PowerNewsTM

VOLUME 9 • APRIL 2016www.npauctions.com

IN THIS ISSUE

Spring has sprung and the V-Twin sector is revving up! Harley-Davidson stock is paying dividends, Indian is on the warpath and Victory is on the gas with the launch of the Octane. After appearing to go into hibernation in Q4, the big V-Twin industry is back on the throttle. The V-Twin Expo in February and the unofficial kickoff to 2016 at Daytona Bike Week demonstrate the V-Twin market is back with a vengeance. Polaris plans to prosper with new offerings from Victory and Indian, but they have a long way to go to topple The Motor Company, who is investing $70 million into retaining the title. Where better to fire a shot across the V-Twin industry's bow than at the 75th Daytona Bike Week bash? After unveiling the Octane and Stealth model Victory motorcycles to dealers and the media, Bike Week witnessed a substantial public push on the reinvigorated brand. Add the Hooligan Indian Scout Sixty dirt trackers rolling into the beachside biker's mecca and it is clear that Polaris planned to crash what had been basically a private party for Harley for decades. Throw in the launch of the new Springfield model targeted right at the Harley Road King and an AMA Pro Flat Track racing legal 750cc powerplant announcement and it looks like the Indian vs. Harley rivalry is back! “Bike Week kicks off the riding season and serves as the perfect place to showcase our modern American muscle with the all-new Victory Octane – the lightest, most powerful and quickest Victory Motorcycle ever produced,” says Steve Menneto, President of Motorcycles for Polaris Industries. “Victory’s goal this year is to highlight the outstanding performance of all of our models, and Victory’s activities and

displays in Daytona are the perfect place to see how we’re pushing the performance envelope.” Coinciding with Polaris' Victory party is the Indian uprising. Indian invited race fans to witness the Roland Sands Design Super Hooligan Indian Scout Sixty dirt trackers in action during Daytona Bike Week. Following on the heels of IV League Flat Track races in California, the RSD Super Hooligan Indian Scout Sixty race bikes went on tour leading up to Daytona, with races at The One Show and Mama Tried events. As if this weren't enough, Indian announced their new Springfield. As Cycle World magazine quipped: "Attention Road King, someone wants your throne." CW Editor-In-Chief Mark Hoyer says, "Clearly, Indian has observed the highly successful model-proliferation playbook developed in Milwaukee. As well it should. The core product from Indian is well designed and engineered, making the work to produce more good models from the basic platforms relatively straightforward. The Springfield is one of those good models."

Taking Stock Of The SituationSo is The Motor Company worried about abdicating their V-Twin crown? The answer would appear to be a definitive and resounding "NO!"

see VIBRANT V-TWIN MARKET p2

MOTORCYCLE SALVAGE BILLMEDIA - POWERSPORTS FINANCECALENDAR - UPCOMING AUCTIONSNPA ON THE MOVE - DESERT TRIP

VIBRANT V-TWIN MARKETEDITOR’S NOTE -THINKING AHEADEFG - CERTIFIED PRE-OWNED PROGRAMBUELL IS BACK - EBR RETURNS

VIBRANT V-TWIN MARKET 2016

REVS UP!Harley-Davidson came out swinging for 2016 with the most powerful collection of cruisers in the brand’s 113-year history. In a further show of strength, the Harley-Davidson, Inc. (NYSE: HOG) Board of Directors approved a 35 cent per share cash dividend for the first quarter of 2016 — an increase of 12.9% compared to the 2015 Q4 dividend of $0.31 per share. This dividend was paid on March 4, the day after the Indian Springfield unveiling. Coincidence? Perhaps not. The Board also authorized the repurchase up to 20 million shares of Harley-Davidson common stock (this is in addition to the existing share repurchase authorization the Board approved back in June 2015. As of the end of 2015, 9 million shares remained on that share repurchase authorization). In October, Harley doubled down by unveiling plans to increase its customer-facing marketing 65% and boost investment in new product development by 35%. Approximately $70 million is being invested to drive demand, focused in four areas: increasing product and brand awareness; growing new ridership in the U.S.; increasing and enhancing brand access; and accelerating the cadence and impact of new products. "We are focused, with strength and resolve, on growing demand and building on our substantial market leadership position," said Harley CEO/President Matt Levatich. "Although we expect the macro-economic environment to remain challenging, we are confident we'll continue to lead with our powerful brand – not simply because of our substantial strengths, but through our increased demand-driving investments and our incredibly talented and passionate employees and dealers." In a branding tour de force, Harley-Davidson celebrated the 75th anniversary of Daytona Bike Week in style with custom bike shows, demo rides and a special outreach to those on the front lines.

