Powersports dealers have proven to be a powerful collection of engaging and knowledgeable business owners whose successes have required the ability to change and adapt. Sometimes, that means the answers are right in front of them. That’s why powersports dealers don’t need to reinvent the wheel when it comes to offering finance and insurance (F&I) products to their consumers.

With many successes and many mistakes along the way, auto dealers have spent 40 years developing the F&I business model. Today’s consumer-friendly, full-disclosure presentations allow consumers to make their own choices. Powersports dealers have the advantage of applying these best practices to not only produce significant profits, but to also create a win-win situation for both themselves and their consumers. With the right partner, many F&I products can easily be adapted for the powersports business model.

For example, window etching wouldn’t be a feasible product in the powersports market, but parts marking is a popular theft deterrent. GAP total-loss protection is another core F&I product for powersports, especially with some motorcycles costing more than an entry-level car. Road hazard protection is another product that’s gained in popularity this decade. Much of that is due to the cost of tire and wheel replacements, which are not covered by manufacturers’ warranties.

In addition, many distributors and administrators of F&I products realize the difference in selling environments between auto and powersports. Not every dealership has a dedicated F&I manager, so many F&I product transactions are completed by the sales staff.

Although not having an in-house F&I department can pose a challenge, administrators have developed sales strategies to integrate F&I products into the sales process. Many sellers and administrators can easily customize tools for dealership sales staffs, including how to make the sales presentation and objection-handling strategies. However, most dealers, large or small, find they have much higher F&I profits when they establish a dedicated F&I department.

Almost anyone who touches powersports F&I is familiar with service contracts and maintenance. However, for this article we’ll take a look at how powersports dealers can take advantage of theft protection, GAP protection and tire-and-wheel road-hazard protection.

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1. Theft Protection

According to the National Insurance Crime Bureau, approximately 70,000 motorcycles are stolen in the United States each year, resulting in millions of dollars in losses. What’s worse is that motorcycle theft-recovery rates are typically only in the 25-to-30-percent range.

This is why many consumers choose theft-protection-marking systems once it is explained by their salesperson or F&I manager. Marking is a process in which a tamper-resistant label, containing a unique registration number, is placed on various metal parts of a motorcycle. If removed, it will leave a traceable image that is readable with a black light. This can be demonstrated using a desktop prop supplied by the distributor.

An endorsement from the salesperson or F&I manager can go a long way, but there’s another strategy that can prove effective.

Marking the dealership’s entire inventory is a strategy employed by many auto dealers. Just make sure salespeople are trained to point to the warning stickers during the customer walk-around. At that time, they should explain that the dealership marks its entire inventory with traceable identification codes to protect the dealership against theft.

Customers should then be reminded of the markings during financial disclosures. This is when the dealer representative can offer the consumer the option of having the theft-protection benefit transferred to his or her name. Also make sure to relay the following benefits of theft-protection marking:

1. Motorcycles and ATVs with marked parts aren’t very popular with chop shops because they can be traced, which makes them undesirable to thieves. Additionally, the registration number, along with the VIN, is registered in a secure database accessible by law enforcement agencies throughout North America.

2. If the markings are removed by a thief or chop shop, law enforcement will still be able to detect the impression made by the marking system.

3. Many administrators provide a substantial financial benefit in the event a motorcycle or ATV cannot be recovered. This benefit can be used for the primary insurance deductible (if the consumer has coverage) and costs related to the purchase of a replacement powersports vehicle.

Objection Handling: Theft-Deterrent Products

Customer: I have never had a motorcycle or ATV stolen. So I won’t need it?

Response: It only takes seconds to steal a motorcycle or ATV. Your out-of-pocket expenses in the event of a theft will far exceed the cost of the theft protection. Even with full-coverage insurance, many insurance companies will not adequately cover the costs associated with theft, such as the insurance deductible and payoff deficiencies (where applicable), not to mention the taxes and fees on the replacement motorcycle or ATV.

Customer: I don’t need to register the motorcycle or ATV because the identification number is already on the vehicle.

Response: If the theft-protection program is not purchased, the warning stickers will need to be removed, the motorcycle or ATV will not be protected from theft and you will not receive the financial benefits if your motorcycle or ATV is stolen. (At this time, the salesperson or F&I manager should remind the consumer of his or her potential out-of-pocket expenses.)

