Man's love of motorcycles now a multi-million dollar business
DAVID Ahmet started his love affair with motorcycles as a nine-year-old tooling around his home town of Bundaberg.
Now the chief executive of ASX-listed MotorCycle Holdings sells more than 16,000 bikes a year as head of one of the largest motorcycle retailers in Australia.
"I just love riding them and the freedom they give you," said Mr Ahmet, who owns six bikes ranging from a Harley-Davidson to a dirt bike.
Underscoring its growth trajectory, the company this week announced a $123.2 million deal to buy NSW-based Cassons, a retailer of helmets, jackets and other accessories.
Mr Ahmet joined MotorCycle Holdings as a salesman when it was a fledgling dealership in Brisbane. Trained as a mechanic, the then 23-year-old desperately wanted to get out of the workshop and try his hand at business.
Mr Ahmet showed a natural talent in the business and within six months was part-owner.
"My mum took a bit of a punt on me, mortgaging her house to allow me to buy into the business," he said.
The gamble paid off with the young Mr Ahmet steadily expanding the business to include other dealerships and brands.
"I have got a head for numbers and I suppose I was prepared to work harder than anyone else," he said. "I have done everything from being a mechanic to sales but it is capital intensive."
With turnover of $225 million and 500 employees, MotorCycle Holdings is a far cry from its origins. The company now has 27 dealerships across Queensland, Victoria and ACT, selling everything from a $50,000 Harley to used dirt bikes.
MotorCycle Holdings listed on the ASX last year, on of the year's most successful floats. Its shares are now double their $2 issue price, closing on Thursday at $4.89.
Mr Ahmet said he adapted many car industry practices to the motorcycle business, which is dominated by small mum-and-dad operations.
As well as selling motorcycles, the company also offers accessories and parts, insurance and operates a riding school.
"We benchmark, which involves looking at everything from overheads to what every person should be selling," he said. "You need to be aware of what is possible and what is not. The average dealer does not have time to do that, whereas we are now of a size where I have a management team around me.
"A lot of mums and dads are not very sophisticated. A lot of them are struggling and there are a lot of traps and you have to be disciplined."
Five years ago, the business had expanded to the point where larger investors were starting to take an interest.
When Mr Ahmet's original partner sold out, private equity firm Archer Capital took a stake in MotorCycle Holdings. Last year, the company listed on the stock exchange, becoming one of the most successful IPOs of 2016.
He said the motorcycle industry had flown under the radar for many years but the type of people buying bikes were becoming richer and more discerning.
The company's core customer is the leisure and recreational rider, rather than the bearded and tattooed stereotypical bikie.
"It is now more mainstream," he said. "In 2005, 400,000 bikes were registered in Australia, now there are 850,000.
"There is not such a bikie element like in the 1970s. It is solicitors, lawyers and bankers buying bikes these days.
"I have not seen a patched bikie in any of our dealerships in the last 28 years. There are lots of people aged in their 50s; baby boomers who can afford it. These bikes are just for weekends."
Six years ago, the company bought the storied Morgan & Wacker Harley-Davidson dealership at Newstead from the descendants of the original founders.
"This is the second oldest Harley dealership in the world and until we bought it it was still owned by the grandsons of the founder Wacker," he said. "It had been in the same family for 94 years."
Morgan & Wacker, which in May celebrated its centenary, is emblematic of the growing gentrification of the industry. Riders drop by the dealership to play pool, pick up the latest Harley leather jacket or arrange a group ride to the Gold Coast.
At the centenary celebration, attended by Bill Davidson, the great-grandson of the company's founder, a street party was held with a competition for the best bikes.
Mr Ahmet said he still loved his motorbikes but it was important to treat the business as something to make a profit.
"It could be refrigerators - fortunately it is not - but you still have to market the product to make a profit."