FOCUS – Scooter Market Up, Suppliers Wary of Low-Cost Models
November 17, 2004
Filed under Features
A study recently commissioned in the U.S. by Piaggio USA, Inc. showed 50% of those surveyed said the word “Thrifty” best described the profile of a scooter owner.
While the study — conducted by Consensus Research — showed only 20% of the population would consider purchasing a scooter, Piaggio says interest in a purchase increased to almost 30% once the surveyed consumer was informed how scooters could save them commuting hassles.
It’s no big secret. Scooter owners, like motorcyclists, save money on fuel, insurance and parking.
With 12 scooter models in its 2005 line-up, Honda leads the U.S. in scooter sales alongside the Yamaha brand.
“Scooters have always been about style, ease of riding, and economy; with today’s gas prices, many customers are looking at scooters again,” Honda’s Jon Seidel told Powersports Business. “The scooter market continues to grow and is bringing many new riders to the world of two wheels. The encouraging trend for Honda is that all displacement sizes from 50cc to 600cc are selling well.”
“The scooter market has proven to be cyclical in something like 10-year terms, and we’re right at the top of the crest,” said Yamaha’s Brad Banister. “In fact, we’ve extended more than 10 years, but it looks like market growth is likely to continue.”
“I think scooter sales will easily exceed 100,000 units in ’04 and grow greater in 2005,” said Rob Gates of CMSI, the importer and distributor of the TNG brand. “A lot of people, I think, have recently turned to scooters because of the cost of gas. Also, the consumer out there isn’t so focused on the auto, and recognizes that there are more economical ways to live life.
“We’re a small company, so we rely heavily on our dealers telling us what they want. What we’re hearing now is a need for competitive 49cc pricing and bigger units for the repeat business.”
Suzuki entered the U.S. scooter market in 2003 with two “Maxi” models, the Burgman 400 and Burgman 650.
“The market we’re talking about is a small one, but sales have blown our projections out of the water,” says Suzuki’s Glenn Hansen. Hansen said sales in 2004 are nearly double of those recorded in 2003.
“I don’t look at the numbers for the 50cc category too often — because we’re not in that market yet — but I would imagine that’s the big growth segment because that’s where most of the numbers are, quantity-wise,” he said.
Joel Martin is president of Martin Racing Performance, the exclusive importer of Malaguti scooters from Italy. Martin said he continues to see potential in the U.S. market in 2004, mostly in the 49cc range, but he also attributes the increase in sales to “lower end Asian and private label re-badgers entering the market,” and not the higher-end Italian bikes.
“I strongly believe that price wars in Asian product at the wholesale and retail level are currently driving the growth in the U.S. scooter market with an adverse affect on European models,” Martin said. “I think we’re entering the whole ‘customer beware’ phase of growth so, in the end, it's like everything else: you end up getting what you pay for.”
KYMCO USA’s Bruce Ramsey appears to agree with Martin.
“The huge influx of second tier, or beyond second tier models — those that come from China, Taiwan or Korea at really low prices — have had a pretty substantial impact on myself as well as other companies,” Ramsey said. “It’s a terrible thing because the quality is not great and the aftersale support is not there. Unfortunately, it will have a negative impact on first-time scooter buyers who may have a bad experience.”
“The top scooter brands in the U.S. are Honda, Yamaha, KYMCO, some of the unreported brands, and Piaggio,” said Philip McCaleb, owner of Chicago-based Genuine Scooter.
Like Martin and Ramsey, McCaleb said dealers should be cautious when choosing a scooter brand.
“There are a handful of factories producing a variety of names, colors and decals to sell through as many channels as they can possibly create in the United States. The length of time that people distribute these products is an indicator, not only of how long they’ve been in business, but how long they’ll likely be in business — the implication there being a very short term.”
So, how is the industry responding to these low-quality imports?
“What you see now is that companies like Piaggio are becoming global players moving production to Asia in order to bring costs down,” said Malaguti’s Martin. “The industry is changing much like the car industry where, for example, Nissan manufacturers in the United States and in Japan, but what sells is the brand name and not where the car is made.
“To tell you the truth, with the dollar at $1.27 vs the Euro, I don’t know if there will be room in the future for people like myself or other Spanish or European importers. The reason being that the Piaggio group can afford to loose money because they are a subsidiary, but U.S. importers who foot the bill for everything will end up getting screwed if we don’t have a clear election or a good strong dollar policy next year.”
“I think the EPA and DOT, despite being short-handed, have really tried to bring their hammer down on illegal imports of inferior product,” said Genuine’s McCaleb. “They are seizing a lot of containers and discouraging a lot of people from importing stuff that could be a potential liability and put a black mark on the general population of scooter retailers.
“I think Homeland Security’s attention was elsewhere during the last three years, but that so many manufacturers who are legitimate have created such a storm of complaints that officers are being assigned now to place intensive inspections on in-bound vehicles from places like China.”