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Powersports Industry Offers Retailers And Restylers Increased Profit Potential

Spring is a seasonal gold mine across many aftermarket segments and an ideal opportunity for retailers and restylers to take advantage of increased foot traffic and cash in. There’s certainly no shortage of enthusiast activities to fuel a consumer spending spree.

 

For example:

  • Off-road racing fans are savoring the intensity of a short-course dirt track and tinkering with their own 4x4 parts in the garage
  • The Jeep® community is hitting the trails top-down style, hoping to get stuck and put that premium winch to good use
  • Open-road adventure seekers have their campers in tow, excited to explore the great outdoors
  • Gear heads are making final modifications to get their whips road ready for the summer season

 

But the powersports market, comprised of ATVs, side-by-sides (SxS), motorcycles, powerboats, personal watercraft (PWC), and snowmobiles, has a diehard group of recreational enthusiasts that often is overlooked as a prime target and means for diversification within the aftermarket. It’s a stable industry with healthy margins and a loyal customer base — and retailers and restylers should be tapping into this pool of increased profit potential.

“(Powersports units) need to be towed, hauled or trailered, and you need a truck in order to do that, so there’s strong customer crossover between truck-accessory shops and the powersports market. Keystone offers products for both,” said Tom Gross, a powersports industry veteran of nearly 30 years and owner of Uni Filter, a manufacturer of high-performance polyurethane foam air filters and a top brand choice among serious off-roaders.

Keystone Automotive Operations, the leading and largest wholesale distributor of automotive aftermarket parts in North America, teamed up with two of its valued partners in the powersports industry, Terracross and Uni Filter, to educate retailers and restylers about the current state of business, market trends, crossover and diversification opportunities, as well as profit potential.

Side-by-Sides Leading the Way

Glenice Wilder, VP of Powersports EFG Companies, said the first quarter of the 2016 fiscal year was off to a positive start, as unit sales, dealer profitability, and maintenance service repairs are all trending upwards. But SxS sales are the true story, taking the industry by storm and nearly cannibalizing a once-dominant ATV market. According to Motorcycle & Powersports News, UTV sales are estimated to be in the neighborhood of 400,000 units, which is significantly higher than its ATV counterpart.

“The UTV has become a popular choice among families, sportsmen and off-roaders alike,” said Joe Duncan, owner of Terracross and a 20-year veteran of the industry with extensive experience in the snowmobile and SxS market segments. “It’s an estimated two-billion dollar segment that is expected to nearly double over the next two years. Whereas ATVs are a highly individualized activity, an entire family can enjoy a UTV experience together during all 12 months of the year, and so we’ve seen a shift (in demand),” he said.

Market data suggests that powersports consumers have one of the largest discretionary budgets, spending thousands of dollars on the unit itself and then several thousand more in aftermarket upgrades — not unlike many truck or Jeep consumers who are eager to customize their rig at the point of purchase with LED lighting, side steps, recovery items or front-end protection. “And that discretionary budget doesn’t end there. It includes an increased rate of replacement parts and maintenance service repairs associated with powersports recreation,” explained Duncan.

Do you see dollar signs yet? According to Steve Nessl, Yamaha ATV/SxS group marketing manager, “The SxS market is evolving, and that’s a good thing for dealers and consumers who will have more selling and buying options.” The result: An opportunity for retailers and restylers to attract new customers, diversify their business and share in the powersports profits — from aftermarket upgrades and personal equipment to repair and maintenance products.

Know Thy Market

Duncan of Terracross offered shop owners some candid advice to consider while exploring diversification opportunities in the powersports industry. “Powersports is a specific niche, so you’ve got to know the players, be knowledgeable about the units and aftermarket products, and share a passionate appreciation for the lifestyle,” said Duncan. “First rule of thumb is to know thy market,” he added. “What kind of powersports are in demand within your immediate area? Is there a body of water, a motocross track or trails?

