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HomeNEWSin-house dealership will be eye-opener for kawasaki

in-house dealership will be eye-opener for kawasaki

The body representing dealers, the National Motorcycle Dealers Association, has responded to Kawasaki’s decision to open its own dealership in the South (see previous story on website).

NMDA chief Steve Latham says: “It is hardly surprising that a motorcycle manufacturer has to set up its own dealership to gain meaningful representation in an area with expensive property costs and the large financial commitment to start up a new motorcycle dealership.

“This practice has been normal in the car industry, where the levels of investment are even greater, for more than 30 years. Peugeot-owned dealerships are called Robins & Day, Jaguar Land-Rover own some sites and both Ford and Vauxhall have investment divisions. These divisions put up the greater proportion of funding, along with a much smaller investment from an operator, therefore in reality they control the business and have site control arrangements in place where they will not lose the site/location for their brand’s representation.

“In today’s world of more stringent banking and business-loan opportunities it is easy to see why a bank would reject lending against a new motorcycle dealership investment when the first few questions they ask will be, how long will your contract be with a particular manufacturer and how much are you borrowing for that manufacturer’s corporate identity and signage. In the bank’s view this expenditure gives no direct return or value.

“For a new operator entering the industry and taking on a franchise the banks are often uncomfortable with the low return on small car and motorcycle dealerships and are more likely to reject them because they require stocking capital and need to run tight cash-flows to stay viable.

“I’m sure Kawasaki is honourable when it says this new dealership will be run in the same way as every other Kawasaki dealership and will share a level playing field with other independently-owned businesses. The reality will be that this new Kawasaki-owned venture will be better funded than most other dealerships and therefore will be able to weather any financial or funding issues better than many others in the network. Irrespective of the true business model and structure, some other Kawasaki dealers will always believe this site will have better access to new and used stock and or margins, plus will have lower targets set for them to achieve.

“Either way, I congratulate Kawasaki for taking this stance and being open about it with their dealers. Running their own retail dealerships is often a great way for manufacturers to find out what it’s like in the real world – and that can only assist future dealer initiatives considered by Kawasaki.”

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