Wednesday, March 16, 2011

MotoMag State of the US Scooter Industry 2011

Mr. Chambers from MotoMag sent me some questions I thought I would share the answers with the blog followers:

1. What is the biggest growth today in the US Scooter Industry?

2011 continues to present significant developments in cross-industry consolidation and optimization. Companies have redundancies such as sales centers, sales representatives, and a range of verticals that need to be integrated. So in terms of real growth besides the ever-crazy gasoline inspired hype ( which I am the first to encourage ) we are still in consolidation phase. Growth will hopefully come in 2012. This year is more about moving the backlog of units and new brands ( I have met / spoken to a bunch of them and we will see them mature.)

There are some great new brands in the USA that are starting like Pit Motors, there’s CF Moto making a comeback, you see the guys at Kymco USA holding steady. Some companies have taken on investors to stay afloat, but you really don’t know what’s going on with them until they release that info publicly. At the same time you see distributors like Lance taking over distribution for SYM which indicates there is a revamping of the brand sales in the country.

2011 shows a lot of promise. I met up with Ivan from Tomberlin at Dealer Expo they have some new stuff in the works. I met the designer of the CCW bikes Scott with PIT Motors at Dealer Expo and was impressed with a new line called Cultura that might come out soon. We got approached by several private label UTVs and even new Go Kart brands that want to come into the market. The idea here is how can MRP help them considering how many parts we have.

2. What are the biggest problems you see in the industry right now as new brands emerge?

We need to be more efficient and eliminate those redundancies. I just met with one of the bigger distributors and they moved their entire back-end office back to Canada for their US operation because the warehouse had no need of secretaries and office staff. That was one way to cut costs, but you see the same going on in the smaller US vehicle distributors. Why invest $300,000 in parts for your new scooter brand when you can work with a partner that already has those parts in stock. The only people who can keep doing this and operate at a loss are the Chinese importers who live off factory credit or financing, the rest of us have to eventually make a profit.

We want to put it out there to potential investment in the industry. Why spend $300,000 in parts when you have a company in Miami that can help you become a more efficient distributor. Let MRP help you!

If you’re planning on going to China this summer and because of gas prices your Investment Capital Group wants to invest in a small private label scooter import to capitalize on $4 gas then team up with someone that can cut your costs. Invest in MRP and we will invest in you. We can cut your expenses in half. Why have a full staff and parts just sitting there when we have more parts than anyone. We are the result of 9 companies combined together bringing market efficiencies to a really inefficient marketplace.

The second issue is the same vehicles are being imported by four or five companies in the US market. You don’t have this in Europe, but in the USA you have companies like Peace which sell the same product with three distributors at three price points. It doesn’t work. I have known TGB – Taiwan Golden Bee for many years and in the 2000-2003 period they had three importers, none of them had any success because they competed with each other. Now you see Carter / Lance having the same situation trying to do joint distribution of SYM product from Taiwan. It never works.

The third issue is everyone lowering their price points. You can only sell at cost for so long, I know a lot of people who have tried to imitate what I do. I know it sounds crazy, but I’ve had former employees of the bigger companies always telling me we were always looking at you for guidance (they just happen to be bigger than our company.) The one thing that always surprised me is how many US companies would imitate the Chinese as they got into the distribution game be it in parts or scooters and have loss leaders and sell at cost. Just to gain market share they operate at a loss. What they have done is create a systematic mentality that appeals to the lowest common denominator for new unit sales. You have a complete breakdown of what is a Powersports dealer in the US market now. Traditional stores are competing with lawn mower shops and in some markets guys working from their garages. The 2008-2009 period only brought out more importers drop shipping units and selling on Ebay further escalating the problems in the sector. The industry has to elevate itself above that and I would like to see more government regulation on this so that people selling scooters have to operate under the same guidelines in all states as cars. What we need is full motor vehicle licensing, bond, and insurance requirements across state lines. It’s unfair to dealers in Florida who are required to have insurance and bonds in place and in some states you can sell motorcycles from your backyard. The internet has had disastrous effects nobody likes to address because our commerce isn’t regulated the way it should be.

3. How can these companies change while at the same time grow their sales and profits in this market?

Support the dealers.

Don’t go around them. This is also the trend in the industry.

4. When it comes to commitment to your partners, what sets your company apart?

We are committed to working together to develop a solution to meet the customer’s needs. Because of the different skill sets required the UTV dealer we now deal with has different needs from a EV or a scooter dealer. I do sales all day long from $40 dealers to the guy looking for a sub-distributor MRP buy in of $10,000. Obviously, I need to focus on the sub-distributors, but we have a huge catalog of parts so we have to get the word out on all the parts for United Motors, TNG, Keeway, Benelli, Andretti, Malaguti that we have in the warehouse. Believe it or not we still sell a ton of Malaguti Moto scooter parts. The reason being is when you buy something that was really made in Italy people will fix it. You paid $3k or $4k for it, it's not disposable. Most buyers these days pay $1000 for a Chinese scooter, use it and then it ends up in the garbage. I see Malaguti scooters I sold ten years ago in Miami with 400 miles on it and it looks new. It was kept in a garage. So when it comes to hard to come parts MRP is your one and only scooter parts source, dealers know this so efficient dealers that want to be profitable on the scooter side come to us for the hard to find stuff. Also, because we're the only guys in the US not selling consumer direct with a catalog they get in the mail. We have also diversified, the UTV dealers have a hard time finding UTV parts for Reusch, Chongqing Huansong, Lingyuen, and even private label CF-Moto so we are constantly adding new parts. I have been adding nearly 30 to 40 SKUS a day to our online inventory every single day for the past two years. I know of no other company that has gone from 2,000 SKUs to over 20,000 in three years in the scooter or aftermarket UTV industry.

If we have a sub-distributor that buys a container a year, he’s our partner. He’s buying with us at the factory and committed to showing off our brand. I will make sure that whatever brand he is focusing on he’s making a profit.

5 Why is this a good time for a solution provider, a dealer, a distributor to join in your sales / partner network?

Our program is designed to ensure high profitability for our buyers. Obviously like Parts Unlimited, WPS, and others the more you buy the more you save. We have the same programs in place. If you have a store and buy you go up the discount chain. We have changed the way we do business in the sense I will still sell only wholesale and we will sell to the guy who only needs $50 a year, but I don’t consider them a dealer since they are not representing our brands. However, the guy that’s stocking MRP, has a sign up, buys $500 a year is a real shop. You walk in they have our jackets, our exhausts, banners etc…. you have to support the dealer that supports you. You give the shop incentives to buy more and stock more.

Same for the sub-distributors. I have partners that spend more on marketing MRP products that we do in their countries. We have some big players selling MRP in Europe now, Australia is a market that shows a lot of promise and are buying with us from the same factories and representing our brand names in their markets. So the future holds a lot of promise for all the partners be it at the national retail level or the international distributor.

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