As the Chinese OEMs start to consolidate the real deal will come from setting up factory owned distribution centers in the USA or buying established importers.
It makes sense for a Taiwanese factory to own say Kymco, but what made it special is that it has the best management from the USA that money can buy. You can see the difference between the way Kymco did it and several others who have failed by putting in Chinese US boses.
They don't know the culture.
They have the money to do it and the factories just not the willpower.
Next comes the US importer wanting again to be the next big Private Label company.
Let's put it this way. The biggest US private label importer will never ever do the volume a private label importer in Belgium can do. So we are a nation of big egos in a small industry. Your value to that Chinese factory is purely one of bragging rights. The volume you buy is of no consequence.
This usually comes from the fact that small stores and importers think they know the industry. Leading to my question why Sir do you think you know the industry better than all the leading industry veterans that I know? Then I get a couple of my favorite responses.
It might be easy to think you can become the next BIG Private label ATV, UTV, or Scooter brand but the truth is 90% of the people that try this have failed. Meaning their operations last less than 6 years. Yes, a better rate than opening a restaurant but still an volatile industry nonetheless.
So before engaging in importing a new brand. I would hire some experts who know a thing or two and see where current Chinese OEMs are going wrong.
1. Financing is Essential. Even CF Moto doesn't have GE right now if your small Scooter private label Znen importer doesn't have commercial financing it will never sell any volume of real consequence.
2. Warranties should never be an issue. If you don't have parts before bikes or have a third party logisitcs company behind you then you will fail. I spend half my day looking for parts for importers who don't have proper parts departments. We make a living being a third party solutions company, we drop ship for small importers all the time. I always say why are you spending so much doing this? A proper solution would be to not have a warehouse for parts, outsource to us or just do it right.
By not investing the proper amount in parts, employees, and a warehouse it will fail. By not investing the proper amount in third parties like MRP it will fail. You have to commit to one or the other companies that do it half way cannot grow.
3. Branding. Why does your Chinese private label brand stand out? Selling on price is only for Chinese subsidiaries now. Why are US investors trying to fight China on price? You cannot fight them on the price of goods yet time and time again this is what we try to do. Build a brand!
4. The Product must be different. The failure of the US scooter industry partially comes from playing the Chinese game with generic molds. You will not win and you will be competing on price.
If you need the right answer on what to do on the four issues above I have them. I am giving them to you for free.
In the next year you will see companies trying to make up for mistakes by changing management. New Chinese companies are already looking at investing but making the same mistakes by putting a nephew or cousin of the factory president in charge.
Companies like CF Moto are ignoring the scooter market and focusing only on more expensive ATVs and bigger UTVs. Instead of parts, warranty, and getting back floorplanning from GE.
Then again you will see more private label brands prop up. Znen Motor already set up more private label brands this year.
Current Article we just published last week.
According to International Dealer News sales in Germany are up, sales in Italy are down year on year.
Also, Chinese sales and exports are down Year on Year and Month on Month.
Our good friend Dave McMullan sent us this report on the state of China.
Chinese Motorcycle
Export Declines Y-o-Y & M-o-M Respectively
Chinese Motorcycle
Output & Sales Destined to Plunge
The accumulative total output and
sales of the Chinese motorcycle industry declined less than 10% for 5
consecutive months due to the influences of the economic growth slowdown of
China, the European debt crisis and the worsened inflation of developing
countries since the beginning of 2012. Judging from the current situation, it
is a foregone conclusion that output and sales of the Chinese motorcycle
industry will plunge. The recovery of the industry awaits the adjustment of
China's policies and the improvement of overseas situation.
Motorcycle Output & Sales Remain Low,
Chinese Motorcycle Industry Facing Gloomy Prospects
The output and sales of the Chinese
motorcycle industry between January and August were 15.4992 million units and
15.6362 million units, down 11.44% and 10.82% year-on-year respectively. The
total number of motorcycles sold in China was 9.6298 million units, down 8.77%
from a year ago.
Motorcycle output and sales of the
Chinese motorcycle industry in August were 1.9572 million units and 1.9905
million units, up 2.16% and 4.22% month-on-month respectively, down 11.44% and
10.82% year-on-year respectively. The number of motorcycles sold in China in
August was 1.246 million units, up 9.08% month-on-month, up 4.03% year-on-year.
Motorcycle sales in China in August saw great increase due to peak season
sales.
The output and sales of two-wheeled
motorcycles in August were 1.7649 million units and 1.7968 million units, up
1.87% and 3.78% month-on-month respectively, down 11.26% and 10.52%
year-on-year respectively. August saw rapid growth of motor-tricycles sales.
Motor-tricycle output and sales in August were 192,300 units and 193,800 units,
up 5.00% and 8.42% month-on-month respectively, up 14.70% and 11.43%
year-on-year respectively.
