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OC Moto SoCal - Closed

GTM®

GTM®

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GT di Razza Pura
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I just heard yesterday from multiple sources that OCM will be closed for good this coming week. Anyone here have any intel? Seems very sudden and without much public notice. If you have a bike there, probably want to to go grab it quickly.
Another one bites the dust. Around the 10th in the last 15 years.
 
I was wondering why Jim sent an email on Nov 14, 2023 sending Triumph customers to Riverside County Triumph.
Bought my 2019 V7III at OCM, Jim and everyone there were nice to work with.
 
I hate to hear this stuff but some people are wealthy but don’t know the value of a MBA who is on the ball.

This place was destined to collapse.

Look at what they sell:

Piaggio, Vespa, Moto Guzzi, MV Agusta, Royal Enfield and Triumph.

All cool brands indeed. Who wouldn’t want to have this, right?

IMG 3268




Now let’s look at MARKET SHARE of what they sell.



IMG 3267

Every single brand they represented, has less than 1% of the motorcycle market in this country.

I love Triumph and MV Agusta but they both have less than 0.25% of the USA motorcycle market.


Now the serious stuff. Look at their facility:

6,000+ sq feet. Orange County, California where rents are expensive and all are Triple-Net leases, a commercial lease where the lessee pays rent and utilities as well as three other types of property expenses: insurance, maintenance, and taxes

IMG 3269

IMG 3270



So, just to make the lease, the owner needed to clear, after provisions for taxes, about $9,000-10,000 a month, just to pay for the building.

We haven’t even accounted for utilities, employees, payroll taxes, general operating expenses, etc.

It was unrealistic to believe that enough revenue could be continuously generated by day to day operations. They did not have a steady stream of income every day to cover operations.

[THIS IS WHY THE REAL PLAYERS, LIKE AF1 RACING, HAVE A HUGE ONLINE RETAIL BUSINESS. THE PARTS AND ACCESSORIES DEPARTMENT, GENERATES A STAGGERING VOLUME OF SALES. THOSE DAILY SALES, PAY FOR OPERATIONS.]

The second biggest income stream has to be SERVICE.

If each lift is not generating at least $800 a day minimum in billed labor revenue, then it is not a sustainable business model.

This thing hemorrhaged cash from day 1.

I promise you.

(I was an excellent MBA student. I loved business analysis.)

Problem is, I never encountered an owner who would ever listen to the fact that “ their dream” had serious flaws with catastrophic consequences.

Motorcycle shop owners are a particularly stubborn group of people. I know, I was one.

We think because we willed something into existence, that we are somehow transformed into omniscients. Not true. In fact, we always wear the biggest blinders.

Objective financial analysis bugs the shit out of most owners and because of this, they are unwilling to listen to anybody but themselves.

I have NO IDEA for sure, if this is the case here, but I’m fairly positive that it most likely is what happened based upon my initial observations.

I’ve seen this exact business model fail time and time again.

What a shame.

I feel so bad for this owner. I really truly do.
 
scottmastrocinque said:
This place was destined to collapse.
Click to expand...
Oh if you only knew the beginnings, it could’ve been easily forecasted without your analysis. No need to beat a dead horse here, but the arrogance and ignorance from day one had it doomed, and that's when it was in the original small location renting HDs. Don’t feel bad.

Piaggio (too) is ignorant to the SoCal market, and this MotoPlex model is a sick joke. We had a small dealer model here that was glowing with sales, but they just made the first big step in the wrong direction in moving into a too large of space.
Only way to survive with this marque is the small shops that love the brand, but you know the story there. Oh well.
 
We have here in BC, International Motorsports, with whom I have an excellent relationship and the service and accessory staff are really helpful and kind to me, but they are taking on more and more brands and currently sell...Triumph, Aprilia, Moto Guzzi, Royal Enfield, Zero, Husky, Gas Gas, MV Augusta and have just extended their saleroom to add Indian, and it almost mirrors the above example with the variety of brands, plus Vespa, Arctic Cat (for the snow time) and Ural! That, my friends, is a lot of motorcycles.
 
