Tuesday, November 29, 2011

A great article online on the scooter situation in Italy

A month after the closing of Malaguti this article just popped up online. I used Google Translate to put it up in English below. To correct a couple things from the story that are lost in translation. The title refers to the Good morning Vietnam phrase from the Robin Williams movie, but also to the Malaguti Vietnam 50 or Saigon 50 as it was referred. Next to the Phantom F-12 it was the best known unit at the time.

Surprisingly in the article we find:
*From 2009 to 2010 the loss increased from 3 million Euros to 13 million. This was previously unknown to anyone outside of the negotiators.
*Ducati Italy decided not to buy an Italian Scooter brand - sources say they are looking at making scooters in Indonesia to increase Asian brand awareness and affordability.
*Offers to buy the brand didn't just come from the US, but also Germany the largest market outside of Italy.

Looking back in the late 90s the top management at Kymco - Kwang Yang Motor Co in Taiwan asked Malaguti to represent the brand in Italy and to invest in their factory. Not wanting an Asian partner they refused and began to source parts in Taiwan from SkyTeam the parts and logistics partner of SYM. Here at MRP we've purchased several lots of parts from different importers that had Eton, Adly, SYM, product all labeled SkyTeam Taiwan or SkyTeam China. Fast forward twenty years and Kymco is a world wide $800 million dollar company.

I think a lot can be learned from the mistakes in this situation. Several Italian brands now in their second or third generation are learning how to revive the brands. Mainly I look at Italjet and Benelli as they struggle to come back in the Italian market. These being original Italian brands they now compete with Italian sounding names that have no history in the country. It becomes an issue related to distribution and price. It's difficult for foreign firms to enter Italy. TGB of Taiwan tried and after two years closed the subsidiary, so did CF MOTO Europe unable to enter the Italian market under its own name. It's just as difficult for Europeans to find good partners. Not everyone has the clout Piaggio has to pick the top factory in China. Peugeot has struggled as it partnered with Qingi in China.

All of Italian brands at one point could have set up production in Asia while maintaining design and assembly in Italy, but moved too slow. From Beta to Malaguti this was a race to the finish which many just didn't move at the speed required by the global market. The last remaining company Piaggio Group is successful because it had ventured into Asian early on (TGB makes all the CVT systems in the Vespas) and Aprilia had a JV with Jincheng group allowing them to source less expensive parts before being acquired by Piaggio Group.


Goodbye, Vietnam beat the Malaguti brand of motorcycle

MILAN - "When 's your company and before your father and your grandfather, you think it's a' never destined to end entities." But it is not. Antonino Malaguti, grandson of the founder of the 'Bologna-based company, explained that, in 2007, the' affection for this' company started with a bicycle frame, and came to conquer the Italian market for mopeds. Why Malaguti, over 170 employees and more than two million vehicles produced, until the 'Last year was the "top five" most of the scooters sold in Italy. After the Liberty, the Beetle and the Vespa, c 'was the Phantom, the scooter from Malaguti launched in 1994 and that all' now, as the 'company closes its doors, is in sixth place of the registered in Italy. Why, then, after eighty years of history Malaguti has closed?The answers come in part from the budgets. The 'last approved (December 31, 2010) speaks so 40 million working capital, but a loss of past, from 2009 to 2010, from 3 million and a half to more than 13 million euros. The numbers tell the story of a 'company that was spending more than they earned, with higher production costs to revenues. He writes, on May 27, the same Antonino Malaguti in the annual report of the 'year 2010: "In order to sell we had to use deep discounts - reads the paper - but the price paid for purchase only the cost of materials." The competition did the rest: "The competitors who have factories in China, India and Vietnam to come to market rates." And so, from 2010 's company has pulled the oars, also serving a devaluation of own shares by almost eight million euros. The search for industrial partners and has been a total flop, but the offers to 'advisor to Deloitte's mandate had not been lacking. From the U.S. Malaguti dealer writes via email: "I personally found companies willing to invest in Malaguti but no one has ever responded." In reality, the proposals would come from the United States so (and also from Germany) but the family would have considered all "inadequate" preferring the closing. "We also put in touch the 'company with Ducati - adds Papignani Bruno, secretary of Fiom Bologna - but to no avail. The proposals have come, we still hope that the trade mark can be detected. It's not too late. " Meanwhile, about 140 workers in the 'Company have agreed to voluntary dismissal, agreeing thirty thousand euros gross output as well. Corinne De Cesare cdecesare@corriere.it PLAY RESERVED
Missing from the article is the fact that Malaguti still has several hundred scooters being liquidated to Italian dealers and the brand isn't exactly dead. They still have 17 employees in Italy selling the US and other countries parts. There is still the possibility of licensing the name or working with an Asian supplier once the employee layoffs are all settled. Paying out over 3 million Euros to employees can be expensive when you have negative cash flow.

The parts situation is the biggest thing going on among former importers. Here at MRP we get daily requests from the Cayman Islands, the Bahamas, Saudi Arabia, and even Jordan. It's difficult because you want to help someone in Saudi Arabia that needs a $10 part, but the cost of shipping is $50 plus you have to explain to them how to look up the part number and order it online. The funny thing its not even for daily use the Malaguti is in a garage parked next to a Ferrari that never gets used. On Miami Beach and Key West when I spot a Malaguti its a seven year old bike with less than 400 miles on it. 

What has happened as importers stopped importing bikes they are not buying parts. So we find ourselves in Miami selling F-12 parts back to Spain and Germany because the F-15 and F-12 are collectors items now. It's amazing that none of the importers in several developed countries would stock the parts they needed. From Miami we've had to fulfill orders for the 500cc in Brazil which was never even sold in America. Just another example how the world wide scooter industry lacks a real effort a parts supply before vehicle supply. Nobody seems to understand why this makes Honda number one in all things scooter related. Even the Chinese suppliers who have taken over the markets fail to realize you need parts before bikes. This is where good customer service comes in.

How Malaguti Scooter Started
How Malaguti Ended

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