MOTORCYCLE Holdings, Australia’s biggest motorbike dealer and accessories group, is to expand its retail outlets despite admitting the pain of a falling market and retreating sales of the Harley-Davidson brand.

Australia’s new-motorcycle market is down seven per cent for the September quarter, with road bikes dropping 13 per cent. In the same period, sales of Harley-Davidson bikes plunged 25.1 per cent.

In a report to the Australian Securities Exchange (ASX), Motorcycle Holdings said the downturn would not halt its acquisition program that, in the past financial year, added three dealerships to the company’s network.

“Current efforts are concentrating on integrating new acquisitions and improving current businesses,” the report said.

The company said it would invest more in used-bike stock and also adopt a more aggressive position for its wholesale business, Cassons. It expects an expanded retail network will improve Casson’s sales.

In the past financial year, the company reported revenue of $302.4 million, up 29 per cent on the previous year, and profit of $87.8 million, up 40.8 per cent.

New-bike sales were up five per cent in 2017-18, leading to a gross profit of two per cent, while used-bike sales were up 13 per cent which equated to a gross profit of 17 per cent.

Motorcycle Holdings said profit was up eight per cent on service and repair business, and up 83 per cent in its accessories and parts department. However, finance and insurance income fell 11 per cent in the same period compared with the previous year.

Motorcycle Holdings operates under business names including parts and accessory stores MCA Motorcycles, TeamMoto and wholesaler Cassons.

It added the Polaris franchise to its outlet in Springwood and now plans to expand the MCA outlets.

One area that has reaped high rewards for the company is its finance arm.

It said that up to $4 million a month of retail finance contracts are being placed through Motorcycle Finance Pty Ltd, half owned by Motorcycle Holdings in a joint venture with Allied Credit.

“The volume is running at close to double initial plans with all KPIs in the expected range,” the report said.

“Motorcycle Holdings enjoys the same commission rates with Motorcycle Finance as with other leading finance providers.”

“Profits are shared equally and will increase significantly for the first five years as the portfolio matures.”

Although new-bike sales were drifting, the company plans to accelerate its used-bike business and increase the presence in its dealerships.

“Used bikes are now being sold from two MCA Motorcycles accessory stores, with four more to follow soon,” the company said in its ASX report.

By Neil Dowling