dealership_floor

There’s nothing quite as nerve wracking, frustrating, and ultimately satisfying as completing a big ticket purchase.  Whether that’s the purchase of a house, a car, or even a motorcycle.  In this article I’m going to offer you some tips for getting to that finish line faster and with more money left in your pocket, for getting out and enjoying your new ride!

If you are one of those sadistic people who actually enjoy the back-and-forth chess game of wheeling and dealing with a dealership’s sales people and sales managers, then you can feel free to skip this article.  However, for the rest of us that only buy a brand new motorcycle once every few years, I will be offering some tips to help level the playing field against those sales managers that complete this process multiple times per day, all year long.  These tips should help you make a simple straight forward purchase, with a reasonable sales manager for a good price, and minimize the frustrating time spent haggling!

 

We should first consider motorcycle dealerships.  There are 2 basic types of motorcycle dealerships:

  • Boutique dealerships
  • Big-Box dealerships.

Boutique dealerships generally deal with a higher-end brand of motorcycle, and very likely only that brand, or a couple of similar brands (BMW, Ducati, Harley-Davidson,etc…).  These dealerships do not move the kind of volume that the Big-Box dealerships do, and as a result tend to rely more on expertise, parts and service than raw sales.  As a result, you will likely find that these dealers have tighter margins on brand new motorcycles, however the higher-end buyers are not as likely to haggle bottom rung prices anyways.  The Boutique dealership will tend to invest more in their customer, to build a relationship and ensure the customer returns to them for parts and service in the future.  Boutique dealerships often retain sales people and service techs over the years, as brand and model expertise is one of their primary offerings.  If you want to have a good relationship with a dealer, a smooth buying experience and aren’t as concerned about getting the lowest price you can, then Boutique dealerships are a good choice.

 

On the other side of the coin are Big-Box dealerships.  These dealerships stock multiple makes and models of motorcycles, including on-road, off-road, ATV, and sometimes even watercraft, snowmobiles and go-karts.  The Big-Box dealership is all about moving inventory in volume, and while they would like to retain customer loyalty for parts and service and accessory purchases, their business model leaves slim chances for that.  As motorcycling can be very seasonal, many dealerships cycle through sales and service tech employees each season.  Since there is little need for expertise in this business model, there is little need to hire sales people and service techs that have much product specific expertise.  The Big-Box dealership will scrimp and save by hiring low wage employees in these slots, and have them managed by knowledgeable retained employees (“Sales Manager”, “Service Manager”, “Parts Manager”,etc..).  These dealerships have larger profit margins on their motorcycles, because they can purchase and move high volume. However, since they generally have poor customer loyalty, they will fight to keep as much of that profit margin as possible!  If you don’t particularly care about the dealer relationship, and are buying a motorcycle that you are comfortable servicing yourself most of the time, and want the best opportunity for a good deal, then the Big-Box dealership is the choice for you.  This article’s tips will be most relevant to the Big-Box dealership model, however, even Boutique buyers could save some money using tips here.

 

With a better understanding of dealerships, let’s get into the tips for helping you lock in a good price on your new motorcycle!  In the below examples, I’m going to use a 2014 Ninja 1000 ABS as the motorcycle model we’re going to buy.  (Perhaps because it is exactly the motorcycle I most recently purchased)

2014 Ninja 1000 ABS

  • Online research and shopping
    • Figure out the MSRP of the motorcycle by going to the manufacturers website:  2014 Ninja 1000 ABS = $11,999
    • Figure out the MSRP of any accessories you would want to purchase for the motorcycle, and bundle into the purchase price manufacturers website – accessories:  Hard Bags = $1,269.75

    (Combined MSRP:  $13,268.75)

    • Determine if there are any deals or promotions from the manufacturers website:  3.95% financing option.
    • Check local advertisement locations for what local dealers are offering on this model, and include http://www.cycletrader.com:  Best deal shows

    2014 Ninja 1000 ABS with hard bags included for $11,999

    • Costco Powersports auto program
      • Most Big-Box dealers are partnered up with Costco to bring in business and this deal is generally about 10% off the motorcycle purchase, as well as 20% off accessories.   So call a few dealers with a fake name and your phone number blocked (you don’t want to play your hand too early), and ask them for the Costco membership price on the motorcycle you want:  $10,800 for the motorcycle, and 20% off accessories $1,015.8 =

