In part one we talked about how not to get ripped off by a dealer. In part 2 we discuss how to find a dealer that won't rip you off.
How to Buy a New Motorcycle Part 2: Finding the Right Dealer
In Part 2 we discuss how to find the right dealer and keep them
“Enough” is a rarely used word in motorcycling. Most of us wish we had a stable of motorcycles, each one in a different color and unique from the rest. I’ll never have enough, but many things limit my motorcycle count. The most restraining factor being money. So, if you’re onto your second, third, tenth, or just your first motorcycle, here are some insider tips and tricks for getting the best deal on your next new-bike purchase.
In our first installment, we sat down with a dealer friend to get the ins and outs of new motorcycle sales. A secret world of tricks and techniques you may not know about unless you worked at a dealership.
We featured a price break down of where our insider's dealership makes its money and how you can benefit. Here, we’ll examine the dealer ranking system and how to find the right dealer. Our third piece will list simple tips—like the best day to buy and the best things to do before stepping foot on a showroom floor. Also, don't forget to tell us your experience with buying motorcycles in the comment section below.
Remember, these are generalized tips and not the end-all, be-all in buying a new motorcycle—every dealership is different, these are just what we've found to be the most common amongst most US dealers. For more tips on buying a motorcycle read:
Find the Right Dealer
“We all pay the exact same thing for ,” said our anonymous insider. It comes down to how every dealer runs his or her own business. There’s the big shots, with gigantic inventory. Then there’s the little guys.
“Sometimes you may have a dealership with two employees, and one is the owner,” said the insider. “They can sell at cost and live off the hold-back checks, because he has little overhead. I can’t do that every time.”
Ways Dealers Make Money - Hold-Back Checks
Dealers, of course, make a profit off of the difference in the cost of a bike and how much it's sold for, but that’s not the only way. Another way is a hold-back check, which can be small, so don’t assume these alone make a dealer profitable.
A hold-back check is from a manufacturer to the dealer on every unit they have. They’ll get this after a sale. The salesman does have the option to take the hold-back check into account on the sale, but they rarely seize that.
In one instance, our insider said, “I’ll just blow the hold-back check to screw over my competition.” But, “It all depends on where I’m at. If I lose $1,000 just because they came from that dealer, I’ll do it.” (We'll get to the dealer competition and ranking in just a moment.)
You can fight on the fees and the price with a salesman. “I’ll sell five for nothing and make a killing on three,” said our insider. Dealers make money in many ways, not just from the profit made on a sale, but through rankings, incentives and hold-back checks.
“The more I order, the cheaper the interest rates I get on floor orders too,” said our insider. “It’s a big gambit.”
So know that a sale is a sale, even if the profit may not appear that high. You'd always prefer to deal with a salesman or dealer who is anxious to make a sale.
The biggest thing you can look for in a dealer is honesty. Recently on shopping for a new car, a salesman lied about the incentives. I mentioned a “friends and family,” discount. He immediately said, “Oh, well ignore the incentives than, you’ll get a better deal with your discount.” Wrong. The discount I mentioned was only included after the manufacturer and dealer incentives, not one or the other.
A lot of the rebates are from the manufacturer, and therefore, untouchable by a dealer. As mentioned in a previous installment, only some manufacturers force the dealers to pass on certain incentives to customers. Others leave it up to the dealer to keep it for themselves or give to a buyer. Find a dealer that passes those incentives on and walk away from those who play too much with the numbers—like giving you an option as to which incentive you want. You’re probably entitled to both.
The Take My Money! Dealer
Our super secret dealer told us of at least one dealer that lives off of the hold-back checks and incentives almost entirely. One dealership that advertises no doc or set up fees for anyone at any time is Southern Honda Powersports in Tennessee. This dealer will usually sell you a Honda motorcycle at cost, minus rebates. We can’t confirm exactly how they make money, of course, but the dealership does advertise: “No Fees Ever!” and by law this must apply to all customers. They also advertise most of its inventory well under the manufacturer’s listed MSRP, so we can only assume they make money the other ways.
The process is simple: Walk into an office, hand them a check, and if they have the bike you want, they’ll load it in your truck before your wallet's back in your pants. This is great for guys and gals like you, who do research before ever entering a dealership.
A dealership like this will also buy old stock from other dealers, who have closed or from the manufacturer (we do not know for sure that Southern Powersports buys old stock, but similar dealers do.)
Honda, along with other bike makers, usually sell off year-old models or inventory that’s slightly damaged. There’s even more incentive for them to sell unwanted inventory from the manufacturer.
“Honda will give them a big discount if it comes form old inventory of other shops—along with scratched and dented stuff too,”said our insider.
The more bikes they sell, the less they can sell them for as every sale increases their ranking with Honda, which includes bonuses and incentives. Bigger sales also means bigger hold-back checks too.
Every manufacturer is different in their dealer networks, incentives, up charges, invoicing, etc.
“Someone like Harley-Davidson owns a part of those dealers, so a bike is sold for whatever Harley wants it to be sold at. We have far more control over our products.” This is because the insider's shop is a multi-brand dealership.
You Can Win
One technique for dealing with a new dealer is to convince the salesman you’re a customer for life. If you need a jacket and helmet, include that in the purchase of the bike. It’ll make the salesman happy, increase their profit, and you probably won’t spend that much more on the gear than if you were to visit an online retailer.
As far as warranties go, that's an entirely separate story itself. As the author, I'd strongly recommend against aftermarket, non-factory warranties. I've seen the inside of some of those companies who laugh about denying claims and constantly using the phrase, "that's not covered." However, I've heard from some riders who had luck with companies like that, hence the reason warranties can be a whole 'nother story to itself.
How to Get an Exact Price Over the Phone
If you’ve been back and forth with a salesperson on the exact out-the-door price, and you’re unsure if they’re being honest with you, here’s a good tip: Tell them you’re at, or on your way, to the bank to get a cashier’s check for the amount they first quoted you. Tell them you’re simply calling to confirm how much to make the check out for.
“That’ll get you the exact price real quick,” said our insider.
But, there’s some honesty here that you’ll need to practice. If you’re actually ready to buy the bike for that price, then ask that question and get the check or loan. You don’t want them being dishonest with you, so don’t be dishonest with them.
Our next installment will list very simple tips for getting the best price. Tell us your story of buying a new or used motorcycle from a dealership.