Why Dealers Offer Demo Rides – Or Don’t

Looking to buy a new bike and planning to spend $10,000, $15,000, or more?More people are answering “yes” to this question. Sales are up modestly in most street bike categories this year, despite the fact those shoppers often hear the same thing from dealership sales persons when asking for a test ride before making the final decision. That is

, “Sorry, no demo rides – our insurance won’t allow them.”

The real answer is more complex and involves decision making by dealer management on several levels.

Firstly, the “no insurance for demos” answer is not as straight forward as it sounds. The cost of insurance coverage for dealerships is a serious part of their overhead. A modestly-sized, two-brand store could easily see monthly policy premiums of $3,000 or more. As insurance premiums are directly related to business size, premium’s can be even higher for big stores.

Getting liability and comprehensive coverage for demo rides can be included in many policies. Sometimes they are rolled into the basic policy’s coverage. Other times they’re separate policy line items. In any case, there is a cost associated with this kind of coverage. The dealership may simply opt out of this coverage, thereby saving some money. So, blaming the insurance company may not be exactly correct.

There is, of course, the real possibility that the dealerships insurance company does not offer this type of coverage. Rather than shop for another carrier, the dealership simply says, “Our insurance won’t allow demo rides.”

Another serious consideration for dealerships is how they will physically manage the demo process. Signing a prospective buyer up for a demo ride takes time. There is paperwork to be filled out, getting the demo bike prepared (find the bike, check gas, mount a license plate, explain basic controls to the rider, etc.).

Will the test rider be allowed to take a solo demo ride or will a dealership employee accompany him? Not too many dealers have extra staff around to ride shotgun on demo rides. Unsupervised demos have a whole assortment of risks associated with them. How about the time one of our demo riders decided to take a BMW GS into a state park, past a “road closed” sign, and onto a dirt track? The result was a crash, $4,000 dollars of damage to the bike, an injured rider, and two employees dispatched with a truck to rescue both crash victims.

Adding miles to bikes is another consideration for the dealership. Few manufacturers offer demo programs, so the cost of depreciating the value of new bikes as miles are added typically falls on the shoulders of the dealership. Even if a dealership has decided to offer demo rides, there are decisions to be made based on specific circumstances.

Suppose you’re a multi-line Japanese motorcycle dealership. One fine day three young men roar into your lot riding 600cc sport bikes, some of which bear the scars of low sides and other misfortunes. One of them is interested in the latest liter bike. He’d like to take a demo ride to confirm his choice. The dealership sales person has visions of all three hot shots having a go at the test bike once they are out of sight of the dealership. Images of wheelies dance in his head. He does his best to explain why there will be no test ride available – while trying not to alienate the prospective customer.

Making the decision whether to offer demo rides is not always easy for dealerships. Savvy dealers know the facts – dealerships that offer demo rides have a substantially higher sales closing rate than dealers who do not. Weighing the cost, risks, and inconvenience of demo rides against the potential for new sales is another one of the many decisions dealers have to make when structuring their business for success.

– By Bob Rosen