Motorcycle Dealership Business Overview
A motorcycle dealership primarily focuses on selling and servicing motorcycles, with some dealers also offering ATVs or personal watercraft as additional product lines. These businesses combine vehicle sales with maintenance services to build long-term customer relationships.
Most dealerships maintain a showroom displaying their inventory, along with a service department staffed by certified motorcycle technicians. Many dealerships also feature a retail section for accessories, riding gear, and merchandise.
The most common business models motorcycle dealerships follow include:
- Full-Service Dealership: Authorized dealer for major motorcycle brands offering new vehicle sales, certified pre-owned motorcycles, parts, accessories, service, and repairs
- Independent Used Motorcycle Dealer: Specializes in pre-owned motorcycle sales and basic service work
- Service-Focused Shop: Primarily offers motorcycle repairs, maintenance, customization, and parts sales with limited or no vehicle inventory
Related: Checklist To Start A Business
How Do Motorcycle Dealerships Make Money?
The primary income source for motorcycle dealerships is selling new and used motorcycles. Customers purchase vehicles directly from the showroom floor, with sports motorcycles representing the largest portion of sales, followed by cruiser and touring motorcycles.
Additional revenue sources these businesses typically generate include:
- Service and Repairs: Income from maintenance work, repairs, and labor charges for motorcycle servicing
- Parts and Accessories: Sales of replacement parts, riding gear, helmets, and motorcycle-specific accessories
- Extended Warranties: Commission earned from selling warranty coverage plans for new and used motorcycles
- Financing: Fees and commissions earned by arranging motorcycle loans and insurance through partner financial institutions
- Trade-Ins: Profit margin generated by purchasing used motorcycles from customers and reselling them after reconditioning
Industry Statistics
Motorcycle dealerships fall under NAICS code 441228: Motorcycle, ATV, Personal Watercraft Dealers. This code represents businesses engaged in retailing new and used motorcycles and parts and providing repair services.
Here are some statistics about the motorcycle dealership industry:
Motorcycle Dealership Industry Size & Growth: The motorcycle dealership industry generated $36.0 billion in revenue during the last year. The industry experienced a slight decline, with an average annual decrease of 0.6% over the past five years. Revenue is projected to increase 2.2% annually through 2029. (IBISWorld)
Number of Motorcycle Dealerships: There are 15,056 motorcycle dealerships operating across the country. The industry remains highly fragmented, with no single company controlling more than 5% of the total market share. Most dealerships operate as independent businesses rather than franchises or chains. (IBISWorld)
Motorcycle Dealership Profit Margin: The average profit margin for motorcycle dealerships is 5.23%. (IRS)
States with Most Motorcycle Dealerships: The states with the highest concentration of motorcycle dealerships align with population centers and areas with favorable riding conditions throughout the year. California, Texas, and Florida have the largest number of motorcycle dealerships, followed by New York and Pennsylvania. (Bureau of Labor Statistics)
Startup Stories
Costs To Start a Motorcycle Dealership
Starting a motorcycle dealership typically requires between $500,000 and $2 million. The amount needed varies based on location, size of operation, and inventory levels.
There are many expenses involved in opening a dealership, but these are some of the more expensive items to consider:
Initial Inventory: A basic inventory of new and used motorcycles costs $200,000 to $500,000. This allows for a mix of different motorcycle styles and price points to attract various customer segments.
Building and Facilities: Leasing or purchasing a commercial space with a showroom and service area ranges from $150,000 to $400,000. The space needs to accommodate motorcycle displays, service bays, parts storage, and customer areas.
Equipment and Tools: Professional motorcycle lifts, diagnostic equipment, specialty tools, and shop equipment costs between $50,000 to $150,000. This includes both general and manufacturer-specific tools needed for servicing different motorcycle brands.
Parts and Accessories: An initial stock of parts, accessories, riding gear, and merchandise typically costs $75,000 to $200,000. Having common replacement parts and popular accessories available helps generate immediate sales and service revenue.
These estimates represent general ranges, and actual costs will vary.