The Power of Powersports F&I

Powersports is an unsung market that can boost an agent’s total finance & insurance (F&I) sales, reports Rob Hefner, president of Rider’s Advantage, a rapidly growing U.S. powersports F&I provider. 

Hefner cut his teeth in the automotive F&I space, working first as a trainer for an F&I agency, then as a general agent. In 2003, he walked into a powersports store, and it changed his world. He continued to work with powersports dealers, fully transitioning into this market in 2013.

He describes powersports as a market ripe for opportunity, which thrives with a blue ocean approach to sales. A blue ocean strategy, he says, is the “simultaneous pursuit of differentiation and low cost to open up a new market space and create new demand. It is about creating and capturing uncontested market space, thereby making the competition irrelevant.”

This is in stark contrast to the automotive F&I market, which employs a red ocean sales strategy. This plan of action aims to make a profit by besting the competition. He explains, “The auto agency market is already cutthroat, rife with competition, and the strategy is to separate yourself in a highly competitive market.”

Hefner says agents can step out of the automotive rat race and into the powersports market easily. “A highly successful automotive F&I agent has an entire market waiting for them in powersports,” he says. “They can use their experience to be successful in powersports, a market tailor made for them and their skills.”

Powersports Market

Powersports represents a subcategory of motorsports and includes utility vehicles (UTV), all-terrain vehicles (ATV), off-road motorcycles, snowmobiles and personal watercraft. It’s a market Hefner says grew significantly during the pandemic and one that analysts predict will grow significantly in the future. In fact, a Strateview Research report released in January forecasts the powersports market will grow 5% annually to a $47.9 billion market by 2027.

But Hefner says two things limit the market’s growth potential: 

• High ownership costs, and
• High maintenance costs.

“Their frequent use in harsh environments and rugged terrains, result in constant maintenance and repair,” he stresses, noting this is where F&I products can fill a void.

Benefits of Wading Into Power Sports

“You can use the same F&I skill sets to sell in the powersports market, plus the sales process is easier and the sales cycle is more cordial,” Hefner says.

He explains there are three key advantages to selling F&I products in the powersports market.

1. The sales cycle is typically shorter, with less credible competition. Agents in the auto space are used to fierce competition; there are 10-15 agents pitching to every dealership. Powersports agents face less competition, making it much easier to win over and sell products to dealers.
2. Smaller dealerships and flatter organizations also make it easier for agents to reach decision makers, who are pragmatic and cordial.
3. F&I expertise offers a benefit to powersports dealerships. “Powersports dealers are not used to a high level of service from F&I agents as there is not a lot of competition in that space,” he says. “Those agents with a high level of expertise will sell products.”

The Market IS Different

“Learn the nooks and crannies of the powersports market,” says Hefner, who shares how he once showed up in a suit and tie and quickly realized he had overdressed. 

It’s a far more casual environment, he stresses. But an agent cannot don a pair of khakis and a golf shirt and expect immediate success. He or she must also understand the mindset of the powersports buyer and dealer.

“Powersports are a want not a need,” stresses Hefner. “However, powersports owners often show more care and concern for their motorcycle than their car. Their motorcycle can be an extension of their personality.” 

On the flip side, powersports dealers dislike being treated like, or compared to, automotive dealers. “They are different,” Hefner stresses. “While you can provide powersports dealers with knowledge learned in auto, you must present it in a way that does not offend or threaten the powersports dealer.” 

He reminds that powersports dealers also have less experience with F&I sales. “They don’t always use best practices and rarely hold their sellers accountable,” he says. “They generally will not use a step-by-step sales process. They’ll offer one product and if they get a ‘no,’ they will stop selling. Sometimes there’s no sales process at all.” 

An agent can offer a point of difference by educating and training sellers to employ techniques used in automotive. Those agents that train powersports dealers how to overcome objections, deliver education and increase product awareness will reap the benefits.

Hefner stresses not all powersports dealerships are worth an agent’s time. For example, those dealerships that use cradle-to-grave processes might inhibit F&I optimization.  Look for companies with good sales volume and a willingness to sell F&I products. 

Hefner then offers his recipe for success:

• Relax: Lower your perceived intensity.
• Dress Down: A suit and tie are not needed.
• Use Discretion: Be careful discussing F&I numbers. “There is often little accountability in powersports,” he says. 
• Guide Growth: “Guided discovery techniques work best for dealer principals,” he says.

Challenges & Opportunities

In powersports, product selection reigns as king. There are a lot of nuances and lots of makes and models and this challenges F&I product selection. 

Vehicle Identification Numbers are harder to code in powersports, which creates a lot of issues. The industry also encounters many “hold my beer” kinds of claims which result in vehicle owners recklessly doing something to damage their vehicle, then they attempt to have the vehicle repaired by making a claim. 

“There must be an understanding of what constitutes a claim and what happens when their vehicle breaks down,” he says. “It can take years of experience to adjudicate these claims. Customers often attempt to manipulate the claims process and submit claims after misusing the product.”

The number of products also makes it hard to determine which models break down more frequently than others.  Many administrators and agents attempt to enter the powersports market, but fail due to lack of knowledge and experience.

 “Consumers often use these products in ways that can damage them. A consumer may use their ATV to jump things, for example. Who pays for that when the vehicle gets damaged?” he asks. 

There also are plenty of consumer objections to overcome. “But there are a lot of moving parts in these vehicles, manufacturers warranties are short, and the cost to keep them maintained is expensive,” he says. “These are all things that can encourage a customer to add F&I products.”

Hefner recommends a priority maintenance program to ensure owners properly maintain their vehicle.  Other beneficial programs include extended service contracts, GAP, battery protection, tire and wheel, theft protection, and appearance protection. 

He adds, “When you enter powersports, do it the right way, so it doesn’t water down the industry,” he says. “Select the right product administrator and approach the powersports dealer in a relaxed and genuine way.

ABOUT THE AUTHOR: Ronnie Wendt is an editor at Agent Entrepreneur.