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Company Overview
Markets
Competition
Company Overview:
Andrews Cycles was founded in 1984 by Russell Haehn. Mr. Haehn obtained
an open point dealership to sell Honda Products. Russell’s
brother, Greg shared 60% ownership with Russell with the remaining
40% owned by Phil Andrews. One year later Andrews Cycles acquired
the Yamaha franchise by purchase of an existing dealership and merging
with the existing Honda operation. Following the same plan they
obtained the Suzuki line of products in 1986 and later the Kawasaki
line in 1987. Since then, Andrews cycles has grown exponentially.
Andrews was actively managed under Phil Andrews until 1998 when
co-owner Russell Haehn took a more aggressive role in managing the
business. Under Mr. Haehn’s direction the business has seen
a major showroom expansion and remodel. The company believes strongly
in the thinking that larger, more open, and inviting showrooms will
draw a larger customer base. After the expansion and remodel, the
super store in Salem, Ohio now draws customers from up to 200 miles
away.
This year, the company has been extremely busy. On January 16,
2004, Andrews Cycles was acquired by Giant Motorsports, Inc. and
became a public company. The company believes that becoming a public
company will dramatically help in their plan to raise equity, capital,
and acquire new dealerships converting them into the super store
concept. Their first acquisition came on April 30, 2004 when Giant
Motorsports acquired Chicago Cycle Center. The dealership has become
the destination to buy a motorcycle in Chicago through target advertising,
proper inventory control, and the appearance of the dealership itself.
The dealership now draws customers from the immediate metropolitan
Chicago area, as well as a 200 plus mile radius of the city. Through
the acquisition of Chicago Cycle Center, Andrews in now one of the
nations largest dealers of the four major Japanese motorcycle brands.
The company is a leader in terms of revenues and broad based inventory.
With the successful acquisition of Chicago Cycle Center, Giant Motorsports
can continue to look for new opportunities to continue expansion
of the business.
Markets:
The power sports industry, estimated at $18 billion in the U.S.,
consists of new and used motorcycles, ATV's, personal watercraft,
and snowmobiles, as well as parts, accessories and mechanical and
financial services related to these products. Over the past five
years the industry has grown an average of 15% per annum. During
2003, industry sales were up approximately 7% over 2002. In the
motorcycle segment of the power sports industry, 50% of the industry's
gross revenue was generated in the top ten states. Sales in the
states representing the Company's target acquisition region represent
approximately 20% of the industry's gross revenue. The industry
is highly fragmented with around 4,000 franchised motorcycle dealerships,
most of which are individually owned. The Company believes that
many dealership owners are motorcycle enthusiasts with minimal business
training. The largest dealership group generated revenues of approximately
$100 million in 2001, or less than 1.0% of total industry sales.
Competition:
The leading motorcycle dealerships include Harley-Davidson, and
multi-brand dealerships selling the top Japanese brands including
Honda, Yamaha, Suzuki, and Kawasaki. In many states, dealerships
have an exclusive 5 to 10-mile franchised territory similar to automobile
dealerships, hi the past, Honda, Suzuki, Yamaha and Kawasaki allowed
for the combination of multiple brands. Honda has recently started
to prohibit new dealerships from sharing the same physical premises
with dealerships of other OEM's. However, many older dealerships
may still be acquired and relocated to shared locations. In addition,
a dealer may have a single facility that is partitioned to separately
house Honda products. The Company will focus on acquiring multiple
brand dealerships, allowing it to continue to provide consumers
with wide product diversification.
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