We can't keep invading everyone we don't like and we can't keep cheap gas forever. So something has to change.
Back in 2008 and 2009 I was writing about consolidation. I was the first go out and tell dealers ( even at the annual meetings I visited how the data didn't make sense ) yes anyone can be on an upward trend if it means you compare yourself to reporting MIC motorcycles. The reality of this industry is that its all smoke and mirrors and it defeats the purpose to claim a 30% increase in sales if the following year you're buying back 500 units from General Electric.
How the market was going down and there were too many distributors. My predictions all turned out to be true. This isn't something you will read about in the industry papers because a downward prediction won't help sell magazines or ads. If anything we all try to be positive and I saw many things that were happening as positive indicators despite them being bad for sales overall.
Since 2009 even the local Miami motorcycle scene has changed dramatically. We had several top dealers in the area and most are now gone.
We've come to the point where consolidation no longer makes sense. Just had a great offer come my way. A bank called and said do you want these guys "we hear you're the guy to talk to." The truth is I was the guy to talk to because there is nobody else in the business that would even be that crazy to buyout a fellow parts or scooter distributor. I did convince many dealers that I'm close to that what they should be doing is buying out the local competition and many listened. Even if it meant I couldn't sell them a tire for a year because they had so many.
We have sufficient inventory for years to come. Why buy more? As a matter of fact why expand when the market is just stabilizing now?
Since I wrote that prediction back in 2008 we've seen over 30 companies leave the scooter market. A churn rate of 400 plus dealerships close. Many changed owners or a partner left, this is normal so some might be counted twice, but the data doesn't lie. Most new dealers could care less since some are on an upward trend picking up better brands a few years ago they couldn't buy, others continue to buy from the new importers and historical data is not something they analyze.
It's not that we plan on failing in this industry, but the average scooter dealer just plain fails to plan at all. They don't look at what makes sense four to five years down the road. How can they? You need to survive now so planning on having a brand that pays insurance and has liability coverage that's someone else's problem right?
If you would have told me STR would be 100% Kymco owned I would have never thought an importer would sell. How about CF MOTO becoming 100% factory owned? That investors would come in and buy up the majority of Genuine and save the day four years ago I would have thought it was a crazy idea. All these changes at the hands of companies that adapted to the market realities are good changes. Bad changes are the ones we saw from some lower end brands as they fold and leave town. The survivors do what they have to do and continue. So I have a lot of respect for people that did what they had to do and are still in the game.
New brands have arrived. This is not a fair marketplace. China continues to dump product. Companies in Europe are still closing. Malaguti Moto finally gave up and is closing its assembly line. You hear the same from the remaining makers in Spain. Globalization has made the game more complicated for everyone.
In Miami we have distributors that import Chinese workers, they get paid in Yuan, work for a year and get sent back to China. Nobody stops them. How can you compete with a distributor that sells parts for below your cost? The mayor doesn't care, the federal gov't doesn't care, and you know President Obama doesn't want to upset China when we need them to buy our debt. So everything affects what we do as an industry no matter how big or small. There are several importers of scooters and parts whose only purpose is to have a green card for the owners back in Argentina or Uruguay, they're not actually here to be a US business that is designed to make a profit. So anyone in this game has to keep that in mind. It is not a level playing field by any means.
These issues won't go away. 2011 and 2012 hopefully will be about brands that care about what they offer the dealer base. I hope dealers start seeing the value of having a Taiwanese or Japanese brand.
We might see TGB or SYM truly come back to the marketplace. That's when you'll know things have improved.
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