Wednesday, February 9, 2011

OIl pushing above $100 again Egyptians to get Facebook again someday

So everyone thought Egypt would get facebook again. Gas prices went down for a week. I'm reading my daily news column and it seems the Google Exec who has become the face of the Egyptian revolution Wael Ghonim vowed "he's ready to die" for change in Egypt. So much for gas prices going down.

This crazy ride doesn't hide the fact that every single week its going up and down, but the trend is for gas to go up. Period. China's interest rate hike announcement yesterday sparked worries about the impact on energy demand, but the fall was countered by a weaker dollar and political uncertainty in Egypt. Now Mr. Ghonim is sparking more uncertainty. Once again leading to higher gas prices and any excuse like this leads to higher prices at the pump in America.

As we approach Dealer Expo dealers and distributors are waking up to the fact that prices in China have gone up 20% on most items. Cheap labor in China is quickly fading as factories scramble to merge and be competitive. The policy makers are also allowing the money to appreciate.

Inventories of scooters are starting to come back up again in the USA. Just in time. Everyone in the market was on a liquidation spree thanks to the Chinese saturation of 2008. Now everyone looking for cheap scooters is running dry and new scooters are pooping up. I just got two offers to review new brands wanting to enter the USA which is great, but I can already tell one of them is the same re-badged scooter we reviewed before.

Next week we're heading to the dealer expo. There is a lot to talk about. Our industry is in shambles. Drop shippers everywhere working from home without a store or any real inventory have driven prices to the point that everyone including consumers expect China direct prices. We need pricing detox ASAP because the market with these factors is unsustainable. You cannot pay salaries on par with other industries or benefits when you have a discount market mentality.

Lot's to talk about at the show. It's a new market. Dealers are starting to realize they are not all meant to be importers. You can make money, but a container impounded at the port can easily cost you $100,000 for failing to have proper EPA or real DOT third party lab data. A fake caliper report from a fake lab in China can cost you your business and one hell of a lawsuit from a smart consumer with a good lawyer for selling cheap scooters. Needless to say don't expect the Chinese factory to indemnify you against a suit, by nature they don't. So this new market means more people will look at quality brands like Kymco in a new light. Enforcement of repair shops being run out of people's home garages are up in Florida, a market that got hit with over 64 stores closing the last two years. So the shops that remain should be profitable and healthy as the craigs list repair centers and mobile home guys get shut down.

The good news is as oil prices climb so do the margins and profit centers for dealerships. This is something we will be talking about at the Dealer Expo. America has got to get ready for the fact that $100 gas is here to stay. $3.50 will be the new $2.50 in 2011.

The simple fact for oil prices worldwide is that supply is limited. It will always be limited and it will continue to get worse as we use it all up. It took millions of years for oil to develop and it won't last us forever. Mankind as a whole will have to find more energy to feed, supply, and eventually run the world. A growing population that one day might include 4 or 5 billion Chinese residents in Asia. We are talking of a world headed for 10 billion people within our lifetimes can only end up using more oil than what is available now. Cities like Rio and coastal cities in Florida will have to get used to the sights of oil rigs as we dig for oil near clear white sands and in the deepwater. These supplies require a price above $65 or so a barrel to be viable. The reality is the US needs to realize $100 a barrel might be here to stay forever.

We just spent a ton of money in America. I'm mainly looking at that $600 billion bond-buying program that is money we can’t afford and will lead to inflation. All this spending is bound to make the dollar weaker abroad meaning scooter prices in China will go up. Parts have already gone up 20% in the last year as I mentioned. It's like giving crack to a pre-Marvel Iron Man Robert Downey Jr. You can't control it and it will only lead us down the rabbit hole.

We're going to discuss all this. How to build a scooter culture. How to avoid the trap of the online competition, and mainly how to stay profitable in this market.
A round-table discussion on "Maintaining a Profitable Scooter Shop" will be hosted at 2:30 p.m. Friday, Feb. 18, by Josh Rogers, co-publisher and vice president of marketing for Scoot! Magazine, and Joel Martin, president of Martin Racing Performance at the Dealer Expo 2011 next week.

The round-table will discuss current and forecasted sales for imported scooter brands from Europe and Asia.

How to buy parts for scooters
How do I build a sense of community
Should I carry EV scooters
Where do I find parts for this and that Chinese scooter brand
All these questions will be on the table next week at the Dealer Expo

The presenters also will provide tips on how to sell unique brands, ensure parts availability and provide seamless parts and service support for customers. Rogers and Martin promise an extensive Q&A session with the audience.

Located at Room 131
Friday, February 18
2:30 pm - 4:00 pm
Maintaining a Profitable Scooter Shop

Saturday, February 19
2:30 pm - 4:00 pm
Maintaining a Profitable Scooter Shop



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