Www.npauctions.com VOLUME 1 • APRIL 2014 EVOLUTION …

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VOLUME 1 ? APRIL 2014

EVOLUTION OF PRE-OWNED

Once Upon a Time...

Believe it or not, there was a time when the preowned market didn't exist... at least like it does today. Most dealers were content selling new motorcycles while the bulk of used bike sales in this country were driveway-to-driveway transactions. Unlike the automotive industry, taking a motorcycle in on trade was a foreign concept to most dealers in the business. However, the vision of one OEM radically changed the pre-owned space forever in 1989!

"Although it was a long time ago, here is my best recollection of the big changes with the OEMs and the advent of retail financing that lead us to where we are today," says National Powersport Auctions founder/CEO Cliff Clifford. "Actually if it wasn't for the vision of Kawasaki Motor Corporation there is a good chance NPA wouldn't have started when it did... or even exist at all! Around 1989, KMC announced national Dealer Financing with their Good Times credit card. This card could be utilized for new purchases and/or services and accessories. Before that, dealers had to source financing on their own with local banks or small financial institutions which was a disjointed, cumbersome exercise at best."

Interestingly, the year before that the ban on three-wheelers by the infamous Consumer Consent Decree simultaneously set the wheels in motion for the birth of the four-wheeled ATV/UTV market and eventually helped more than double new-unit sales for the powersports industry. On April 28, 1988, the U.S. ATV distributors entered into an unprecedented 10-year agreement with the CPSC called the Final Consent Decree. Under the terms of the agreement, the ATV industry made a $100 million commitment to expand existing safety programs. Additionally, distributors would no longer market three-wheeled ATVs, repurchasing any unsold three-wheel models from dealer inventory. In hindsight, the birth of a national powersports financing program was well-timed.

"With the success of KMC gaining market share through its creative financing program, it wasn't long before the other OEMs followed their lead," recollects Cliff. By 1991 the

Japanese "Big Four" had all established relationships with national lenders to support their dealer base with retail financing. "The powersports market changed almost overnight! Dealers suddenly had options to offer customers financing on bikes and accessories. Advertising campaigns promoting easy payment plans started to be mainstream, with OEMs pursuing market dominance through financing options." NPA's role in moving recovered financed vehicles back into the dealer network followed shortly thereafter, with NPA selling 150 units at its first live dealer-only auction in San Diego in 1991.

By 1997, there were more than 3.8 million motorcycles registered in the U.S.! By that time, all of the major OEMs and finance companies realized the opportunity to wholesale pre-owned purchases through NPA. Savvy dealers had also

IN THIS ISSUE

Evolution of Pre-Owned Tuning to WIIFM Power Pro le Timeline

recognized NPA as a great opportunity to stock used inventory as well as take motorcycles and ATVs in on trade, knowing they could liquidate them at auction later. So great was the demand for an auction option, that NPA opened a second facility in Atlanta that year.

In addition to expanding its physical facilities, NPA began honing its tools. In 2001 NPA's Auction Management System technology platform was born, followed by the first commercial online powersports auction platform with NPA eSaleTM in 2003. "It is clear from the data that 2004 was also a turning point," states COO Jim Woodruff, noting that is when NPA began actively accepting consignment units from dealers. "It has taken time to get everyone up the education curve, but our Dealer Consignment program now plays a key role for both us and the

see EVOLUTION OF PRE-OWNED, p3

Used Units in Use Top 10 MIC Snap Shot NPA Rumbles Into Cincy Did Someone Say Road Trip?

SAN DIEGO ? DALLAS ? CINCINNATI ? ATLANTA TOLL-FREE 888.292.5339 WWW.

TUNING TO WIIFM

Time To Turn It Up

By Jim Woodruff

Rumor has it that in a previous life I did voice-over work, but WIIFM is not a radio station call sign. Instead it is an acronym created by motorcycle industry trainer Otis Hackett nearly 20 years ago. It stands for "What's In It For Me" -- an appropriate question for the first issue of NPA PowerNewsTM. As an industry leader, we are committed to answering this question. We sincerely believe in being a better business partner for our dealers...if dealers are successful, we are successful and so is the industry.

A concrete example of tuning in WIIFM for dealers was our participation in the V-Twin Expo in February, where we rolled out several new programs to benefit dealers. NPA Dealer Financing and our NPA Black MarketTM aftermarket accessory auctions were among the tools presented to dealers at the tradeshow in Cincinnati (see the story on page 4).

Believe it or not, we are the second largest single source of V-Twin product, behind Harley-Davidson. We are also the largest wholesale channel for pre-owned powersports products of all flavors. Because of this, we realize we play a significant role in the growth and profitability of all our dealer customers, and we are committed to providing them with the tools and first-class service they need to be successful.

