March 12, 2007 – Dealer network, sales growth continues

INDIANAPOLIS — KMYCO reports double-digit growth in sales in an area of the industry that slumped in 2006, plus is hinting at entering a new market segment in the near future.
The Taiwan manufacturer’s scooter sales rose nearly 30 percent while the reported industry fell 4.6 percent, Bruce Ramsey, vice president of sales and marketing for KYMCO USA, said in an interview with Powersports Business.
Ramsey also said he “wouldn’t be surprised” if the company, a nonreporting member of the Motorcycle Industry Council (MIC), unveils a side-by-side vehicle for 2008.
During a break at the Dealer Expo, Ramsey also spoke about the company’s dealer expansion — it added 190 dealers last year — and where he expects the company’s biggest product growth to come from in the near future. The following Q&A has been edited for clarity and brevity. The full interview can be viewed online at www.powersportsbusiness.com.
PSB: Many OEMs from the Far East displaying at the Dealer Expo talk about becoming the next KYMCO. It’s obviously a sign of respect for what KYMCO has been able to do in the marketplace and must be something that you and your staff can appreciate.
Ramsey: Certainly. With all the new entries into both the ATV and scooter side, a lot of the ads (from new OEMs competing at the same price point) now are starting to mirror some of ours. For the past few years, a lot of the (new OEMs’) programs coming out have been very similar to ours.
PSB: Have you reached a point where brand awareness isn’t as much of an issue as it was a couple of years ago, or is that something you’re still fighting?
Ramsey: We certainly fight it. But in the past few years we’ve done a respectful job of getting the awareness out to the dealers. So the industry presence is there. For consumer presence, we have a considerable way to go. It takes a lot more time and frankly, a lot more money. So as we move forward this year and into future years, our marketing dollars will shift a lot toward consumer advertising.
PSB: Where are you with your dealers in terms of numbers and where do you want to be?
Ramsey: I don’t know what the magic number is as far as total dealers. We have some that are four-wheel only, some that are only two-wheel and of course, the full lines. My perfect world would be everybody would be full-line dealers, but that’s not realistic based on the markets. We’re at about 450 active dealers right now. I would expect somewhere in the 800-900 range would be optimum for us. I really don’t know that I would want to have 1,400-1,500 like some of the major OEs where you have a lot more dealer-to-dealer pressure in the same brand. But certainly we can add several hundred to our line because we can have territories that are still untapped.
PSB: Are those territories in certain regions of the country?
Ramsey: No, it varies. There are some regions where we haven’t had the product line to support a lot of sales. In south Louisiana, if you’re not offering a four wheel-drive machine, you’re pretty much not going to sell anything. So as we develop the ATV line further, we have the opportunity to expand in areas where we previously have been unable to break through.
PSB: We noticed a lot more higher-displacement machines from nontraditional OEMs at this year’s Dealer Expo. Any idea why that is? And is that comforting to KYMCO since the company got a head start on the new wave of higher-displacement ATVs with its release of a 500cc quad?
Ramsey: I don’t know that it’s actually comforting. Most companies like KYMCO see a need for it though. The extreme competitiveness of the youth models, especially with nontraditional dealers like Pep Boys selling them, has lent itself to where anybody who wants to grow and have success can’t compete in that youth segment. So the 50cc, 70cc, 90cc and unfortunately the 110cc stuff that literally flooded the market in tens of thousands of units annually now are so inexpensive that more substantial OEMs that build to specifications and safety standards really have a hard time competing. So even though (low price point OEMs) have no aftercare, no parts supply or warranty coverage, in many cases they still sell a lot of units because it’s perceived by many consumers as disposable. So everybody that wants to stay in the game perceives the need to move up (in engine class). As far as having more competition there, we’re not fond of that. Obviously, I have a huge challenge getting anywhere near the respect the “Big Seven” already have. So I’m not eager to have 70 other companies competing on my heels.
PSB: Do you foresee in the near future, perhaps in five years, the rush of companies entering the U.S. market from the Far East will slow and there will be a certain number of companies that will gain a foothold?
Ramsey: Absolutely. Like any industry, many companies see the potential. Even though the reported sales are not growing at this point, it is a substantial market for ATVs or motorcycles. So all these other companies see the opportunity to carve out their niche. Like most other industries, certainly the strong will survive. I’m referring to those that do offer solid dealer networks, competitive programs, dealer support and training, warranties, parts and supplies. Those will be the ones that survive during the next five years and without a doubt, many will fall by the wayside.
PSB: Is there a specific area in your product lineup that you see the most growth in?
Ramsey: As of 2006, we certainly had more growth in the scooter side of the business than the ATV side. We introduced a lot of new models, but only three were ATVs. Even with the introduction of the 500cc front-wheel drive, which was a good rollout for us, we still had considerably more growth on the two-wheel side. Even though the MIC reported the (scooter market) numbers down, they only have a handful of reporting manufacturers that sell scooters and that number is skewed by literally a couple hundred thousand pieces at least. So the market, I feel, is certainly up. We had phenomenal growth on the scooter side. Slowly I think the U.S. is looking at scooters as acceptable means of transportation, not just an impulse buy.
PSB: There has been strong side-by-side growth in the market for the past couple of years. Is KYMCO looking at that market segment?
Ramsey: Yes we’re definitely looking at it. We’re looking pretty hard at it. I believe KYMCO will have to enter into that market. It’s a growing segment. I believe it’s stealing some sales from utility ATVs. So if we want to continue to have the presence that we focused so hard on building, I certainly feel we need to enter that segment. psb