Next, you want to get yourself involved in the local sport — attend an event, sponsor an event, talk to consumers at the event. Pick their brains about what products they’d like to see offered in your shop. You have to know what’s sellable! This is a loyal group of enthusiasts, and if you support them, they’ll support you.” Uni Filter’s Gross also suggested a handful of core products that will always be in demand among powersports users, including maintenance items, such as tires, filters, spark plugs, chains and belts.

Tap Into Sales and Profit Potential

“On average, accessories spending is about $2,000 the minute (customers) buy the (UTV). They may spend $6,000-$7,000 in accessories over the lifetime of the unit. If it’s being used in the racing circuit, guys could be spending $50,000-$60,000 when all is said and done between the engine, tranny and differential work,” said Terracross’ Duncan. “Bottom line, there’s a lot of sales potential and strong margins on powersports products, which help offset some of the margin pressures on the aftermarket side of the business,” added Gross. “Guys are towing their toys, so it’s a natural add-on sale for truck-accessory shops.”

And it doesn’t stop there! Above and beyond accessorizing, ATVs and UTVs virtually assure consistent work for service repair shops. “The rise of SxS sales represents plenty of tire changes, service work, parts and accessories profitability for dealers to cash in on,” reported Motorcycle & Powersports News. This provides retailers and restylers an opportunity to showcase the significant range of skills its technicians have to service crossover consumers in both the aftermarket and powersports industries.

Partner with a Distributor

“We’re always looking to bring on more enthusiasts and expand our powersports network,” said Duncan. But the powersports industry has a strict distribution model, so diversification must be done appropriately. Duncan and Gross suggested that retailers and restylers identify a target segment, conduct preliminary market research to determine what lines and products will best suit the needs of local consumers, and lean on the expertise of key manufacturers within the powersports space to direct them to the right distribution partner. “Keystone is dedicated to expanding the reach of the powersports industry by getting our automotive aftermarket customer base excited about and involved in the market,” said Jason Shatrowskas, Keystone category manager. “We carry dozens of powersports lines, many of them very strong crossover brands that make it an easier transition into this space for our automotive aftermarket customers.”

Diversification doesn’t need to be drastic. It can be as simple as stocking popular maintenance parts or as complex as broad inventory and repair service. Either way, consider the impressive opportunity that awaits. Let Keystone be your go-to team, helping you explore a new market, expand your customer reach and increase your company’s profitability.

 

Recent Articles

LKQ finalized deal to acquire Warn Industries

Chicago, IL (November 1, 2017) - LKQ Corporation (Nasdaq: LKQ) today announced that it has finalized the acquisition of Warn Industries, Inc. (“Warn”) a leading designer, manufacturer and marketer of high performance aftermarket equipment and accessories. Warn was previously owned by Dover Corporation (NYSE: DOV). Warn will be a part of LKQ’s Specialty Segment, Keystone Automotive Operations, Inc. (‘Keystone”)

“Finding new and better ways to serve the needs of our customers is a priority for Keystone. We are excited about the value and capabilities Warn brings to our customer centric approach to service,” said Bill Rogers, Vice President and General Manager of Keystone. “Their leadership position in the market and premium iconic brand give us the ability to drive our long-term strategy of growing share in our core markets and developing viable points of entry into adjacent spaces that show promise.”

Warn offers a broad product line of premium winches, hoists, locking hubs and bumpers and serve specialty retailers and distributors globally. Warn has a long history and reputation of developing the highest quality most technologically advanced products in the industry. The red W logo is omnipresent where rugged dependable products are required. From mountaintops to worksites and deserts to disaster areas, Warn is the product enthusiasts and professionals depend on.

“The team at Warn is very excited to be part of LKQ / Keystone,” said Eric Banks, Warn Vice President of Operations. “Our approach to customers and market opportunities are very similar. We believe that by serving our customers best we serve the needs of the entire supply chain better. They know our market space and have been leaders in it for many years. Being supported by a company that can bring new and critical resources to us means that our customers and all of our channel partners will benefit,” added Banks.