In a blast from the past, we tapped NPA founder/ CEO Cliff Clifford's encyclopedic knowledge to help break down the evolution of the pre-owned market for our cover story. Some of you may remember the greatest hits (like the CPSC three-wheeler ban and the financial crisis) the market has had. Despite some setbacks, this industry has continued to rock & roll for more than 50 years.

Time to crank up the volume! Think of this newsletter as another tool and an example of our commitment to everyone's WIIFM.

CONTRIBUTORS



NPA San Diego, 12400 Stowe Drive ? Poway, California 92064 TOLL FREE 1-888-292-5339 ? Fax 858-513-1599

SENIOR EDITOR ................ Robin Hartfiel MANAGING EDITOR .......... Becky Sabala ART DIRECTOR .................. Efraim Manuel

POWER PROFILE Corona Powersports

Corona Powersports owner Bryant Markovich has been in the powersports business for the past 21 years. He has seen the ups and downs... and managed to figure out a way to stay one step ahead of the game. One of the factors he attributes his success to was becoming an early adopter of pre-owned auctions, becoming an active NPA participant back in 1998! As his business transitioned from new unit motorcycle sales to pre-owned ATVs, so did his utilization of auctions.

In fact, his entire business model has shifted. Their primary business is now . "Rather than trying to fight the Internet, I tried to figure out how to make it work for me," notes Bryant. Before NPA, Bryant would get his pre-owned units from individuals off the street using publications such as Cycle Trader and The Recycler. NPA is much more convenient... and much more consistent than cruising the streets looking for used units for sale. "It was game changing," he says.

"I started using NPA because the inventory was unbeatable and easily accessible. I was able to pick and choose product because the selection was so large rather than relying on what I could find in Cycle Trader."

Once he started using NPA and offering a large number of pre-owned units, he was able to build a large clientele.

He remembers going to the live auctions and getting nervous before his first sale. However Bryant notes he learned so much from the other dealers and NPA staff and quickly got into the swing of things. "The NPA team, Cliff and Al specifically, provided me with the help and support needed to grow my business."

To say he is sold on the auction process is an understatement. When NPA opened its auction facility in Georgia, Bryant would fly to GA to purchase sport ATVs that were in high demand/ low supply in Southern California. It was worth it for him to fly to Atlanta, attend the auction, fill a truck with units and ship them all the way back to California.

"It is even easier to use NPA these days," he claims. "Simulcast creates an awesome work environment because you don't have to leave your shop!" He also likes having the screens on the auction blocks when he's bidding live so he can see what the simulcast bidders are doing.

But as good as the technology has become and as easy to use as Simulcast is, Bryant wouldn't trade in his early experiences at the live auctions for anything. "The auctioneer really cares about the business and knew the types of vehicles I was looking for... it was a great experience!"

The one thing that hasn't come across the block is Bryant's first bike -- a Honda QA 50cc. "I don't have it anymore, but I know I'll see one someday."

Corona Powersports Early Growth Years

YEAR

2001 2002 2003 2004

UNITS PURCHASED

57 247 316 263

NPA CALENDAR OF EVENTS

NPA SAN DIEGO

? April 4th ? May 2nd ? June 6th ? July 11th Anniversary Auction

NPA DALLAS

? April 11th ? May 9th ? June 13th ? July 18th

NPA CINCINNATI

? April 16th ? May 14th Anniversary Auction ? June 18th ? July 23rd

NPA ATLANTA

? April 18th ? May 16th ? June 20th ? July 25th

VOLUME 1 ? APRIL 2014 ? NPA POWERNEWS ? WWW. ? P2

EVOLUTION OF PRE-OWNED continued from cover

NPA's physical expansion continued with the addition of its Dallas campus in 2004. And by 2006, NPA initiated the industry's first online dealer exchange with HDDX for Harley-Davidson dealers. By this time, there were now 6.6 million registered motorcycles in the U.S. and interestingly enough, the percentage of driveway-to-driveway sales of used units dropped from more than 95% to 75% as dealers were brought back into the pre-owned business by the auction process.

