Wednesday, May 19, 2010

Zombie Scooter Companies

We as an industry have the power to stop the Zombies!

I mean the Zombie companies and their followers in some cases the guys working from a garage at home drop shipping scooters, parts, atvs, gokarts without a mechanic, license, or the expenses my dealers have to endure to stay in business. They are cannibalizing the legitimate stores that have been in business for 30 years or more.

I think stores or at least dealers with a sense of pride just need to stop the buying from these parts places working from their houses. These are the same people that feed the Scooter Zombie Companies.

There is so much illegal activity going on in California and Texas right now with importers bringing in parts they don't declare, don't pay taxes on, and then dump them to guys selling parts from their houses. We'll the word is out NHTSA, Customs, Carb, EPA, and CA DOT is cracking down. It's about time.

Maybe they are just looking for money because state coffers are at an all time low, but its about time they do something.

Following a year that can only be described as Armageddon 2009 many of the CEOs of legitimate importers have been asking for years that the DOT / NHTSA crack down on this situation. Companies like CF-MOTO and ZNEN have stopped feeding the respective zombies companies supposedly were distributors, but weren't. Some of them just large dealers. Many Chinese manufacturers were subsidizing their importers during the 2007 - 2008 boom, but that could only last a little while. Last year some 12 scooter distributors crashed in the US ( Much of this went under reported or ignored completely by the magazines that were happy to take their Indy Dealer Expo dollars and ads ) Despite all this several companies have continued to trump along and these need to get weeded out as well.

Again, my reasoning behind all this is that its killing the legitimate Yamaha, Honda, Vespa dealers that can't make a living as long as we allow the undead a free rampage of Ebay and Craigs list.

My points in this rant today is that Chinese excess capacity needs to be eliminated. We need more enforcement so legitimate companies that pay warranty, help dealers, and play by the rules stick around ( Kymcos / Peirspeed / SYM of the world you know who you are ) This can only be achieved if the dealers think before they buy.

Dealers once and for all = Stop buying from the guy who works from the garage because he's cheap.

Consumers = if its too good to be true and you purchase a scooter from a guy working from a U-Haul you will get screwed. Be smart. Buy from a shop.

Yo NHTSA, DOT stop looking at fake HDs and Honda parts focus on whats happening at the 50cc level. EPA keep checking the Chinese ATVs.

Thats my rant, but you know what someone predicted all this about 2 years ago. He wrote a really good piece you can see online. Tom Lynott. He was probably ahead of the curve when he put this online.

The following is from CMSI / TNGs market report to the MIC:
Non-Compliance with DOT Gray Market Penalties!
•The new Obama administration has committed to much stronger enforcement of consumer protection laws. This action is especially attractive for the government when it also means that new jobs will be added for Americans who have lost their jobs to “off-shore” workers and who will be hired by AIM.
•Under existing rules listed in CFR 49 book, penalties for violations are severe and are imposed on the original manufacturer, in spite of their being a foreign company.
•Referring to the CFR 49, section 578.6 and 579.3 the foreign manufacturer is responsible for compliance with the various rules and regulations and includes reporting of safety defects and any complaints or claims filed against that manufacturer in any country that the manufacturer has sold vehicles.
•The penalties for violations are listed below:
•Motor Vehicle Safety Standards:( FMVSS ). $6,000 per vehicle and $16,375,000 max. for a related series of violations.
•Title Information: $1,100 per case
•Consumer Information: $1,100 per case, $500,000 maximum
•Country of Origin: $1,100 per case
•Odometer tampering: $2,200 per case
•Vehicle theft device tampering: $1,100 per case
•Failure to report under part 579 “Reporting of Information and Communications About Potential Defects.”
–SubPart A: General
–SubPart B: Reporting of Safety Recalls and Other Safety Campaigns in Foreign Countries.
–SubPart C: Reporting of Early Warning Information
Why Chinese Vehicle manufacturers now face big problems in the U.S.
•Lack of Quality Control & Testing. Unsafe vehicles.
•Non-Compliance with DOT, EPA, CARB and CPSC.
•Black Market “drop shipping” via Internet.
•Consumers/Small Businesses being “ripped off”
•Many Chinese vehicle makers sell to anyone and enable uneducated U.S. importers to set up distribution of private label brands without adequate infrastructure of customer service and/or dealer after-sale support.
•Non-compliant vehicles pollute the environment and endanger public safety.
•No Service or parts infrastructure, no product liability insurance. Massive consumer dissatisfaction after receipt of “drop shipped” scooter (see chart)
•Hundreds of thousands of “orphaned” vehicles (scooters, motorcycles and ATVs)

In the meantime we will keep doing what we do and work the parts segment.

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