Warn will be run in an autonomous way within LKQ’s Specialty Products Group and maintain its operational presence in Oregon. “It is fantastic to have a very capable management team and experienced workforce in place there. Their infusion of talent to our organization will contribute significantly to all our working groups,” said Kyle Shiminski, Vice President of Keystone’s Specialty Products Group. “Their passion for their products and customers will help ensure that we continue to provide the highest quality products and service experiences people have come to expect,” he concluded.

“The collective team will be focused on maintaining the highest level of customer focus and driving the growth initiatives the organization has already developed,” said Rogers.

About LKQ Corporation
LKQ Corporation (www.lkqcorp.com) is a leading provider of alternative and specialty parts to repair and accessorize automobiles and other vehicles. LKQ has operations in North America, Europe and Taiwan. LKQ offers its customers a broad range of replacement systems, components, equipment and parts to repair and accessorize automobiles, trucks, and recreational and performance vehicles.

About Keystone Automotive Operations
Keystone is the leading distributor and marketer of aftermarket automotive products and services, uniquely positioned to offer customers and suppliers substantial scale, the most comprehensive inventory selection in the industry, high levels of customer service, and innovative marketing support. Keystone is committed to expanding its offerings to meet the ever-growing needs of its customer base, providing them what they need, when they need it most.

Keystone Automotive Operations Showcases Parts VIA at SEMA

EXETER, PA (October 23, 1017) – Parts Via is a new jobber friendly eCommerce solution developed by Keystone Automotive Operations that connects brands, through a unique network, to retail outlets and consumers. It is a web-based solution which creates a seamless transaction environment built over a supply chain network and infrastructure that can deliver anything from light bulbs and exhaust systems to tow bars and truck bed products to just about anywhere in North America next day.

According to Eric Fairchild, at Keystone. “Parts Via gives consumers the convenience of purchasing authentic branded products online with the choice to have them shipped to one of Keystone’s many qualified network retailers and installers. Parts Via provides consumers with unparalleled access to local services, technical expertise and installation support that traditional online purchases do not provide.”

Parts Via creates a strategic alliance between brands, retail outlets and consumers using Keystone’s technology, inventory, warehouses and fleet to enhance the shopping experience for consumers while growing sales for the Parts Via partner and dealer network. It enables and helps businesses capture sales where and how consumers shop in the fastest growing sales channel, always pulling the local retail outlet into the transaction.

“How we make it work is simple,” says Fairchild. “A consumer purchases an authentic branded product from their favorite branded website. We give them the choice to ship their purchase to their home or pick it up at a local network dealer’s location, gaining access to installation and service.” In either case the local establishment participates.

Keystone’s supplier partner’s website serves as the point of consumer engagement and Parts Via coordinates efforts to secure the sale and channel post-transaction activity (pick up in store and installation) with local merchants (network dealers). Parts Via bridges the customer engagement gap that leaves local brick and mortar retail outlets disconnected in most e-commerce transactions.

On behalf of the supplier partner and the retailer (network dealer), Parts Via develops the eCommerce components, runs transactions, manages distribution and oversees customer support. “This type of coordinated network partnership is unique and made possible only through Parts Via,” says Fairchild. “After a year’s worth of testing with very positive results and a ton of data and testimonials, we look forward to expanding our network with new suppliers and network dealers in the coming months,” he concludes.

Suppliers and retailers, dealers, installers and jobbers interested in learning more about Parts Via can visit www.partsvia.com.

LKQ Corporation to Acquire Aftermarket Business of Warn Industries, Inc.

