Windy City rides a revolution in the motorcycle industry

The landscape of the auto and motorcycle industry has changed drastically in the last five years. Independent dealerships and even small auto groups are being acquired at unprecedented levels.

With increased competition from larger groups, the old-school independent dealers are being forced to reassess the way they operate. Higher operating costs are also fueling consolidation.

The U.S. auto retail market shrunk from around 22,000 car dealerships in 2005 to 18,000 in 2015 (a 20-percent reduction in individual owners) and the trend will continue, driven in large part by an aging owner population and dwindling profitability of the single owner and operator.

These acquisitions were generated by large publicly traded dealer groups such as AutoNation Inc. Just recently, the publicly traded Lithia Motors Inc. acquired a New York based auto group that had been in operation since the 1920s.

Automobile-related retail businesses are also consolidating at fierce rates. Icahn Enterprises bought Pep Boys and is planning to merge these auto parts stores with its Auto Plus parts business. Monro Muffler Brake Inc. added 65 stores via acquisition, including 56 in two major purchases - Clark Tire & Auto Inc. and McGee Auto Service & Tires. Still further, telecom, media, pharmaceutical, shipping and other industries are consolidating at head-spinning rates.

The motorcycle industry is following suit in a hurry. "Mom-and-pop," single-owner dealerships are disappearing because of the difficulty to maintain profitability. This consolidation allows larger companies to use economies of scale to combine accounting, advertising, parts and service, and financing functions to bring down costs. As these larger entities become more profitable, they can lower costs to customers and create better customer experiences.

Large motorcycle groups operate on the Darwinian theory that the strong survive and evolve faster. The larger buyers bring in fresh blood, better processes and modern tools. Now we can see an underperforming store completely turn around months after being acquired by a better, larger operator.

Consolidation in many industries simply makes sense. And the motorcycle retail industry is no different. A collective dealer group is not only able to offer more options, lower prices and a staff with varied areas of expertise, but they also have lower costs on the back-end when it comes to things like employee health insurance and administrative staff. Rather than viewing it as a way to eliminate small businesses, consolidation is actually the key to saving the entrepreneurial spirit and ensuring that small towns throughout America continue to have their local dealerships to support.

Multi-dealer operators have stronger resources to provide a higher level of professionalism, training and development than single-owner dealerships. From shared motorcycle parts and accessories and clothing inventory to multiple locations for pickup and delivery, service, riding lessons and rentals, the convenience to the customer is endless.

We are watching one of the biggest innovators in this consolidation shift flourish right here in the Chicago area.

Ozzie Giglio, CEO of Windy City Motorcycle Co., has grown WCMC from one dealership, Wild Fire Harley-Davidson in Villa Park, which he and his wife Jill purchased in 2001, to what is now a motorcycle company with 15 locations in Illinois and Wisconsin. These locations include the brands Harley-Davidson, Triumph, KTM and BMW.

WCMC is following this new direction with the consolidation of multiple Harley-Davidson dealerships in the Chicago and southern Wisconsin markets. In the last 16 years, WCMC has grown to 12 dealerships and three retail stores that employ more than 400 people.

"Our company has helped breathe life back into the Harley-Davidson brand by transforming struggling Harley locations back into flourishing businesses," Giglio said. "Acquisitions are a win-win-win for everyone involved. They keep prices low for riders, keep quality standards high, ensure highly trained staff to deliver a professional experience to customers, reward single dealer operators for their time in the business, create efficiencies of operations and ensure that customers are never far from a location, even when they are on the road."

WCMC is run by riders for riders, he said. The company's core values and mission statement emphasizes that motorcycling is more than just a sport, but a lifestyle that encompasses all walks of life. It's a community.

For a small dealership owner, this new trend of acquisitions is also a benefit, as it means that "owners have interested buyers and financial options when they decide they want to sell their company," says Giglio.

That being said, Giglio doesn't believe in acquiring dealerships just for the sake of it.

"We are only interested in adding locations to our company that can meet our high standards. We firmly believe that our success is due in large part to the fact that we are here to serve the rider community, and because we want to serve the community as a whole. By transforming underperforming dealerships into busy hubs of commerce once again, we create jobs, ensure storefront stability and contribute financial strength to struggling areas."

Giglio is certain that dealership acquisition is one of the most important ways the motorcycle industry can continue to remain viable in difficult economic conditions. Like the auto industry, a larger, stronger dealer-operator will be able to invest more heavily in infrastructure, operations, employee training and the customer experience, he says.

"Having a network of stores means that customers have freedom of choice, rider convenience and a strong commitment to value throughout the Midwest. And it means prices remain competitive. Whether they are a new rider seeking lessons, are looking for a place to store their bike through the harsh winter months or want access to the largest used inventory in the Midwest, WCMC has completely revolutionized the way that Harley-Davidson fans buy, ride and enjoy their motorcycles," Giglio said.

Today, all 400 WCMC employees go through ongoing training and reviews to make sure customers are properly handled, whether at the parts counter, service departments or sales floor. Riding a Harley-Davidson, or any motorcycle, is a very personal, emotional and visceral feeling, and the WCMC stores promote those feelings and passions, Giglio said.

Windy City is ranked No. 233 on Crain's Chicago Business list of Chicago's largest privately held businesses. It continues to grow, save dealerships that are struggling, and has become a major player in this consolidation shift happening throughout the motorcycle industry and in our own backyard.

WCMC locations today include Wild One Harley-Davidson in Bloomingdale, Illinois Harley-Davidson in Countryside, Barbed Wire Harley-Davidson in DeKalb, Chain 'O Lakes Harley-Davidson in McHenry, Starved Rock Harley-Davidson in Ottawa, City Limits Harley-Davidson in Palatine, Windy City Harley-Davidson in Rosemont (opening in August), Fox River Harley-Davidson in St. Charles, Wild Fire Harley-Davidson in Villa Park, Woodstock Harley-Davidson, Windy City Harley-Davidson in Chicago O'Hare International Airport, as well as Lake Geneva Harley-Davidson in Lake Geneva, Wisconsin, and Milwaukee Harley-Davidson.

The company also owns Windy City Triumph/BMW in St. Charles and Woodstock Triumph/KTM in Woodstock.