Spring is my favorite time of year: the days are longer, the air is warmer, and retail traffic is increasing as buyers are shaking off winter. Over the next 3-4 months most

dealerships will do a majority of their annual sales. The spring selling season brings a lot of trade-in, Craigslist and eBay opportunities because the retail market is strong and consumers are motivated. Yet all too often we experience dealers who purchase units at spring prices only to end up selling later at fall prices. Besides the loss in value, those units also take up floor space and capital during the busiest transactional months of the year. One way to expand margin and inventory management beyond your peak season is by investing in your pre-owned product with a one- to two-month-ahead mentality. By pricing purchases for the future rather than today, you can be competitive but less prone to future downside. Thinking ahead during the purchase makes it easier to retail units at a discount if needed. Thinking ahead also makes it less painful for any units that go straight to auction - or that eventually get wholesaled or auctioned later if they sit more than 90-120 days. Below are six suggestions to help your Summer, Fall and Winter be as good as your Spring.• Take every trade you can and either retail it, or promptly wholesale it via auction as-is• Buy trade-ins and off the street purchases with the likely future wholesale auction value in mind• Use NPA Value Guide to get current values, then adjust downward depending upon how long you might hold the unit. Remember that wholesale pricing is generally higher in spring and less in late-summer through winter.• Adjust your inventory turn times – turn faster in Spring (45-60 days) and slower in fall-winter (90-120 days)• Adjust retail pricing after 25 days and again at 35 days, then wholesale via auction after your age limit• Check your inventory against NPA Value Guide at least once per month and promptly liquidate slow movers as well as units that are depreciating quickly

By following these six suggestions you can avoid being stuck with too much inventory and too much money invested to liquidate. Thinking ahead lets you enjoy your spring – and the rest of your year as well!

At a venue known for speed – Daytona International Speedway – they took a moment to slow down and say “thank you” by inviting a group of military personnel and first responders to take an unforgettable ride around the “World Center of Racing” during Bike Week festivities. This parade lap is just the start of free training for military and law enforcement professionals as a way to get more enthusiasts on bikes. Now through the end of 2016, all current and former U.S. military, and first responders, including law enforcement officers, firefighters and EMS professionals are invited to learn to ride for free through Harley-Davidson’s Riding Academy program. “Our offer of free motorcycle training for all U.S. Military and First Responders is all about expressing our appreciation for their service, so they can enjoy more of the freedom they work so hard to protect,” said Dino Bernacchi, Harley-Davidson U.S. Marketing Director. “We’re honored all of these riders joined us today. What a great way to celebrate 75 years at Daytona Bike Week, kick off riding season, and salute those who help protect everyone’s personal freedom.”Showtime!Guests were also invited to throw a leg over Harley’s newest bikes – the CVO Pro Street Breakout, the Low Rider S, and the Road Glide Ultra with its clean sheet design - and all available for demo rides in Daytona. While the OEMs’ jockeying for position took center stage during Bike Week, the aftermarket got to see the opening act at the annual V-Twin Expo weeks before Daytona. For nearly two decades, V-Twin Expo has brought together business-minded industry professionals each February to network, collaborate and exhibit the latest products for the V-Twin market. "Dealers want to see what's new right before

THINKING AHEAD

SENIOR EDITOR ..............Robin Hartfiel

PRODUCTION EDITOR ... Jim Woodruff

ART DIRECTOR. ...............Efraim Manuel

NPA San Diego, 12400 Stowe Drive • Poway, CA 92064 TOLL FREE 1.888.292.5339 • Fax 858.513.1599© 2016 National Powersport Auctions