The total output and sales of
cruisers between January and August were 8.7667 million units and 8.8295
million units, down 13.87% and 13.30% year-on-year respectively, accounting for
56.56% of the total output. The output and sales of cruisers in August were
1.1294 million units and 1.1371 million units, up 5.54% and 5.36%
month-on-month and down 13.33% and 13.40% year-on-year respectively.
The output and sales of cubs
between January and August were 3.0904 million units and 3.1274 million units,
down 13.50% and 13.80% year-on-year respectively, taking up 19.94% of the total
output. The number of cubs made and sold in August was 367,900 units and 384,600
units, output down 3.32% month-on-month, and sales up 2.75% month-on-month.
The total output and sales of
scooters between January and August were 2.142 million units and 2.177 million
units, down 3.95% and 1.46% year-on-year respectively, taking up 13.82% of the
total output. The number of scooters manufactured and sold in August was
267,700 units and 275,000 units, down 5.07% and 0.95% month-on-month
respectively, and up 0.15% and 5.93% from 2011 respectively.
Only the Sales of 150ml Motorcycles Remain
Growing Slightly among the Major Displacement Motorcycles
Among major displacement
motorcycles, only the 150ml motorcycles remain a growth of 5.2% since the
beginning of 2012, and the rest of them have had various decline. The 125ml
motorcycles which occupy the majority of motorcycle output and sales had the
most decrease. The total output and sales of 125ml motorcycles between January
and August were 5.6361 million units and 5.6878 million units, down 16.80% and
15.87% year-on-year respectively. The production and sales of the 125ml
motorcycles in August were 704,700 units and 710,600 units, up 3.46% and 3.77%
month-on-month, and down 16.11% and 14.59% year-on-year respectively.
The output and sales of 110ml
motorcycles are second to those of 125ml motorcycles. Its total output and
sales between January and August were 2.6519 million units and 2.7013 million
units, down 9.42% and 9.06% from 2011 respectively. The output and sales of
110ml motorcycles in August were 323,300 units and 338,800 units, output down
1.68% month-on-month and sales up 4.85% month-on-month, down 4.83% and 2.09%
year-on-year respectively.
The 150ml motorcycle is the only
model that maintains sales growth in 2012 due to the increased economic growth
in Western China. The total output and sales of 150ml motorcycles between
January and August were 2.7831 million units and 2.8111 million units
respectively, up 5.20% and 5.97% year-on-year respectively. The production and
sales of 150ml motorcycles in August were 387,800 units and 389,500 units, up
3.09% and 2.58% month-on-month, and up 10.98% and 6.79% year-on-year, showing
obvious growth.
The sales performance of 50ml
motorcycles was good in the first half of 2012. It's one of the few models that
maintained sales growth among major displacement motorcycles in the first half
of 2012. However, its output and sales plunged upon entering the second half of
2012. The total output and sales of 50ml motorcycles between January and August
were 1.249 million units and 1.2569 million units, down 7.40% and 7.56% from
2011 respectively.
The month-on-month output and sales
growth of 50ml motorcycles was great in August. Its output and sales both
increased by about 10% respectively, but not as good as those of last year. The
output and sales of 50ml motorcycles in August were 143,200 units and 151,600
units, up 7.06% and 10.39% from a month ago, down 21.94% and 18.61%
year-on-year respectively.
The sales performance of 250ml
motorcycles was not as good as that of last year due to the decline of Chinese
motorcycle export in 2012. The total output and sales of 250ml motorcycles
between January and August were 451,500 units and 449,100 units, down 7.14% and
7.11% from 2011 respectively, decreasing amplitude worsened a little. The
output and sales of 250ml motorcycles in August were 72,300 units and 70,300
units, up 10.49% and 10.57% from a month ago, down 7.21% and 8.11% year-on-year
respectively.
Output & Sales of Motor-tricycles
Rebounded, Their Accumulative Decreasing Rate Lessened
Motor-tricycles are mostly used as
goods transports by farm workers and dwellers of towns and small cities that
run business. Due to the economic growth slowdown and soaring commodity prices
in the first half of 2012, many consumers suspended or quit their
motor-tricycles purchase plans which lead to the gradual decrease of
motor-tricycle's output and sales. However, motor-tricycle sales rebounded
greatly in August due to the seasonal peak period.
The output and sales of
motor-tricycles between January and August were 1.5001 million units and 1.5022
million units, down 1.39% and 0.73% respectively from a year ago, decreasing
amplitude shrank by 2 percentage points. As motor-tricycles are mostly used for
transporting goods, so their displacements are mostly the 150ml
(100ml
We can conclude that motor-tricycle
sales rebound in August were mostly driven by the sales increase of 250ml
motor-tricycles. This proves that farm workers and low-income group tend to buy
vehicles with bigger load. The total sales of the above two displacements
motor-tricycles between January and August accounted for 92.20% of the total
motor-tricycle output.