The next four years were watershed moments for NPA and the pre-owned market. "I'm not sure if we changed the market single-handedly, but we sure influenced the direction it took," claims Cliff. In 2007 the very first live NPA SimulcastTM sale took place, quickly followed by the first

Simulcast Factory sale for Yamaha Motor Corporation. Just as the financial crisis hit in 2008 NPAhadtoexpandagain,opening its Cincinnati location just in time to handle the ensuing flood of powersports units. By 2010, NPA was serving all the major powersport finance compa nies, OEMs, and dealers through every live and online auction channel imaginable,

selling a record 90,000 units in one year! In order to increase dealer awareness

of the paradigm shifts in pre-owned, the first trade show auction ever was held at the Dealer Expo in Indianapolis in 2011. Meanwhile, the number of registered motorcycles in the U.S. now exceeded 8.4 million. "We're not ones to rest on our laurels, so we decided to continue raising the bar," explains Cliff of the 2012 launch of the NPA Insurance | Total LossTM auction exchange and NPAMobileTM technology for smartphones and tablets. NPA and the evolution of pre-owned did not stop there, of course. NPA changed the rules again with the 2013 expansion of NPA Value GuideTM and the launch of NPA Black MarketTM for parts & apparel, as well as new dealer exchanges for Indian Motorcycle, Victory Motorcycles, and the Penske rental organization. "Not sure this is what KMC had in mind when they introduced the Good Times credit card, but we have been happy to help the industry's good times roll since 1990."

THE POWER OF THE WEB

The technology available at our fingertips today is mind-boggling. Hand-held communicators that were the stuff of science fiction have become commonplace realities. The current crop of smartphones far exceeds any Trekkie's wildest dreams, including the ability to cram 500,000 square feet of warehouse space into the palm of your hand! NPA MobileTM allows dealers to access more than 5,000 pre-owned powersports vehicles each month.

While we actually rolled out this "final frontier" technology awhile back, it has been stunning to see how valuable the latest generation of NPA Mobile has become - NPA data indicates on-

line utilization has grown more than 300% in the past three years. "It is a testament to the value of our data and condition reports to our customers, as well as the trust they have in our auction process," explains COO Jim Woodruff.

See our next issue for the full scoop on NPA's online features. In the interim please visit

TIMELINE

NPA Historical Milestones In The Past 25 Years

1987 CPSC Consent Decree bans the sale

of three-wheeled ATCs, ultimately leading to 4-wheeled ATVs and UTVs

1988 Honda opens rst Rider Education Centers

in Colton, California and Irving, Texas

1989 Kawasaki introduces national dealer

nancing and launches Good Times credit card for consumer nancing

1990 National Powersport Auctions Founded

1991 Other OEMs introduce vehicle

nancing for consumers

1991 NPA hosts its rst live auction

1997 3,826,373 motorcycles registered

in the U.S.

1997 NPA opens Atlanta facility

1998 NPA sells 6,000 vehicles

2001 Launch of internal AMS

(Auction Management System)

2003 Launch of NPA eSaleTM

2004 NPA opens Dallas location

2006 Launch of HDDX for

Harley-Davidson dealers

2006 6,678,958 motorcycles registered

in the U.S.

2006 NPA forges relationship with Penske

2007 Launch of NPA SimulcastTM

2007 First Factory Simulcast sale

2008 Financial crisis hits

2008 NPA opens Cincinnati location

2010 Record 90,000 units sold in

one year at NPA

2011 First Dealer Expo Educational Auction

2011 8,410,255 motorcycles registered

in the U.S.

2012 Launched NPA Insurance | Total LossTM

2013 Launched NPA Black MarketTM

2014 NPA PowerNewsTM published

VOLUME 1 ? APRIL 2014 ? NPA POWERNEWS ? WWW. ? P3

USED UNITS IN USE Top 10 States

Several of the leading financial firms and even The Wall Street Journal have been reporting on motorcycle usage recently. One interesting analysis is the breakdown of per capita motorcycle registrations in the U.S. According to the Department of Transportation there are more than 8.4 million motorcycles registered in the U.S. -- and in a big surprise, California, Texas and Florida don't even crack the top 10 in terms of motorcycles per capita!

Instead, South Dakota and New Hampshire have the greatest penetration of registered motorcycles per user -- one motorcycle per 12 people in South Dakota and one per 17 in New Hampshire, more than triple the penetration of CA. Sure, it helps to have the Sturgis Rally skewing the SD numbers, but the localized Laconia Rally doesn't explain why there are so many bikes registered in NH.

"Minnesota and the four states that surround it are among the top 10 states in motorcycle ownership per their populations," notes veteran journalist and Minnesota Motorcycle Monthly magazine editor Guido Ebert. "In comparison, states often thought of as leading the motorcycle market fall further down the list." In some cases, much further! Despite having year-round riding, Bike Week and Biketoberfest, Florida finished 24th with 33 people for every motorcycle.

