Boardtracker closed??
#11
This same thing happened a few years back to Carson City Harley in Nevada. Payments made at the dealership on bikes financed through HD did not get sent to HD. The stealership kept the money and ultimately shut down. They reopened shortly thereafter with new ownership as Battle Born Harley Davidson. I don't recall how long it took but IIRC it was less that 6-9 months.
#12
I took some time to read the article. In the finance world, we call it "Out Of Trust". It appears that the dealership floorplans with Harley Credit. Under most floor plan agreements, when the dealership sells a bike (usually a new one), they have x number of days to remit the floor plan payment to the lender. When this is not done, the dealership is considered Out of Trust. 1.9Million is quite a bit for any type of dealership - so, this must have been going on for some time.
Some used bikes may also be on floor plan - so, this could apply too. The final issue is - let's say you had a lien on your bike and you traded that bike to the dealership. Your new bike was $25,000 and you owed $5,000 on the old one. The trade in value was $10,000 - so, you were able to finance $20,000 (the difference). Now, you are all set - except, the dealership has to remit the $5000 to your lender.
If Harley Credit was your lender, chances are, they used the right of offset to payoff your loan. If your used bike was place on used vehicle floor plan, they may have also paid off your loan. If you lender was not Harley Credit, then, there is a real possibility that the loan was not paid off. If such is the case with your sale, I would take a moment to verify this.
Some used bikes may also be on floor plan - so, this could apply too. The final issue is - let's say you had a lien on your bike and you traded that bike to the dealership. Your new bike was $25,000 and you owed $5,000 on the old one. The trade in value was $10,000 - so, you were able to finance $20,000 (the difference). Now, you are all set - except, the dealership has to remit the $5000 to your lender.
If Harley Credit was your lender, chances are, they used the right of offset to payoff your loan. If your used bike was place on used vehicle floor plan, they may have also paid off your loan. If you lender was not Harley Credit, then, there is a real possibility that the loan was not paid off. If such is the case with your sale, I would take a moment to verify this.
#13
GOV5 - am certain that Harley Credit has someone there on site, protecting their inventory. The inventory that is in the showroom is not the real concern - all they do is reassign that to another dealership. The concern is the inventory that was sold - and floor plan credit not issued.
From my experience, Harley will not try to run the dealership - they don't want the responsibility of the customer's bikes in the dealership's position. So, if some of you guys have bikes there - you need to follow for some answers.
For the bikes sold and not paid for - of the trade ins not paid, the floor plan source (in this case Harley Credit) keep a running list of all they find. Such would be offset from any revenue they receive from the dealership sale (they don't actually sell, the dealer does - however Harley should had a UCC filing that protects their interest.)
I have been through this sort of thing tons of time in my professional experience.
From my experience, Harley will not try to run the dealership - they don't want the responsibility of the customer's bikes in the dealership's position. So, if some of you guys have bikes there - you need to follow for some answers.
For the bikes sold and not paid for - of the trade ins not paid, the floor plan source (in this case Harley Credit) keep a running list of all they find. Such would be offset from any revenue they receive from the dealership sale (they don't actually sell, the dealer does - however Harley should had a UCC filing that protects their interest.)
I have been through this sort of thing tons of time in my professional experience.
Selling 40 bikes a month should be a decent amount to pay the bills, but obviously it wasn't or someone was skimming pretty heavily. But with those Mega-Boutiques that Harley forced the owners to build, maybe 40 per month just isn't enough to pay the bills.
#14
I spent 34+ years on the manufacturer's auto financing side - have been through this many, many times.
Ture these new buildings can be quite expensive and note that the goal is to have the "back-end" of the business cover all of the expenses. This is commonly referred to as the absorption rate. You want that rate to be as close to 100% as possible (ever over if possible)
Given the cost of service for Harleys along with the maintenance schedules, I might thing that the service and parts departments make enough to cover all of those expenses. Then add to that - motor clothes and you should be there.
Any expenses not covered and then covered by the sales of bikes. Dealers sales are measured and they calculate there break even point - the number of bikes that have to be sole each month to help cover any expenses.
I have no idea why this dealership is out of trust. If Harley Credit is as good as I think they are, it will not take them long to determine what created the problem. My guess is they are also holding all of the cards because they must have a UCC filing on all of the dealer's assets
Ture these new buildings can be quite expensive and note that the goal is to have the "back-end" of the business cover all of the expenses. This is commonly referred to as the absorption rate. You want that rate to be as close to 100% as possible (ever over if possible)
Given the cost of service for Harleys along with the maintenance schedules, I might thing that the service and parts departments make enough to cover all of those expenses. Then add to that - motor clothes and you should be there.
Any expenses not covered and then covered by the sales of bikes. Dealers sales are measured and they calculate there break even point - the number of bikes that have to be sole each month to help cover any expenses.
I have no idea why this dealership is out of trust. If Harley Credit is as good as I think they are, it will not take them long to determine what created the problem. My guess is they are also holding all of the cards because they must have a UCC filing on all of the dealer's assets
#15
If you want to read about this type of situation to the extreme search for Reagor-Dykes.They're still adding up the losses, probably well over $100 million to Ford. There are a number of people that are making payments on the trade in because the lien wasn't paid and making payments on the car they purchased. With all of the other people and businesses they owed it is well over $500 million.
#16
This is my local dealer about a mile from my house. This has been in the news for a few months about the owners owing a large sum of money, I hope there's some jail time for the couple. I store my bikes in my garage over the winter but I know a few that store them at the dealer. I really feel bad for the staff. They have a lot of great people that work in service and parts and I hope the sale goes through quickly so they can be retained.
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mazz (04-17-2019)
#17
If they don't have a UCC1 on the personal assets of the principle(s) shame on Harley! Then of course there are more than just a few examples of UCC1's having little or no real recoverable value as well.
#19
40 bikes a month may sound like a lot but is it really in $$?
Where I work (small family owned business, 75 employees) the typical break even point in sales is ~$750,000/month. This covers payroll, benefits, machine payments, building rent & expenses, on & on. What do you figure a HD dealership has to gross each month to survive? I bet it's a lot higher than most would think, and as mentioned above it's mostly not from bike sales.
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Where I work (small family owned business, 75 employees) the typical break even point in sales is ~$750,000/month. This covers payroll, benefits, machine payments, building rent & expenses, on & on. What do you figure a HD dealership has to gross each month to survive? I bet it's a lot higher than most would think, and as mentioned above it's mostly not from bike sales.
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#20
Rockout Rocker - wow, if your breakeven is $750,000 per month in sales - that's $9 million per year in sales. I wouldn't consider that a small business.
Some of the auto dealers that I provided floor plan had same bike dealerships. So, I have had an opportunity to review their financials. $9 million in sales was not typical.
Some of the auto dealers that I provided floor plan had same bike dealerships. So, I have had an opportunity to review their financials. $9 million in sales was not typical.