BrianR said:
We have here in BC, International Motorsports, with whom I have an excellent relationship and the service and accessory staff are really helpful and kind to me, but they are taking on more and more brands and currently sell...Triumph, Aprilia, Moto Guzzi, Royal Enfield, Zero, Husky, Gas Gas, MV Augusta and have just extended their saleroom to add Indian, and it almost mirrors the above example with the variety of brands, plus Vespa, Arctic Cat (for the snow time) and Ural! That, my friends, is a lot of motorcycles.
Click to expand...
Indeed, that expansion worries me a lot. At least I now have access to Guzzi support here on the island again. Ignition Motorsports in Duncan. Wonderful people.
 
Piaggio made their sales to the dealer, done their job and continues on. Someone else may pick it up or the auction every year will get rid of the bikes.
You need lots of customers for large shops to work.
 
GTM® said:
Oh if you only knew the beginnings, it could’ve been easily forecasted without your analysis. No need to beat a dead horse here, but the arrogance and ignorance from day one had it doomed, and that's when it was in the original small location renting HDs. Don’t feel bad.

Piaggio (too) is ignorant to the SoCal market, and this MotoPlex model is a sick joke. We had a small dealer model here that was glowing with sales, but they just made the first big step in the wrong direction in moving into a too large of space.
Only way to survive with this marque is the small shops that love the brand, but you know the story there. Oh well.
Click to expand...

Remember when “Mom & Pop” dealers lasted forever? Small shops can survive the ups and downs of the motorcycle business.

Case in point, West Valley Cycle Sales. The oldest BMW motorcycle dealer in the USA. 3rd generation family still operates it to this day.

They have used California’s protective dealership laws to block BMW from driving them into bankruptcy with their ridiculous Corporate ID megastore bullshit.
 
scottmastrocinque said:
Case in point, West Valley Cycle Sales. The oldest BMW motorcycle dealer in the USA. 3rd generation family still operates it to this day.
Click to expand...
Well I'll be. I've been by this place dozens of times, and had no idea! I'll have to stop by on my next trek to the Valley. Thanks for posting Scott(!).
 
GTM® said:
Well I'll be. I've been by this place dozens of times, and had no idea! I'll have to stop by on my next trek to the Valley. Thanks for posting Scott(!).
Click to expand...
Tell Jay, (3rd generation owner/operator) Scott Mastrocinque formally of Brattin Motors in San Diego, and Scott’s Motorcycle Workshop in Findlay, Ohio, says “Hi!”

I knew his Mom, Dad, and both Grandparents very well. They were all stellar people.

His Mom, Laurie, was famous for her hand-typed newsletters. She hated the computer and refused to use a word processor! 😆



West Valley Cycle Sales - Circa 1950’s

Oldest same family owned dealership of BMW Motorcycles in the USA.

STILL THERE TODAY BECAUSE THEY NEVER BOUGHT INTO THE FANCY DEALERSHIP BULLSHIT!

IMG 3276
 
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Too, COV19 saw over $3T ($3,000,000,000,000) enter into the real economy. Interest rates had been trending down for 40 years, RE values have soared in the recent past making it an easy for consumers to refinance their home & pull $$$ out for a new motorcycle or whatever. Inventory financing for dealers in the recent past must have been an order of magnitude easier. Just surmising here, there were similar stories around the 2008 GFC.
 
Not sure about the USA but in the UK (and I would imagine mainland Europe too) RE has established its own dealer network rather than using an importer. Difficult yet to discern any difference but we’ll see. I imagine there are some dealers who no longer feature in the RE official network.
 
They received a $104,778. ppp loan in 2020 & another of $84,700 in 2021. The first one was forgiven, the second one is unclear how it settled. They claimed 14 jobs. Interesting but the info really doesn't tell us much. Wondering if they filed a bankruptcy. In any event, the macroeconomic environment has changed, the amount of money circulating in the real economy should be tighter for some time. I think these business models are interest rate sensitive - that could have been enough to tip the scales for them.
 
Economic Injury Disaster Loans (EIDL) were also available to small business like this during & subsequent covid, my understanding is it would be possible to take out a loan for up to 30 years at 3.75% & so long as the loan did not exceed $200,000 no personal guaranty would be required & the loan could be discharged during bankruptcy w/o harm to the corporation's officer's personal credit. To be clear, I have no idea if any of this is applicable, just pointing out the type of incentive's that were available to business just like this one during this time.
 
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