bent over backwards to help them, but they were a lost cause.

So there you have two opposite examples of spectrum. And yes, you'd pay more at the first example dealership...and still can. The second example is now gone and many of their customers are thankful...and/or should be.
 
Billy, the history is that plenty of good dealers are gone thanks to BMW NA.
For years, BMW forced them to be single brand dealerships or they wouldn't approve them.
And they had to completely renovate the buildings to conform to the new look or they would lose the dealership.

I hope that has changed, as my local H-D dealership recently became H-D/BMW.
 
Billy, the history is that plenty of good dealers are gone thanks to BMW NA.
For years, BMW forced them to be single brand dealerships or they wouldn't approve them.
And they had to completely renovate the buildings to conform to the new look or they would lose the dealership.

I hope that has changed, as my local H-D dealership recently became H-D/BMW.

Given the fact that NA is located in Woodcliff Lake and Bergen County had no representation for years it may have been I do think they made a good choice with Bergen H-D. I don't know this for fact but with the overall decline in the motorcycle business I imagine Bergen was happy enough to take on BMW. Something that may have not occurred had H-D kept increasing sales. Bergen's good people so hopefully they can build a BMW staff with some depth in a reasonable time frame. It ain't easy. A stand-along BMW store in Bergen County would basically equal suicide and I guess even BMW realized that at some point in time. At one point they were actually running motorcycle sales through a BMW car store up on 17 South in Ramsey. That mix doesn't typically work well although a few have pulled it off.

The old time BMW stores were pretty much a disaster. BMW NA really needed to address that issue but they have probably gone too far especially so in today's market. Having said that if more dealers listened to some of the good information BMW has to hand out it would benefit the dealer network as a whole. IMO. Most of BMW's plans were difficult to pull off when the economy collapsed and many stores did pay the price. How much of that was due to poorly managed stores versus the economy is extremely difficult to tell.
 
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