      Costco Deal with hard bags $11,815.8

      • If you decided to go this route, pay the $55 Costco membership, and go here to get your legit deal and ensure you get your Costco Cash bonus (right now it is $200).  (Note: this is no longer Kawasaki specific )  https://www.costcoauto.com/powersports/default.aspx
    • Another research option is to search the web for an “Invoice Report” specific to the motorcycle you want to purchase.  You should find that most dealers have a 10%-20% profit margin just off MSRP.  Here’s an example of what a Dealer’s Invoice Report looks like from when I purchased an SV650:

2007 SV 650 ABS Dealer Invoice Report

  • So now you have an idea of what MSRP would be, and what the dealer’s cost should be (let’s assume 15% MSRP profit), which gives you your negotiating window:

2014 Ninja 1000 ABS with Hard Bags

(Estimated Cost: $11,279) to (MSRP: $13,269)

  • But wait!  There’s Fees…
    • None of those prices you saw on Cycle Trader, or were quoted over the phone mean squat, if they didn’t specify any included “fees”.  You see, dealerships will try to convince you that there are “fees” which must be paid for a new motorcycle:  Freight, Set-up, Documentation, etc…
    • The truth is that “fees” are simply used as a negotiating tool by the dealership, to re-coup their profit margin.
    • Most Big-Box dealerships purchase motorcycles in a “lot” and get heavily discounted shipping and include the cost in their purchase price.
    • Most manufacturers only allow dealerships a modest set-up or unpacking fee (Like $50-$100 un-crating and adding fluids and battery).  This would already be buffered into a sale at MSRP, and shouldn’t be in addition to that price.
    • Each state has their own Tax/Title/Registration fees, and dealerships are allowed to charge the buyer a modest “documentation fee”, of like $50-$75 dollars for completing and submitting required DMV paperwork.  (Dealers should never be charging you $150 or more for “documentation”. Check your state’s DMV website, which should list the allowed fee amount)
    • Be very careful with any deal you find, as the dealerships will often add fees back into the price in the amount of hundreds of dollars, which are really not justifiable.  In the examples provided here, the Costco deal I found at $11,815.8 was better than the Cycle Trader deal I found at $11,999.  However, that dealership offering the Costco deal was adding back in $650 in fees and didn’t even have the bike in stock.  The deal from the Cycle Trader dealership had no fees and I could pick up the bike that day!
    • With all of the above said about fees, it’s simply important to understand that many dealerships do this, and you need to include this as part of your consideration and negotiation tactics.  Don’t bother getting caught up in arguing whether they should or shouldn’t, or how much they charge.  Ultimately each dealer will attempt to sell a motorcycle for as much profit as they can, while still bringing in as much business as they can.  Some dealers will want more business, and offer smaller or no fees at all, and other dealerships will feel they can charge exorbitant fees in their market, and customers will still pay them.

2014 Ninja 1000 ABS

 

So now you know about dealer costs, Costco buying programs, and bogus fees.  You know the profit margin range for the motorcycle you want, and know the maximum amount you should pay, and the lowest amount the dealer could likely sell for and still make a profit.  This is where you get into negotiating, and this is where it gets very difficult.  I will offer some basic tips from my experiences, but understand that you are going up against a sales manager that makes and breaks deals multiple times per day, every day as his job.  Do your best to understand what the dealership and sales manager want, be up front and candid about what you want, and be ready to walk away if you are getting stone-walled.  Don’t let a dealership pressure you into a purchase you don’t want to make.  With that said, let’s get into some tips for negotiating your purchase…

 

