OPE’s 2012 Dealer Survey

By Steve Noe

During my nearly 15 years as editor of Outdoor Power Equipment magazine, one thing I’ve learned about this great industry is that it’s starved for data. Hardly a week goes by when I don’t receive a phone call or an e-mail from someone seeking data on the latest trends in the industry.

As a result, I’ve made it my mission to provide you with as much data as possible. To that end, we at OPE decided to follow up our nationwide dealer surveys from 2001, 2006 and 2010 by recently conducting a similar survey. The only difference between this year’s survey and the 20-question survey in 2010 is that with the emergence of social media, we decided to add a 21st question about its use for business purposes.

After sending out this survey to more than 1,200 dealers on June 28 and July 12, I’m pleased to report that we received an 8.5-percent response rate by the July 20 deadline.

Since we realized that the answers to a few of our questions would vary from region to region — especially when it comes to technicians’ salaries and shop labor rates — we decided to further validate the results to those questions by breaking down the multiple-choice answers into the following five regions:

Northeast: Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont
South: Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, West Virginia
Midwest: Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, Wisconsin
Northwest: Alaska, Idaho, Montana, Oregon, Washington, Wyoming
Southwest: Arizona, California, Colorado, Hawaii, Nevada, New Mexico, Utah

Without further delay, I would like to share with you the findings of our survey with a few observations along the way:

 Ownership

One notable and slightly alarming trend is that dealership owners aren’t getting any younger with few retiring and few following in their footsteps. Three out of every four dealership owners have already celebrated their 50th birthday.

While the percentage of dealership owners in their 50s steadily rose in each of our three previous surveys from nearly 32 percent in 2001 to 43 percent in 2010 before dropping slightly to about 39 percent this year, those in their 60s have yet to experience a drop-off. In fact, they have nearly doubled from about 19 percent in 2001 to 37 percent this year. Meanwhile, less than 4 percent of dealership owners are younger than age 40.

Employees

The composition of a dealership workforce continues to show little change since 2001 with about half of all dealerships containing no more than 5 employees, including 1-2 service technicians. A whopping 95 percent of dealers employ six or less technicians, yet that same percentage of dealers also believes there is a shortage of qualified service technicians for the OPE industry.

A contributing factor to that shortage may be that dealers have started to scale back on employee benefits packages. Since 2010, those dealers offering medical coverage to their employees has dropped from about 55 percent to 46 percent and 401(k) or other retirement plans from 37 percent to 32 percent.

Annual gross income

Annual gross income appears to be on the rise with nearly 20 percent of dealers belonging to the $1-million to $2-million club and about 25 percent of all dealers grossing $2 million or more.

Slightly more than half of those respondents said that their satisfaction level with profit margins was “fair,” but 25 percent said it was “poor” and 6 percent “very poor.”

Sales trends

Little has changed since 2001 when it comes to consumer versus commercial business. More than half of all dealers said they receive at least 70 percent of their business from consumers, with the highest 10-percent concentration range being in the 81- to 90-percent range (25.2 percent). Meanwhile, more than half of all dealers said they receive 20 percent or less of their business from commercial users.

One encouraging sign was that the percentage of dealers who indicated that they had downsized their business in the past five years went from about 20 percent in 2010 down to about 16 percent this year, while those reporting no change rose from about 36 percent to 43 percent.

Service

In 2001, more than half of all dealers charged a shop labor rate of $40-$50. Most starting service technicians were making $7-$8.99 per hour, and the best service techs were being paid nearly double that amount at $15-$16.99.

From 2001 to 2010, due to several factors — not the least of which was the Fair Minimum Wage Act of 2007, which increased the federal minimum wage by $2.10 over a two-year period to $7.25 per hour — the shop labor rate of most dealers rose to a minimum of $60. Most starting techs saw their hourly pay increase from $7-8.99 to $11-12.99, while the best service technicians remained at their 2001 hourly pay levels of $15-$16.99.

Since 2010, not much has changed in hourly shop labor and technician pay rates on a national level, but I highly encourage you to take a closer look at the charts that break down these numbers regionally.

Dealers are taking a slightly tougher stance on which brands they service as 13.6 percent said they would only service brands they sold, which is about a 3-percent increase over 2010. However, more than half of all dealers (53.4 percent) are still willing to service brands sold and selected others, while servicing all brands fell 3 percent to 33 percent.

More than 90 percent of all dealers rated warranty payment satisfaction “fair,” “good” or “very good.”

Biggest concerns

When asked about their biggest concern and presented seven choices, dealers’ top three choices were nearly unanimous and nearly split equally between business operating costs (29.1 percent), weather (26.2 percent) and the economy (25.2 percent). They were followed by the availability of quality employees (8.7 percent), profit margin from sales (6.8 percent), and competition and other (tied at 1.9 percent).

In 2010, only 11 percent of respondents chose weather as their biggest concern, but the huge spike is understandable given the extremely hot and dry conditions that have swept much of the nation.

 Websites and social media

There is no denying the power of the Internet and the role it has played in dealerships. In 2001, less than half of all dealers had websites, but more than 70 percent do now.

In addition to having their own websites, dealers are also starting to rely on social media to communicate with their customers with nearly half of all dealers using Facebook.

I would like to thank all of those dealers who took time out of their busy schedules to complete the survey so that we could validate the results. I hope the results help you to make the necessary adjustments to how you conduct business so that you can increase your profitability.