VOLUME 9 • APRIL 2016 • NPA POWERNEWS • WWW.NPAUCTIONS.COM • P2

By Jim Woodruff

VIBRANT V-TWIN MARKET

MANAGING EDITOR ....... Ryan Keefe

SECTION EDITOR ........... Sara Spohr

continuedfrom cover

EFG COMPANIESCERTIFIED PRE-OWNED PROGRAM

EFG Companies, an industry innovator of consumer and vehicle protection programs, announced the launch of a Certified Pre-Owned Program designed specifically for powersports dealers “As the powersports market continues to recover, we know dealerships need showroom traffic now,” said Glenice Wilder, vice president of powersports, EFG Companies. “Our CPO program provides dealerships with an immediate means of capturing market share based on current consumer drivers. We are motivating customers to a make a purchase based on value that they can only get with a strong CPO program, and our relationship with NPA makes it easy for dealers.” EFG’s CPO program provides consumers with complimentary limited powertrain protection on name-brand pre-owned motorcycles. As an added benefit,

the riding season kicks into overdrive during Daytona Bike Week," says show producer and founder Jim Betlach. "We just give the industry what it is asking for." "The show reflects the size of the industry," he explains. "Nothing more, nothing less." A true microcosm of the market, the show has expanded and contracted during the sometimes turbulent ride since 2000. "During the chopper craze when we had dozens of aftermarket frame makers and specialty OEMs like Big Dog, American IronHorse, two different Indians and the like, the show expanded." When the chopper craze crashed and the overall market tanked in 2008, the show contracted accordingly. However the date and the location stayed constant, again based entirely on what the market wanted. "We don't do anything crazy, we just do what the market wants," adds Betlach. The good news is that the market wants to expand in 2016. Of the 200+ exhibitors on the floor plan, better than 10% are first-time exhibitors, including big guns from the automotive market like MagnaFlow exhausts and Red Line Oil. "New players are always good to have in the game and it reflects that the V-Twin market is continuing to rebound… 10% growth is well ahead of national average and most other segments of the powersports market. Boom Goes The Bottom Line!According to the latest MIC data (see MIC Snapshot on page 4) all on-highway motorcycle sales were up 6.4% through the end of 2015, while the total motorcycle market (dirtbikes, dual purpose and scooters combined) was up 4.7%. V-Twin Expo's growth and overall strength of the V-Twin sector are definitely ahead of the curve! Add in the innovative new product Polaris is bringing to the party and Harley's investment of $70 million into engaging new riders, and the domestic V-Twin market is on the fast track!

motorcycles purchased by dealers from NPA with an overall NPA Condition Report score of 75 or higher will automatically be eligible for the program (brand, year, mileage, engine, transmission and frame score limits apply). All vehicles are pre-qualified so no additional service inspection needs to be completed by the dealer. Dealers purchasing a CPO-eligible motorcycle can simply opt-in to EFG’s CPO program to retail the motorcycle as Certified Pre-Owned and market it to retail customers. Based on a recent third-party survey, 63 percent of powersports consumers place a higher value on CPO motorcycles by $500 to $1000. Wilder also stated, “A program like this is perfect for an independent dealer who wants to add value to their inventory without the hassle of performing their own inspections. This program increases buyer confidence and has customers coming back again and again.”

CONTRIBUTORS

SAN DIEGO • DALLAS • CINCINNATI • ATLANTA

VIBRANT V-TWIN MARKET

NPA CALENDAR

BUELL IS BACK MOTORCYCLESALVAGE BILL

After being brought back to life when Bill Melvin of Liquid Asset Partners bought EBR at a bankruptcy auction, it is appropriate that the first new bike be auctioned off. EBR Motorcycles is planning to auction serial #1 and donate the proceeds of the first American patriotic bike to a national charity that assists American military personnel and veterans. Did somebody say auction? NPA Regional Sales Manager Tony Avello was on hand for the official re-launch of the EBR brand and to offer assistance with the planned charity auction. “The launch of EBR Motorcycles in 2016 is very exciting for American motorcyclists and the Buell Nation around the globe,” states Bill Melvin. “The team at EBR is top-notch and they have worked enthusiastically towards this day. It’s a great day for America. America can succeed in manufacturing a high-performance sportbike that competes with the fastest motorcycles in the world. The excitement over EBR from riders is stunning, and dealers are quickly expressing their interest in being an EBR dealer. EBR is ready to twist the throttle and enjoy the ride!” Founder and CTO, Erik Buell said, “We are glad to see the talk all over the Internet and Facebook about the launch and those coming to the Launch Party event. It is always fun to meet riders in person, that’s what brings joy to the job!” For 2016, EBR Motorcycles is focused on their restructuring, as well as updates on their 2017 models and development of 2018 motorcycles and future innovations. EBR Motorcycles will continue to work closely with its race sponsors and privateer race teams - who are succeeding in racing EBRs worldwide.