  • You are best served to have your money figured out ahead of time.  If you can’t make the purchase in cash from your bank account, then get financing through your bank or credit union ahead of time.  There are sometimes exceptional financing offers from the manufacturer, but you will need very good credit to qualify for those, and once you start dealing with financing at a dealership, then you will have both the Sales Manager and the Finance Manager trying to find ways to make money off you!  (In this case Kawasaki was offering 3.95% financing deal, but I went with my own financing at a 2% higher rate, for the peace of mind of knowing what I was getting, and making the deal simpler for me).
  • Understand the dealership.  Is it a Boutique or a Big-Box?  The Boutique dealership won’t be as keen to wheel and deal, since they have some exclusivity on the product.  However, they will want to make a happy customer out of you and ensure you become a loyal customer for them and tell your friends, so keep that in mind.  The Big-Box dealership just wants to maximize their profit on the sale, and move as many products as they can.  So while you will have a better opportunity for a deal with Big-Box dealership, you will have to work for it, because ultimately they don’t care much if you walk.
  • Pick the right time.  For either type of dealership, you will find that buying in the off-season will give you more negotiating room, and you’ll likely be dealing with more experienced sales staff (since seasonal workers won’t be hired yet).
  • Pick the right bike.  If you don’t need to have the newest model, you will find you can get much better deals on older motorcycles that a dealership hasn’t been able to move.
  • Do it in person.  Don’t bother trying to email or make phone calls to do negotiating.  Most dealerships just won’t even bother dealing over the phone or in email.  (Have you ever tried to sell anything on Craigslist?  You know how flaky people can be there?  Imagine that hundreds of times every week).  Negotiate in person, with your money ready, or prepared to deal with dealership financing that day.
  • Establish rapport.  Even if the salesperson is “Joe McStuntaBuddy” who is only going to be selling at this dealership for 2 more weeks, make a connection.  It is in your best interest for the salesperson (and later the sales manager), to be invested in you and your desire to make this purchase.
  • Once you’ve established rapport…be up front with the salesperson.  Explain to them that you have the money, you’re serious about buying, you know the price you want to pay, and if you make the deal on your OTD (Out The Door) price, you’ll give them another sale to put on their board today!
  • Once the negotiating starts, ask to work with the sales manager.  The salesperson will come back and explain how they just can’t quite go that low, because they have to make a profit, or these are really popular bikes, or …. Thank the salesperson for their efforts, and ask to speak with the sales manager directly.  You will likely be told they are busy, simply explain that you can wait a bit, then go walk over and start browsing gear and accessories.
  • Once you are dealing with the sales manager, be sure to again try to establish some rapport.  This person will be very experienced with making deals, will know what kind of profit margin they want on the bike, and will be sizing you up to try and figure out just how much more they can make off you.  Explain with all sincerity how you’ve talked to some other dealers in the area, and can get a similar price from them for this bike, but that you’ve always preferred this dealership.  Explain that you understand at this price he will be making roughly x profit, as well as making a sale for the day, and getting a happy new customer who will tell your friends all about the awesome dealership.  (The sales manager will respect your honesty, be a bit impressed by your knowledge of the pricing, and depending on where they are at as a dealership in their business cycles, will either appreciate an easy and quick lower profit sale, or will tell you they just can’t do it).
  • If you are told by the sales manager, that they just can’t do it… thank them and then walk out.  (There’s nothing worse  to a sales manager than feeling that they lost a possible sale).  Either move on to the next dealership, or take a break for a couple of weeks.  Often times, you will get a call from the Sales Manager a few days later with some incredible story about how they got a new shipment in, or an incentive from the manufacturer, or some other Deus Ex Machina that lets him make the deal you wanted.  (If this doesn’t happen, it’s totally acceptable for you to stop by next month and try again).
  • If you are getting stone-walled at multiple dealers, you should reevaluate your asking price.  Either your research was flawed, or your expectations are too high for the rarity of the bike, the season of purchase, or geographic location and demand.  (If multiple dealerships are able to afford losing your sale, you need to figure out who is paying more, and why).
  • Once you have locked in your deal, remember to watch all of the paperwork like a hawk.  Dealerships (especially Big-Box dealerships), may do sneaky things like try to have you sign paperwork that let’s them sell your address, phone number, and email to 3rd party advertising, sign you up for extended warranties you didn’t ask for, and even write back in fees that the Sales Manager said you wouldn’t have to pay.  *Read everything very carefully before signing, and always be ready to walk if they refuse to deal fairly with you*
  • Don’t forget to apply the same strategies above regarding research and shopping around to your motorcycle insurance purchase, as you may find *vastly* different prices from all the various insurance companies.

 

You’ve completed your research.  You’ve shopped around at different dealerships.  You’ve negotiated the best deal you could, and you now have a shiny new motorcycle with which to go tear up the hillsides!  (Or if you’ve followed my advice, you’ve purchased this in the off season, and saved some bucks, but now you have to wait through the weather for the fun to begin)!

Now I just have to ride the motorcycle 80 miles home from the dealership in 34 degree rain!

ninja1k_purchased

 

Congratulations on your new motorcycle! 

Ride Safe!  (But not too safe)