UPPER TOWNSHIP — Ray Leps, owner of a Suzuki motorcycle dealership in Cape May County, spent time at the recent Atlantic City Boat Show lining up customers who want to build a dock or buy a personal watercraft.
Since the 2007 recession, motorcycle sales have nose-dived both in South Jersey and nationally. One-third of dealerships operating in 2008 are now out of business, according to the Motorcycle Industry Council, a trade group.
Leps, of Upper Township, said he surely would have been one of them had he not taken some advice from the late Ralph Dilks, former owner of All Seasons Marina in Marmora, who warned him to broaden his business strategy.
“If I didn’t diversify, I wouldn’t be talking to you today,” Leps said.
His business, Seaville Motor Sports in Upper Township, offers a wide variety of motorcycles. But he also owns two other businesses: All Action Water Sports in Somers Point, which specializes in personal watercraft and sport boats, and EZ-Dock Mid-Atlantic, which sells pre-fabricated and interlocking docks for use at public and private marinas, rivers and lakes.
“Our dock business does very well. The boats do very well. People are still not buying motorcycles,” he said.
Since discretionary income typically drives motorcycle sales, a South Jersey economy slow to rebound has been especially harmful.
“They lose three dealerships a week. It’s not because they’re bad businessmen. It’s just the economy is so bad,” Leps said.
“Out on the West Coast, it’s even worse. We’ve probably lost 35 to 40 percent of our dealerships,” said John Paliwoda, of Los Angeles, director of the National Council of Motorcycle Dealer Associations.
“There is no disposable income. It’s getting better, but it will take a number of years to recover.”
Paliwoda said surviving dealerships cut expenses and staff and focused their attention on service and sales of used motorcycles.
“They’re trying to do the same with less,” he said.
Meanwhile, Paliwoda said, motorcycle financing is harder to come by as banks take steps to minimize risk.
“I think lenders who have traditionally financed motorcycles have kind of dried up. They’ve found other areas to place money rather than motorcycle sales,” he said.
Dealerships usually start to see a surge in consumer interest in late winter and early spring. Motorcycle-riding season typically begins about a month earlier than boating season in New Jersey.
Locally, Harley-Davidson dealerships in Wildwood and Millville closed in 2010 consolidations.
“A lot of dealers have closed. That’s why some others are able to hang on,” said Justin Hammell, of Forked River, Lacey Township, who sells motorcycles at Atlantic City Cycle Center in Hammonton.
The center stocks Yamaha motorcycles, three-wheeled Can-Am Spyders, all-terrain vehicles, scooters and side-by-sides.
Atlantic City Cycle Center opened in 2009 as the effects of the recession began to settle into South Jersey. But Hammell said sales are starting to pick up.
“It’s only getting better. Sales numbers have been going up for us every year since we opened,” he said. “You can tell people are spending more money than they used to.”
Harley-Davidson, a publicly traded company based in Wisconsin, reported worldwide sales were up 4.7 percent last year. Revenue was $5.9 billion, up 6 percent from the year before.
But local dealers said the region has been slower to recover with numerous shuttered dealerships.
“It seems like Jersey got hit the hardest by the number of dealers that closed doors,” said Dean Petrovic, of Egg Harbor Township, co-owner of Atlantic County Harley-Davidson.
Petrovic said New Jersey has a shorter riding season than southern and western states. And its employment situation is among the worst in the nation.
Meanwhile, buyers remain cautious when making such a large purchase, he said. They typically visit several dealerships before making a decision.
“The Atlantic County market is feeling the effects,” he said. “Banks are more risk-averse, but Harley-Davidson is still lending. They’re pretty lenient compared to most local banks. You tell them you want a motorcycle and they laugh at you.”
Still, Petrovic said his dealership is optimistic about the coming year. Harley-Davidson has an updated touring model called the Ultra Limited, which has a liquid-cooled engine.
“Harley just came out with a whole new touring lineup with built-in navigation, touch-screen radios. They’re really keeping up with the times,” he said. “Come spring break, that model will take off.”
Leps said he is selling many of his motorcycles virtually at cost to make room for new inventory.
“It pops in my head at least once a day. Do I want to stay in this business? Last month, I put $8,000 into it,” he said of his January net losses.
The thinning market helped surviving dealerships compete. But Leps said he does not take much joy in walking on the graves of his competitors. Each failed business makes it harder to sustain the industry in the region.
“That’s a poor way to look at it. You want as much competition as possible. You need a certain number of businesses just to offer service to your customers,” he said.
The company’s repair shop has been one bright spot, he said.
“Service is what’s keeping our shop alive. We have a great service guy,” Leps said.
He said he’d be happy to sell customers a new Boulevard cruiser motorcycle — but until the economy recovers, maybe it will be a Waverunner instead.
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