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2. Gap Total-Loss Protection

GAP protection is a classic F&I product that easily translates into powersports sales. Motorcycles and ATVs are a large investment. And, like car and truck owners, powersports consumers don’t want to deal with the hassles and expenses related to a total loss situation. In addition, F&I administrators experienced in the powersports market have developed GAP protection programs for both installment and revolving loans.

Because of common risks associated with theft, collisions and natural disasters, it is important to convey the potential of a consumers’s motorcycle or ATV being stolen or damaged beyond repair. Then, explaining how the product “closes the GAP” should close the deal. GAP covers the difference between the primary insurance settlement and the loan balance. It should also pay for all or a portion of the consumer’s primary insurance deductible. Consumers often think that insurance will pay the entire loan payoff amount, so it’s crucial to explain the difference between the payoff amount and the actual cash value.

Objection Handling: Gap Protection

When it comes to GAP protection, consumer objections tend to center around their expectations about the insurance settlement. A prepared salesperson or F&I manager can overcome objections by knowing the product and creating the need by properly educating the consumer about the practices of insurance carriers. And if the consumer doesn’t have primary insurance, GAP is even more valuable.

Customer: I have insurance already; I don’t need more.

Response: Your insurance company is obligated to provide you funds equal to your actual cash value. However, it is not obligated to give you the amount equal to your payoff. If you were to owe $10,000 on your powersports vehicle and your insurance carrier offers you $6,000, you still would be obligated for the balance of the loan. For a few more dollars a month, you can protect yourself against from this potentially costly occurrence.

Customer: I can’t afford it.

Response: What would happen if your motorcycle or ATV was deemed a total loss and you owed $5,000 more than your insurance company said the actual cash value was? Well, you would have to come up with that $5,000. Wouldn’t it make more sense to pay $10 more per month right now for that coverage and peace of mind?

Customer: I’ll check with my insurance company about GAP.

Response: Did you know that some states do not allow you to purchase GAP from your agent because there can be a conflict of interest? When your agent realizes that you have their GAP, there is a greater likelihood that he or she will not total your vehicle. If the insurance company fixes your motorcycle or ATV and doesn’t total it out, you will have a greatly devalued motorcycle or ATV.

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3. Tire and Wheel Protection

Did you know that 23 percent of the nation’s major metropolitan roads have pavements in poor condition, costing the average motorist $413 annually in additional vehicle operating costs? It’s one of the reasons why tire-and-wheel protection has grown in popularity.

Tire and wheel protection is one of the newer F&I products that powersports dealers can add to their offerings, as the benefits easily translate into value for the consumer. Most people can relate to the expense of replacing a tire or wheel due to a road hazard.

Tire and wheel protection plans replace tires and/or wheels due to a road hazard, which is defined as a pothole, metal, nails, screws, glass, or anything in the roadway that should not be there. In addition to the tire and wheel being replaced, most plans cover expenses related to mounting, balancing, valve stems, and sales.

A good source for statistics to help you build a case for tire and wheel protection is TRIP, a national transportation research group (www.tripnet.org). In it’s March 2008 report, TRIP noted that transportation agencies are facing significant challenges in improving urban pavement conditions because of budget shortfalls and increased vehicle travel. In fact, 18 states are expected to face budget shortfalls totaling more than $14 billion this year.

Objection Handling: Tire and Wheel Protection

The best way to begin the sale of road-hazard protection is to describe the limitations of the factory warranty. Knowing that the wheels and tires damaged by a road hazard are not covered by the factory warranty will help the customer understand the tremendous expense this type of damage poses. By reiterating the expense involved and the value of the coverage, many consumers purchase the protection even if they initially have objections.

Customer: I’ve never had a flat tire before.

Response: I understand, but you never know when an unforeseen object in the road will cause you to experience a flat. For only a few dollars a month, you can protect yourself from the hassles of this situation and the costs associated with it.

Customer: I’ll just take my chances.

Response: Do you realize that your tires are the only part of your motorcycle or ATV that touch the ground? Think about that. Tire and wheel damage can be the most expensive repair you will have that is not covered by the manufacturer’s warranty. Therefore, I’m sure you can see why most of my customers take advantage of the tire and wheel protection program.

Customer: I don’t want to raise my payments anymore.

Response: Staying within a budget is important. You will notice that with this protection your payment is $249 per month. Without it, your payment is $240 per month. So, for only $9 per month, you are budgeting for any future expenses and the peace of mind that goes with it. Would you prefer the 36-month program, or would you like to upgrade to the premium 60-month program?

David Duncan is the senior vice president of sales at Safe-Guard Products International LLC, a provider of F&I products to the powersports industry.