Southern Honda Powersports made its first sale this week at its new 73,000-square-foot East Ridge store — a Honda Africa Twin motorcycle capable on- and off-road with a $17,900 price tag.
The business belongs to newly inaugurated Chattanooga Mayor Tim Kelly, who decided a few years ago to avail himself of business incentives in East Ridge and relocate the venture from Workman Road in Chattanooga in a $10 million move.
Kelly said his decision to shift the dealership to East Ridge "was 100 percent" due to the Border Region Retail Tourism Development District. East Ridge recaptures the growth in sales tax collections within a designated zone and then plows those funds back into repaying investments in the area.
The zone was created for the border towns of Bristol and East Ridge by the Tennessee General Assembly in 2011.
"Chattanooga didn't participate [in a border tax zone] for whatever reason," Kelly said. "This [relocation to East Ridge] was a business decision made long before I decided to run for mayor of Chattanooga."
According to the dealership, it has been the largest Honda powersports dealer in the nation as it operated out of its 100,000-square-foot Chattanooga facility. Since 2004, it has sold more than 85,000 street bikes, dirt bikes, ATVs and side by sides.
Ellis Smith, director of special projects for the mayor's office, said Kelly has stepped away from operation of his businesses, which are in a trust.
Smith also said Kelly has resigned all his board seats, including for the Chattanooga Football Club. The mayor is co-founder of Chattanooga FC and was chairman of the club. Kelly said he expects that transition to happen at a board meeting next week.
Kelly sold a longtime business, Kelly Subaru, at the end of last year, though he retained the property at M.L. King Boulevard and Riverfront Parkway.
Along with Southern Honda Powersports, Kelly has interests in Chattanooga Brewery Co. and SocialBot LLC, an automotive advertising technology company. Kelly said he will no longer direct or have oversight responsibility "so I can concentrate entirely on my job with the city."
Last year when talking about moving the Honda dealership, Kelly said he had to do "what's right for the business," citing the incentive and the new store's proximity to Interstate 75. He said Hamilton County still receives its share of school taxes in the deal with East Ridge.
When Chattanooga developer Bob Corker was elected mayor in 2001, he also put his business holdings in a trust.
Kelly said when he launched Southern Honda Powersports nearly two decades ago, his businessman father was skeptical. But Kelly said he saw the opportunity to use auto sales methods in the growing motorcycle market.
David Carmody, general manager of the 5330 Ringgold Road store in East Ridge, said that while he's looking forward to many more sales such as the Africa Twin, the facility is suffering from a shortage of inventory not unlike what auto dealers are seeing due to supply chain issues.
"It's about availability," he said. "It's a matter of filling in inventory."
Carmody expects sales this year to be off a little compared to 2020 due to the inventory issue.
Still, the general manager projects sales to hit about $3.9 million this year.
The new location, which employs about 45 people, has received a designation from Honda as a "powerhouse dealer," which will allow for priority, automatic inventory replenishment, he said.
While the Workman Road building, which is for sale, is larger, much of that was warehouse space, Carmody said. The new facility has more retail space for vehicles and apparel, he said.
In the new parts storage area, the facility has installed an innovative vending machine-like operation. It tracks and then delivers parts in the warehouse without workers having to hunt and pick them, according to the company.
"It's not very common at powersports," Carmody said.
The service area also is larger than on Workman Road, he said, noting the Ringgold Road location has 12 bays compared to eight at the former site.
The dealership's grand opening is set for Saturday with a bike show, food trucks, live music and a giveaway of a new Pioneer 1000-5 side by side. The proceeds from the bike show will be donated to the Make-A-Wish foundation, according to the dealership.
"The pandemic really challenged us in being able to fulfill wishes," said Garrett Wagley, chief executive of Make-A-Wish East Tennessee. "Today, we have 235 children with wishes that need to be filled."
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