“Working with Erik and EBR to develop an innovative superbike like the 1190 is just an amazing experience,” said Dan Hurda, Director of Engineering. “And on top of that, we are working on so many other exciting designs for the future. It’s the kind of job every kid who goes to engineering school dreams of.” Dealers interested in selling EBR Motorcycles should contact Sales@LiquidAP.com to receive an information packet on becoming an EBR dealer. Anyone interested in more information about the EBR Motorcycles partnership, investment opportunity, or purchasing assets that are in excess to current production should visit www.LiquidAP.com.

Tennessee title trouble will soon be a thing of the past. SB 1994 009256 by Senator Ketron and HB 1450 009256 by Representative Kane, closed a loophole in the law that applies to salvage, nonrepairable, rebuilt, and flood vehicle certificate of title requirements. The new law amends TCA Section 55-3-211 by appropriatly including motorcycles in the state's definition of a vehicle. This bill passed just before the spring recess and is just waiting for the Governor’s signature. "What the legalese means is that the state of Tennessee inadvertantley allowed for insurance companies to take advantage of a loophole to not disclose salvage on motorcycles," explains Al Sands, NPA's Director of Customer Care, who worked tirelessly with HDFS, the Motorcycle Industry Council, local dealers and insurance underwriters to clear things up. "Basically they did not have to brand motorcycle titles as salvage.

VOLUME 9 • APRIL 2016 • NPA POWERNEWS • WWW.NPAUCTIONS.COM • P 3

EBR RETURNSWITH AN AUCTION

FAST TRACKED TOSUCCESS

NPA Regional Sales Manager, Tony Avello, with Erik Buell, Bill Melvin Jr., and Bill Melvin Sr., the new owners of EBR Motorcycles at the reborn EBR Plant in East Troy, WI. They are standing with the first bike off the production line that will be auctioned off for charity, with the proceeds going to military veterans.

As you can imagine this exposes the consumer when they have a clean title but a salvage record on the vehicle. It left innocent parties with an asset that was misrepresented… and worth far less to re-sell." "As a franchised motorcycle dealer in the state of Tennessee representing Harley-Davidson, Indian Motorcycle and Victory Motorcycle, I feel strongly that this bill is monumental when it comes to protecting consumer rights," says Ricky Kelley of Harley-Davidson of Columbia Superstore. "A service like CarFax or InstaVIN tells the consumer about an automobile's history, and when auto titles should be branded as 'SALVAGE' — the motorcycle consumer deserves to buy with the same confidence that a motorcycle has no salvage history." A similar challenge exists for dealers in Illinois and a letter has been sent to Illinois Senator John J. Cullerton in hopes of circumventing the issues there. Legal eagles can get all the details at:www.wapp.capitol.tn.gov/apps/Bil l Info/Default.aspx?BillNumber=HB1450

www.npauctions.com

Another year had come and gone and another sand-filled getaway with NPA friends and family was in need. A caravan of ~30 adventurers rolled out Friday night and made the trek to Gordons Well Sand Dunes just East of El Centro, CA. A weekend of fun under the sun was had by all! Thankfully there were no broken bones - just a few damaged egos and mangled toys. Luckily, Vey’s Powersports had a test day set up no more than a football field away and a few fortunate souls got to test drive the new Yamaha YXZ1000. So how does this compare to other side-by-sides? Two words: Manual Transmission. This helps fuel economy, connects horsepower to the ground and adds to the overall excitement of driving a side-by-side. All in all it was another great weekend trip and we all lived our passion for the powersports.

