Stark actually profitable... kinda

[Erwin P]

I am not sure on the margins and it depends where you live I suppose. Having a dealer network is more than just service and markups though. A good dealer network can do localized marketing and outreach, especially to folks who are not early adopters and willing to make the change to a non-ice bike.

EVs generally in the US are suffering from many things but among them is a strong anti-EV press sentiment which sort of aligns EVs with one kind of politics or another. Local supporting dealers who are in communities serving those communities can do a lot to overcome this. Particularly with their core customers. In dealerships Starks can be seen as a good competitive bike not some symbol of some wokeness internet conspiracy or whatever the politics flavor of the day is.

And more than that, with production reaching upwards of a 1000 bikes per month, dealers can act like an inventory buffer in market fluctuations and directly serve customers in varied geographies. The internet is flat space un-tuned to localities. Plus, many customers are not willing to part with 10k for a mail order bike on the internet even though Stark has a pretty good reputation.

I am not a dealership fanboy but I think it would be short sighted --at least in the US which is currently one of Stark's largest markets-- to think the short term profit boost of a few bikes on the front end will offset the potential to really grow the brand in a solid way in varied markets. Even old well known companies like Nike have stumbled in failing to recognize how dealerships/resellers serve the overall business and often are more than just profit skimming middlemen.

I think Stark does a great job of a ''hybrid'' system here.
They have rather few dealers as you might expect from a starting brand. But there are enough to pick up and serivice your bike at one if you don't mind a longer drive there. However they also sell them online wich takes out the dealer margin and make more profit.

With a low number of dealers it's worthwile for them to be a dealer since they sell enough through scarse. But Stark can also sell them themselves for a higher margin.

A little sidenote. In the Netherlands we actually almost never see dealer mark-ups. The price any OEM mentiones on their website is the dealer price. For what i've heard thats very different in the US?

 

[happyinmotion]

Wait, what?

What's a dealer markup?

I'm in NZ and the price is the price. I can order direct for NZ$17,900 or go to the dealer and pay $17,900. How can it be different?

 

[Erwin P]

Wait, what?

What's a dealer markup?

I'm in NZ and the price is the price. I can order direct for NZ$17,900 or go to the dealer and pay $17,900. How can it be different?

Same here.

 

[AL_V]

Wait, what?

What's a dealer markup?

I'm in NZ and the price is the price. I can order direct for NZ$17,900 or go to the dealer and pay $17,900. How can it be different?

The price to the consumer may be the same, but that means that Stark is providing some discount to the dealers so that they can make a profit from the sale.
So it's better for Stark to sell direct.
In the US, (in general) dealers may provide a discount, sacrificing some of their profit to make a sale.
On rare occasions, a dealer may ask for more than the official "sticker price" if demand is high and supply is scarce.

 

[Patrick Verner]

The USA is huge market and the AMA is doing everything they can to sabotage Stark. How do you sell a race bike that you can't race? Without AMA insurance, most tracks couldn't afford to have races. Most tracks are AMA in this country.

 

[Chaconne]

The price to the consumer may be the same, but that means that Stark is providing some discount to the dealers so that they can make a profit from the sale.
So it's better for Stark to sell direct.
In the US, (in general) dealers may provide a discount, sacrificing some of their profit to make a sale.
On rare occasions, a dealer may ask for more than the official "sticker price" if demand is high and supply is scarce.

Wait, what?

What's a dealer markup?

I'm in NZ and the price is the price. I can order direct for NZ$17,900 or go to the dealer and pay $17,900. How can it be different?

As @AL_V says in the US resellers have flexibility to markup or markdown depending on supply/demand. Having a corporation fix a price and make everybody pay the same would hamper the free market in the US and also disrupt inventory control especially if local markets changed (NY's economic condition might not be in the same state as CA for example).

In the US Corporations try to fix prices but are often threatened with breakup for monopolistic behavior or worse price-fixing illegalities. Some price fixing is allowed for utilities in some areas but that is typically on a state by state basis. That is the theory at least, in practice well like everything it is a mixed bag.

 

[Beagle]

As @AL_V says in the US resellers have flexibility to markup or markdown depending on supply/demand. Having a corporation fix a price and make everybody pay the same would hamper the free market in the US and also disrupt inventory control especially if local markets changed (NY's economic condition might not be in the same state as CA for example).

In the US Corporations try to fix prices but are often threatened with breakup for monopolistic behavior or worse price-fixing illegalities. Some price fixing is allowed for utilities in some areas but that is typically on a state by state basis. That is the theory at least, in practice well like everything it is a mixed bag.

Not just between states though, is it? Like you could go to 2 KTM dealers in the same state and get 2 different quotes for the same brand new bike, right?

 

[Erwin P]

Here you actually can get a lower price on the bike compared to official numbers, but never higher.

 

[AL_V]

Not just between states though, is it? Like you could go to 2 KTM dealers in the same state and get 2 different quotes for the same brand new bike, right?

Right, each dealer can offer a discount (or price above "Suggested Retail") of varying degree.

 

[Chaconne]

Not just between states though, is it? Like you could go to 2 KTM dealers in the same state and get 2 different quotes for the same brand new bike, right?

Right that is correct, I was using the state example for illustration. 2 dealers across the street from one another could give different quotes and many times in some retailing they shop each other and deliberately undercut each other's prices.

Capitalist hardball is still played in many industries. Of course, there are utilities and healthcare that play by different rules in the US because downturns in those things could be more catastrophic than a few $k on a dirtbike.

 

[Chaconne]

Right, each dealer can offer a discount (or price above "Suggested Retail") of varying degree.

This is true but the "varying degree" is more like business pressure rather than an legal pressure. In fact, price fixing can be illegal in the US, though it is mostly big guys who can afford lawyers to bring cases that will pay them out.

Yet we also have a tradition in the US of seeking out alternatives if we don't like prices since we have the expectation that there will be variances to take advantage of rather than expecting that a fixed price is mostly what we get. MSRP is often a badge of dishonor.

I have found this as a cultural difference between Americans and Europeans in my work --we don't expect to pay MSRP and often it is the opposite in Europe..

 

[Chaconne]

Here you actually can get a lower price on the bike compared to official numbers, but never higher.

Supply and demand can cause higher or lower here. OEMs try to stop it but they are usually overwhelmed when markets soar or crash --and that is when you find the most variation.

 

[Erwin P]

Lower price is often negotiated. Higher however not. When a dealer goes higher it will cost them their name. Also being a so tightly packed country they can't up the price without the risk of customers just going to the other dealer.

The 2 farthest towns are 4,5 hours apart, but it wil be hard to have 2 dealers more than 1 hour apart.