Chicago, IL (October 23, 2017) - LKQ Corporation (Nasdaq: LKQ) today announced that its Specialty Segment, Keystone Automotive Operations, Inc. (‘Keystone”), agreed to acquire the aftermarket business of Warn Industries, Inc., a leading designer, manufacturer and marketer of high performance vehicle equipment and accessories. Warn is a wholly owned subsidiary of Dover Corporation (NYSE: DOV).

Established in 1948, Warn’s aftermarket business offers a broad product line of winches, hoists, locking hubs and bumpers, with over 350 employees serving specialty retailers and distributors globally. Holding over 130 patents, Warn has a long history of developing the highest quality, most technologically advanced products in the industry.

“Warn’s leadership position and premium iconic brand offer our Specialty Products Group the ability to drive our long-term strategy of growing our core markets and developing viable points of entry into adjacent markets,” said Bill Rogers, Vice President and General Manager of Keystone. “LKQ and Warn will be committed to continuing delivery of great value to our customers and to growing our combined businesses to higher levels.”

The transaction is expected to close in the fourth quarter, subject to customary closing conditions.

About LKQ Corporation

LKQ Corporation (www.lkqcorp.com) is a leading provider of alternative and specialty parts to repair and accessorize automobiles and other vehicles. LKQ has operations in North America, Europe and Taiwan. LKQ offers its customers a broad range of replacement systems, components, equipment and parts to repair and accessorize automobiles, trucks, and recreational and performance vehicles.

Keystone Automotive Operations acquires Topline Systems, Inc.

 

Exeter, PA. Keystone Automotive Operations has announced the acquisition of Topline Systems, Inc., a dealer and retail software development company that specializes in dealership/shop management and point of sales products that include comprehensive sales, service and parts management modules. “Our interest in looking at software as a solution for our customers began when we tried to think of new and improved customer support strategies and ways we could help our customers grow. What are the challenges our customers face that we can help them overcome?” states Keystone Business Leader, Bill Rogers.

“After hundreds of customer visits in the markets we serve we determined that inventory management, procurement, sales processes, and fundamental reporting and analytics were areas that many of our customers struggle with. The options available to them are either complicated and expensive, or too simplistic and ineffective. We felt a robust and easy to use alternative was needed and found Topline’s suite of products a perfect fit,” adds Rogers.

Keystone and Topline have a long history of working together, collaborating on a variety of projects. “We are excited about continuing our work with Keystone in a much more significant way,” comments Topline president, Steve Karafas. “The availability of capital and other resources they bring to the relationship will result in expanded features and benefits for existing users and help our emerging presence supporting customers in new markets as well.”

The foundation of Topline’s software is firmly rooted in the owner-manager-doer mindset. It was developed at a dealership with a retail store and a service/installation shop - for that business, by that owner. The same daily decision making process used to run the business was engineered into the software and has application well beyond the market it was initially intended to serve. This thoughtful - “I’ve actually done this work before” - approach has resulted in a feature-rich software solution that is affordable, easy to install, and easy to use.

“There are hundreds of dealers in North America using the Topline program today and we intend to keep things business as usual for them. They will experience no interruption in services or be required to work any differently than they have in the past. In fact, our intention is to operate Topline independently to maintain the existing securities and confidentiality that all of Topline’s customers and business partners have enjoyed,” commented Rogers. “We are looking forward to expanding on the foundational programming solutions that Topline has developed and applying them to businesses in other markets with similar needs, including the automotive aftermarket where we see a significant opportunity.”

Keystone intends to infuse capital and resources into the company to help it continue developing customer satisfaction solutions in the markets they serve. “For over 50 years, Keystone / NTP-STAG has been committed to partnering with our customers to not only provide them the broadest and deepest inventory selection and world class fulfillment capability, but also helping them continue to grow and succeed by offering end-to-end marketing solutions and innovative e-commerce solutions,” says Rogers. He adds, “The addition of Topline allows us to continue to offer new ways to help our customers grow and succeed by providing value based, high quality, state of the art business solutions, including Dealership Management, Point of Sale, Service, and Parts Management.”

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