Tuesday, September 21, 2010

Powersports Factory is a symptom of a greather problem

So I got a couple of emails from dealers looking for warranty parts this morning thanks to yesterdays blog. So I will start my morning rant by saying Powersports Factory is just another symptom of the problem.

We are all so busy running our small companies that we don't have time to really investigate the people we do business with. So it's easy to believe responses like "oh don't worry we'll give you a discount on the next scooter order for that leaky gas tank," it's a shame because most of us want to believe people and some of us are just poorly informed about the laws in place to protect them from these actions. So dealers and third parties have to ask if this company is down to one or two employees how are they even going to comply with the Thread Act or different agency regulations? Can a distributor with only two full time employees comply with over 30 state and federal agency requirements? I don't think so.

I'm amazed Benelli scooters were sold in Florida when Powersports Factory didn't have a renewed distributors license in the state for the Benelli product. That just goes to show how the system is broken at all the levels.

You also have sub-distributors of former companies like Vento and JMstar dumping product. One Puerto Rico distributor had 1,500 Chinese GY6 150cc scooters sitting in a warehouse for three years. He just sold them back to the mainland for $300 a piece, that's less than production cost. He lost over $900 a unit, plus the interest. Now all these Primo Terminex Scooters will be on Craigst list in NJ in the next few weeks. All this does is put more pressure on unsuspecting dealers and lower the overall perceived value in the mind of the consumer since they will be picking these up for $600 retail. Obviously, we can blame the consumer in America for all this including the mushrooms:

If there was no demand for Chinese mushrooms nobody would sell them. It might be a combination of ignorance, being cheap, or the fact that people genuinely believe you can get the same quality out of a $600 scooter as a Kymco. I don't know, but I do know the system is not designed for this type of rampant consumer. He / She will expect the dealer to comply with the same laws, the same lemon laws, and will be back at the dealership expecting warranty on any new vehicle be it a Andretti Benelli from Powersports Factory or a 2007 Vento that is now selling for the first time.

So we can partially blame consumers for everything that's happening. Let's face it if they didn't like the style of a Benelli or the pricepoint of JMStar this wouldnt be happening. However, there are other cases where it is a quality product like a Hyosung. Everyone knows this Korean maker is an OEM supplier to Suzuki, so you can put a Suzuki side by side with a Hyosung and many of them are the exact same thing, but ask about warranty and support and you're a hundred times better going off with a Suzuki. Why would I say that? We'll I deal with several hundred former UM dealers. Ask any United Motors dealer that is dealing with the fact the HMA ( Hyosung Motors North America ) won't cover the warranties of any new UM rebadged Hyosung Motorcycle and you will know what I am referring to. Worse yet is the fact that Korean Management won't understand why US dealers won't buy more Hyosungs when they got burned by rebadged Hyosungs.

So some of it can be blamed on the consumer, but its also an industry problem since there is a lack of oversight. When the parents are away kids go for the cookie jar and the scooter industry is all about self-regulation. It doesn't work in a bad economy, it really doesn't because everyone will cut corners. The truth is the Consumer Safety Board is already overwhelmed with a ton of Chinese products that contain lead, poison, and it's affecting all the agencies across the board since more and more food products come from China. We've gotten so lazy in this country even the Amish don't want to pick the mushrooms

Yesterdays Blog


So my advice to the dealers. Do your research. Is Powersports Factory closing? Are dealers not getting parts? Find out from the blogs, Dealer News, do your research before shelling out all this money to not get warranty on your parts.

Are the gas tanks leaking? Ask another dealer. I already told you why magazines won't write these articles, now its up to you to find out. http://www.dealernews.com/dealernews/LATEST+NEWS/Ailing-Andretti-Benelli-Scooter-Distributor-to-Ent/ArticleStandard/Article/detail/649215?searchString=Benelli



After reading all these articles you might ask yourself where is the bank that financed this operation these guys called Crossroads? We'll the truth is they are out of the picture. They sold their interest and liquidated, got paid and are out. So there is really nobody left with any assets from what I can see online, remember this is all public information since its on the SEC site. Where is the SEC? NHTSA? Who is looking into the fuel tank situation? I don't know any of these things, we're just trying to help people find parts, but I hear the frustration, I hear the anger at people loosing money. I know that people like Glenn Russo are a bunch of thieves and that their companies like Avatar financial and other companies are fronts to steal money and take people's credit card information so it really comes down to reporting them to the Better Business Bureau and hope that eventually they get what they are due.

Like I said before everyone in the industry has gotten hurt by the actions of a few, from MRP not getting paid, from dealers not getting warranties, from dealers loosing thousands for product they thought they paid but didn't. You can go online and see how even Dealer News magazine is suing them and will likely never see a dollar back. In the end that same consumer that keeps pushing the prices down by looking for the cheapest deal might find himself with a scooter with no parts availability because they helped in pushing dealers to carrying more of those cheaper bikes without support and that dealer that carried them might get sued and the vicious circle continues.

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