The output and sales of
motor-tricycles in August were 192,300 units and 193,800 units, up 5.00% and
8.42% month-on-month respectively, and up 14.70% and 11.43% year-on-year
respectively. The output and sales of 150cc motor-tricycles were 126,200 units
and 126,200 units respectively, up 7.40% and 9.46% month-on-month respectively,
and up 9.08% and 9.34% year-on-year respectively. The output and sales of 250cc
motor-tricycles were 50,600 units and 51,800 units, up 0.76% and 7.22% from a
month ago, and up 20.20% and 7.27% from 2011.
Dachangjiang Continues to Take the Lead in
the Industry
The top 10 Chinese motorcycle
manufacturers in sales in August of 2012 were Dachangjiang, Loncin, Lifan,
Luoyang Northern Ek Chor Motorcycle, Guangzhou Dayun, Jialing, Zongshen,
Wuyang-Honda, Sundiro-Honda and Jianshe, and their respective sales were
164,900 units, 162,500 units, 130,900 units, 129,300 units, 90,900 units,
88,700 units, 88,500 units, 84,300 units, 82,400 units and 79,700 units. As
compared with last month, apart from 2 motorcycle manufacturers which had sales
decrease, the rest 8 of them all had various sales growths with Luoyang
Northern Ek had the fastest growth. As compared with last year, 3 of them had
sales slump, 7 of them had sales increase, and six of them increased by over
13% respectively. The total motorcycle sales of the above 10 motorcycle
manufacturers in August were 1.1021 million units, accounting for 55.37% of the
total motorcycle sales.
Motorcycle Exports Reduced 900,000 Units in
the First 8 Months
Chinese motorcycle exports plunged
as compared with last year due to the shrinking overseas demands.
The total motorcycle exports
between January and August were 6.0063 million units, down 13.79% or about
900,000 units. The export value was USD 3.797 billion, down 0.55% year-on-year.
The exports of motorcycle engine were 1.3124 million units, down 34.35% from
2011, decreasing greatly. Its export value was USD 201 million, down 19.39%
year-on-year. The exports of ATV were 54,800 units, up 1.38% from 2011. Its
export value was USD 128 million, up 23.96% year-on-year.
Motor-tricycle export has been
growing greatly since the beginning of 2012. The total motor-tricycle exports
between January and August were 155,100 units, up 32.94% year-on-year. The
export value was USD 125 million, up 47.56% year-on-year.
The total motorcycle export value
in August was USD 487 million, down 1.95% month-on-month, and down 9.64% from
2011. Motorcycle exports in August were 744,500 units, down 4.21%
month-on-month, down 24.36% year-on-year. Export value was USD 409 million,
down 3.52% month-on-month, and down 13.71% year-on-year.
The most exported motorcycle models
between January and August were the 125 series, the 150 series, the 110 series,
and the 50 series, and their respective exports were 2.1204 million units,
1.3782 million units, 825,400 units, and 718,400 units. The total exports of
the above four major series of motorcycles between January and August were
5.4402 million units, taking up 90.57% of the total motorcycle exports.
The top 10 Chinese motorcycle
manufacturers in export volume between January and August were Loncin, Lifan,
Yinxiang, Sundiro-Honda, Guangzhou Dayun, Dachangjiang, Qianjiang, Guangzhou
Haojin, Zongshen, and Chongqing Astronautic Bashan Motor. The total export
volume of the above 10 Chinese motorcycle producers was 3.1026 million units,
taking up 51.65% of the total motorcycle exports.
The top 10 Chinese motorcycle
manufacturers in export value between January and August were Sundiro Honda,
Loncin, Lifan, Guangzhou Dayun, Dachangjiang, Qianjiang, Zongshen, Yinxiang,
Wuyang-Honda and Guangzhou Haojin. The total export value of the above 10
Chinese motorcycle producers was USD 2.031 billion, accounting for 53.49% of the
total motorcycle export value.
Motorcycle Profit Down 15.24% Y-o-Y in the
First 7 Months
The total profit achieved by the
Chinese motorcycle industry between January and July was RMB 1.539 billion,
down 15.24% from 2011, decreasing amplitude shrank 0.77 percentage point as
compared with the figure between January and June. The operating revenue of the
Chinese motorcycle industry was RMB 71.271 billion, down 1.58% year-on-year.
The operating costs were RMB 62.674 billion, down 1.79% from 2011. The rate of
return on sales was 2.16%, down 13.94% year-on-year. The administrative
expenses were RMB 3.427 billion, up 8.49% from 2011. The financial expense was
RMB 524 million, up 19.81% from a year ago. Of which the interest expense was
RMB 492 million, up 43.79% year-on-year. The total assets value was RMB 95.625
billion, up 2.64% year-on-year. The floating assets were RMB 61.682 billion, up
2.91% year-on-year. The accounts receivable was RMB 14.719 billion, up 6.24%
from a year ago.
The value of motorcycle manufacturers'
inventory between January and July was RMB 10.036 billion, down 5.85%
year-on-year. The value of finished products was RMB 3.909 billion, down 3.17%
year-on-year.
SPARK PLUG CAP SILICON 90
