We have experience in this industry for the valuation of the business, equipment and real estate. Let us help you with our valuation consultation in all areas of the valuation of motorcycle shop businesses. Below is a brief synopsis of the industry.
Description of Business
Establishments primarily engaged in the retail sale of new and used motorcycles, including motor scooters and mopeds, and all-terrain vehicles in addition to motorcycle gear and accessories.
General Industry Information
Typically, motorcycle shops can be broken down into two distinct classifications: dealerships that sell new bikes from one single manufacturer, and retail stores that sell both new and used bikes, along with accessories and motorcycle-related clothing. Both types of operations generally provide service departments that account for a portion of revenues.
As of the recent US Census, the United States Census Bureau reported that there were roughly 7,800 establishments engaged in selling new or used motorcycles and equipment. By 2003, the amount of establishments operating in the United States increased to 9,603 with total sales equaling about $9.9 billion. The average operation reported sales of approximately $1 million annually. The majority of motorcycle dealerships are found in warm-weather states like California, Florida, and Texas.
Franchised dealerships tend to fare better in this industry than the independent retailers. While franchised dealerships make up only one third of the motorcycle dealerships, they still control 80% of the market in terms of revenue. For non-franchised operations, the majority of sales came not from motorcycles, but from apparel, parts, accessories, and servicing.
As is the case with most of the markets for durable goods, motorcycle sales are somewhat vulnerable to changes in general economic conditions. Recessionary and expansionary periods tend to affect the levels of consumption for these products.
The two largest manufacturers in this business are Honda and Harley-Davidson. Exports have become an essential function of this industry; accounting for over $500 million in annual sales during 2001.
Red Flags and Risks
Since many buyers finance their bikes, the industry is at risk of interest rate fluctuations and swings in overall economic conditions. Buyers should be mindful of this and ask owners for financials that reflect several years to get a better indication of sales for an entire economic cycle. Although businesses located in warmer states are more likely to thrive, there are examples of successful high-volume dealerships in cold-weather states.
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