“There’s no wholesale financing available for our dealerships.” “We can’t find retail financing for our customers.” We’ve all heard comments like these, but where can we go to learn and share more information? When GE Commercial Distribution Finance announced their shift to Wells Fargo and Capital One decided to exit the space last year everyone wondered who would take their place and help the OEMs and dealers provide the necessary financing Given everything going on in the industry during the past year, the need to know has never been greater. Enter PowerSports Finance.

“PowerSports Finance is produced by Royal Media, the same company behind the auto finance industry’s leading publication, Auto Finance News, and premier industry event, the Auto Finance Summit,” explains JJ Hornblass, Executive Editor/Publisher. “The goal is to fill the information void from a financing perspective.” PowerSports Finance came to fruition last summer when Auto Finance News polled lenders and found a significant portion of the institutional lenders serving the automotive market were looking for more information about powersports. Subsequently, they hosted the Inaugural Powersports Finance Summit in Las Vegas last October. Although there is a long road ahead of them, they are steadily producing new stories and information about powersports every day. “PowerSportsFinance.com is the first news outlet to focus solely on the powersports lending market,” adds Hornblass. “It offers industry professionals the first dedicated forum to share insights, best practices and practical intelligence on the financing of motorcycles, ATVs, jet skis, RVs and other specialty vehicles.” In addition to PowersportsFinance.com, Powersports Finance Quarterly was just launched. The digital magazine, daily e-newsletter and website are available to new and current subscribers. “The team at Powersports Finance are making strides at bridging the knowledge gap between the auto and powersports industries. Subscribe to their mailing list and receive daily e-newsletters and the quarterly print publication. You can also join the PowerSports Finance community on LinkedIn and Twitter. Visit www.powersportsfinance.com for more information.

MEDIA WATCHThe 2015 total new retail sales numbers are in and the news is good. The motorcycle market continued its incremental growth, ending up 3.6% last year with more than half a million new motorcycles being sold. The Motorcycle Industry Council (MIC) final numbers for Q4 show total on-highway sales of nearly 351,000 units, up 4.9% over 2014. Dirt bike sales were also up 1.9% in 2015 and dual-purpose bikes increased 7.8%. Much more detailed figures, including make and model breakdowns are available to MIC members, as is their comprehensive Statistical Annual. Every powersports dealer should become an MIC member and enjoy access to much of the same data and information as the OEMs, including snapshots like this one. For more details on the benefits of MIC membership, visit www.membership.mic.org

POWERSPORTSFINANCE

NPA ON THE MOVE DESERT TRIP TOGORDONS WELL SAND DUNES

OVERVIEW & SNAPSHOT THROUGH DEC 2015MIC SNAPSHOT

2015 YEAR-END

DECEMBER 2015VEHICLE TYPE GENERAL TYPE 2015

CURRENT2014PRIOR

UNITCHANGE

PERCENTAGECHANGE

ATV ATV 27,435 28,518 -1,083 -3.8 %

MOTORCYCLE DUAL 2,351 2,129 222 10.4 %

MOTORCYCLE OFF-HWY 11,877 12,049 -172 -1.4 %

MOTORCYCLE ON-HWY 15,317 16,615 -1,298 -7.8 %

MOTORCYCLE SCOOTER 1,622 1,668 -46 -2.8 %

MOTORCYCLE TOTAL 31,167 32,461 -1,294 -4.0 %

GRAND TOTAL 58,602 60,979 -2,377 -3.9 %

VEHICLE TYPE GENERAL TYPE 2015CURRENT

2014PRIOR

UNITCHANGE

PERCENTAGECHANGE

ATV ATV 228,380 229,552 -1,172 -0.5 %

MOTORCYCLE DUAL 36,917 34,249 2,668 7.8 %

MOTORCYCLE OFF-HWY 82,844 81,261 1,583 1.9 %

MOTORCYCLE ON-HWY 350,869 334,488 16,381 4.9 %

MOTORCYCLE SCOOTER 30,065 33,528 -3,463 -10.3 %

MOTORCYCLE TOTAL 500,695 483,526 17,169 3.6 %

GRAND TOTAL 729,075 713,078 15,997 2.2 %

VOLUME 9 • APRIL 2016 • NPA POWERNEWS • WWW.NPAUCTIONS.COM • P4