With all the bad news floating around, crawling into a hole
really doesn’t sound like a bad idea these days. However, that’s not what
businesses do. And it’s clear by some of the more positive news out there that
industries aren’t ready to throw in the towel.
Take Hyundai’s announcement of a complimentary 12-month
vehicle-return program, which allows consumers to return their vehicles if they
lose their jobs, become disabled or lose their license due to an illness.
What a new and revolutionary idea, right? Well, not exactly.
The company which created it, WALKAWAY, has been around since 2000. The company
is a division of EFG Companies, a Dallas-based performance management company.
Word on the street is EFG Companies is teaming up with two
motorcycle manufacturers to bring the same program to the powersports industry.
We’ll have more on that in the upcoming issue.
I also like what Harley-Davidson did in January. Basically,
it’s guaranteeing the trade-in value of some Sportsters when traded in for a
more expensive bike. Apparently, analysts loved it, too.
“Of all the things Harley can do to be promotional,
leveraging the fact that its bikes hold their value well is a strong message,”
said Craig Kennison, a market analyst for Robert W. Baird & Co.
Now look, it’s tough out there. We learned in December that
we’re not just in a recession, but we’ve been in one since December 2007. The
Federal Reserve also reported in January that consumer lending dropped by $7.94
billion last November, the biggest decline in 65 years.
Now, the Fed doesn’t provide any type of analysis with its
report, so it’s unclear if the drop was due solely to the credit crisis, or
because of a major retrenchment by consumers. I’m guessing it had to do with a
little of both, especially after a recent conversation with Tony Boutelle,
president and CEO of CU Direct, a Southern California-based company that
connects credit unions, their member and dealers through its own lending
network.
Like other lending segments, liquidity is quickly becoming a
problem for credit unions, said Boutelle. In fact, four out of the top five
lenders on CUDL’s portal are tapped out, which means there is a limit to how
active credit unions can remain.
Boutelle added that when it comes to powersports lending,
credit unions will focus on existing members. The problem is credit unions
don’t have the infrastructure to handle delinquencies and repossessions to
originate loans at the point of sale, but that doesn’t mean you shouldn’t make
contact with them.
It’s easy to see why many market analysts and investors are
betting against industries that rely on a consumer’s disposable income.
However, it’s a little disheartening when these wagers impact companies that
are actually bucking the trends.
Take Polaris. Investors continue to bet against the
recreational vehicle maker, and the Medina, Minn.-based company continues to
show them up by keeping earnings and forecasts on track. In October, much to
the dismay of investors, the company raised its year-end forecast, and still
reported third-quarter sales that grew nearly 7 percent to $580 million.
See, no one gave Polaris any credit for creating a $100
million product category with its side-by-side ATV segment. Trust me, I
understand what investors are seeing, especially with major lenders like HSBC
and GE Money tightening lending standards. But it doesn’t help the situation
when the perceived risk investor’s have about the industry and consumer spending
makes the company’s performance irrelevant. Heck, even my profession is taking
hits these days. I even had a guy who spent the last couple of years in the
mortgage business tell me that journalism was dead. I guess he’d know best what
a doomed industry looks like. Look, I come in everyday to do my job, regardless
of all the doom and gloom out there. And as I continue to get better acquainted
with you, I know you do the same. Let’s just keep plugging away, as it’s clear
we all need to shift into survival mode.