Friday, November 26, 2010

too many suppliers and too many factories. Despite a slowdown new importers with new models Chinese factories continue!

So another Holiday Season is upon us and small dealers are asking themselves what should I stock?

We'll be careful and let me tell you a few stories from the Scooter Maven's point of view.
I title this Holiday story "Too many suppliers and too many factories."

We made some head turns last month with our last acquisition of United Motors, the company was a staple of ATVs, Scooters, and bikes at the Dealer Expo the last twelve years so it came to a shock to many people. What smaller stores don't realize is how big UM was, they were bigger than TNG, CPI, Diamo, Italjet, Derbi, Daelim combined. They sold more units than better known names like Genuine or Carter while they were in the US market. In my honest opinion they did a great job importing Taiwanese and Chinese scooters before anyone else got into the industry and they will be missed. They were the first to import ATVs from Vietnam and the first to have an affordable 50cc unit back in 1998 with the Jincheng brand.

They over-expanded, they grew too quickly, and they made the mistake of importing a brand that was directly competing against them namely Hyosung. The same mistake the killed Alphasports back in the day and Kasea. You can't survive without the support of the factory that sells to you. Something that has become cliche in the importing business from Asia. That's an entirely different article, but back to UM. Too many models means you have to have better support and that's really what I'm getting at today.

The entire contents of the UM warehouse are slowly being integrated into the MRP parts selection. We are working around the clock this holiday season to add this to our already growing inventory of Scooter, ATV, UTV, and Motorcycle parts. I understand several big Hyosung dealers purchased large amounts of scooters and motorcycles at the NPA auctions since May of 2010. Many of them have been waiting on backordered Hyosung parts for several months and the fact that Hyosung North America does not cover any warranties on any UM branded Hyosung motorcycles opened the door to an increase in parts sales for everyone. So we are doing the best job we can, still it's like a needle in a haystack for some items. We have more than Hyosung USA in some parts and much less. That technical support aspect is what kills many companies if you overorder one product or underorder another. Logistics.

UM had too many suppliers and too many factories. Period.

The same is true of many dealers. I have said this over and over again. Many small shops are known for buying every single brand they can, locking territories, to only do a terrible job in representing any one brand. What's worse they can't support the brands they have.

I see Kymco dealers that are sub-par out there. If you're going to take on a line that has over 15 models you should have at least 5 of them in the shop, instead you see shops with one or two Kymcos and five Chinese brands in there. I'm not saying only have one or two lines like a Vespa boutique thats a death sentence in itself, but strike a balance between medium and high. This is the only way to give good support to the client and stock parts.

Back in 1999 it used to be a requirement for new dealers to stock a selection of OEM parts. If you wanted to get an Aprilia scooter dealership you had to have a minimum parts buy in. We've done away with that for "just buy some scooters" and in the end what we do is give bad service. Plus you have importers importing more models that aren't generic engines or generic plastics making the situation that much worse. Check your local junkyard and you will see what I mean.

Despite a US slowdown in sales and companies closing like FlyScooters ( another ZNEN Motors importer ) we continue to see new guys pop up. This new ZNEN Motor importer in Miami ( the factories are like a Hydra cut off one head and two more pop up ) we see models that are unsupported and are new to the market.

Worse some factories spent the last 5 years flooding the market with the same models under 10 different names ( CF MOTO was a good example a great product with too many importers )

I know my advice falls on deaf ears but honestly why pickup unsupported units? We need to educate dealers at the next SEMA and Dealer Expo about this growing trend. The local importer brings in 10 new models, barely has 2 or 3 plastics in stock. Probably only gets the 2 to 3% free plastics the factory gives and never stocks all the colors they imported. - SEE VIDEO ABOVE

The ratio should be 10 to 1 per color for plastics per model. What ends up happening is consumers will never get the same color plastic if they ever have a problem. How do I know this? Because I use to be an importer and even with a very high end brand this is a considerable job to keep track of. So fly by night guys will never get it right.

My other concern is the ever increasing Walmart mentality among smaller dealers. When you buy at lower price points you think these things won't bite you in the butt later, but they will. One dealer we met as 40 United Motor ATVs sitting in a warehouse he purchased them at liquidation prices, but once they started having problems his problems started. You need to have a source ( fortunately for him we purchased United Motors in bankruptcy.)

Again these ratios are important for the aftermarket support in the industry since a dealer has to support what they sell and you can't do that when selling a lower end brand like SunL(Massimo) or Roketa its the whole Baja mentality at Pep Boys its cheaper to give you a new unit than to repair the one we sold you except that the small Chinese dealer isn't PEP BOYS or SEARS and cannot afford to give out new units. That's when the problems arise. You're better off buying a good Taiwanese brand from the start like Kymco, PGO, or TGB and not worrying about it. This is why both at the store and at the distributor level we have to be careful not to flood the market with items we can't support.

So this holiday season I know everyone is looking for a bargain, here at MRP we are giving away all sorts of promos and freebies to get dealers to buy, we are helping with gifts and discounts, free shipping, but the best gift I can give is advice. Think long term, think service, and as you stock up those 20 dirtbikes and ATVs or 30 scooters don't buy stuff you can't support. It's been killing distributors and its been killing dealers.

Support the brands that support the business and have parts like Kymco, CFMOTO, TGB, and you will have happy end users.

The Scooter Maven

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