"California came in 43rd with 47 people for every registered motorcycle," adds Ebert. "New York was rated 47th with 56 people for every motorcycle." See the following chart from Minnesota Motorcycle Monthly for a breakdown of the top 10. If you happen to already live in motorcycling's heartland, MMM is distributed free at shops throughout the state and online at

RANK

1 2 3 4 5 6 7 8 9 10

STATE

South Dakota New Hampshire

Iowa Wisconsin Wyoming North Dakota Vermont Montana Minnesota

Alaska

#BIKES

69,284 79,266 173,929 317,276 30,351 32,654 30,070 46,996 240,288 30,983

POPULATION

816,598 1,316,807 3,050,202 5,691,659 564,554 674,629 625,909 990,958 5,310,658 714,146

PEOPLE PER BIKE

12 17 18 18 19 21 21 21 22 23

MIC SNAP SHOT

YEAR TO DATE

VEHICLE TYPE GENERAL TYPE

ATV MOTORCYCLE MOTORCYCLE MOTORCYCLE MOTORCYCLE MOTORCYCLE

GRAND

MONTH

ATV DUAL OFF-HWY ON-HWY SCOOTER TOTAL TOTAL

VEHICLE TYPE GENERAL TYPE

ATV MOTORCYCLE MOTORCYCLE MOTORCYCLE MOTORCYCLE MOTORCYCLE

GRAND

ATV DUAL OFF-HWY ON-HWY SCOOTER TOTAL TOTAL

2013 CURRENT 228,305 32,979 73,371 324,691 34,742 465,783 694,088

2013 CURRENT 26,786

1,892 9,324 13,882 1,565 26,663 53,449

2012 PRIOR 227,256 30,592 69,395 318,206 41,105 459,298 686,554

2012 PRIOR 24,987 1,950 10,349 14,169 1,858 28,326 53,313

UNIT CHANGE

1,049 2,387 3,976 6,485 -6,363 6,485 7,534

PERCENTAGE CHANGE

0.5% 7.8% 5.7% 2.0% -15.5% 1.4% 1.1%

UNIT CHANGE

1,799 -58

-1,025 -287 -293 -1,663 136

PERCENTAGE CHANGE

7.2% -3.0% -9.9% -2.0% -15.8% -5.9% 0.3%

The Motorcycle Industry Council (MIC) provides its members with quarterly "Flash Reports" as a way of benchmarking new unit sales. They also provide a year-over-year comparison by type of product sold, enabling you to see critical sales trends at a glance. Although National Powersport Auctions specializes in pre-owned inventory, we felt it would be beneficial to share this data with you (with MIC's permission, of course). Much more detailed figures, including make and model breakdowns are available to MIC members, as is their comprehensive Statistical Annual. In a change of long-standing policy, dealers can now become MIC members and access much of the same data used by the OEMs, including Flash Reports like this one. For more details on the benefits of MIC membership visit,

NPA ON THE MOVE

Did Someone Say Road Trip?

NPA RUMBLES INTO CINCY

Making Some Noise At The V-Twin Expo

As documented by the trade press, NPA rolled out an unprecedented array of services and programs at the 14th Annual V-Twin Expo by Easyriders in Cincinnati back in February. Since this is the only trade show focused on V-Twin dealers, it was an ideal venue for NPA to premiere its newest programs. Among the tools we shared with dealers was NPA Dealer FinancingTM. At a time when many banks still won't make loans, NPA is stepping up. Even better, the show's special introductory program runs through April 30, so there is still time to take advantage of it even if you couldn't attend the V-Twin Expo. The NPA Dealer Financing promotion is offering dealers a $25 Flooring Fee and waiving the 1% Program Charge for the first 30 days (Dealer ADB Rate still applies). Last, but certainly not least, NPA showed off our NPA Value GuideTM updates, including a new mileage breakdown. This is the most comprehensive source for pre-owned powersport values in the world. The NPA Value GuideTM breaks down each unit sold by location, condition, month, and now, mileage. With more than 26,000 models in our value database, it is an essential tool for taking in any trade-in.

NPA's sales and operation teams convene in San Diego at the beginning of each year to focus on the company's goals, processes and a plethora of other topics. The purpose is to ensure that the coming year is even better than the previous one for NPA and our customers. But after 3 days of being immersed in a warehouse of motorcycles and not being able to throw a leg over one, people can get a little antsy. Remember that feeling you got on the last day of school watching the second hand tick, agonizingly waiting for that final bell to be struck? That's how we feel after three days of training, charts and graphs! So, some of the NPA crew likes to get out and ride when our work is done. Once we're back on a bike, the reports and graphs are replaced with scenic views from the beaches to the mountains of San Diego. The ride is a great reminder of why we chose this profession and how lucky we are to enjoy the industry we work in.

VOLUME 1 ? APRIL 2014 ? NPA POWERNEWS ? WWW. ? P4

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