April 2, 2007 – Franchised dealers can no longer ignore Chinese products

Many in the industry were just hoping they would go away. After all, the initial product offerings from the Chinese were not worth the consideration of serious operators.
That was then. What is offered now cannot be ignored.
At the conclusion of last month’s column I urged all metric dealers to take a hard look at Chinese product. Placing that product on your showroom next to the established brands you’re selling is not going to make your current OEM suppliers happy.
For the most part it will be incremental business and the lower price point should attract buyers for everything you sell. That will not stop your district manager from viewing the new company as parasites taking advantage of the market position they feel they have created for you. That, of course, is the same argument Triumph and BSA distributors put forth in the 1960s when we had an invasion from another part of Asia.
The Chinese product is continually improving, but there has been none of the creative marketing that helped get the Japanese brands established. For the time being, all that is being offered is OK product at a cheap price. No one brand has yet to establish itself. Go for the low price point merchandise, just be sure you are not putting everything you have worked for at risk.
Product liability is the first concern. Let your insurance carrier advise you on this. Your big box enterprise is a handy target. When, not if, you get sued by a consumer, is the indemnification in place? The carrier underwriting you has the resources to make the determination.
How is the product distributed? Do not consider any product line that does not use established and credible dealers. Be very clear on just what their standards are for dealers. If you are a big league operator insist on a big league distribution process. Don’t be shrugged off on this by assurances of what will happen soon. You owe yourself a little due diligence here. I would like to hear from dealers with good or bad experiences with the suppliers of Chinese or Taiwanese motorcycles, ATVs and scooters. I will pass the word along.
At such a low price point do not expect the OEM programs you have become accustomed to. Training, co-op advertising and the like cost money. None of the management of any of the Chinese companies I have met have any real clue of what happens in the U.S. retail marketplace. So, again do not look for any help in the way of marketing. All you can expect at this point is a supplier who appears to be serious. Be sure you are dealing with the manufacturer or its controlled distribution arm. Leave the middleman distributors for the independent and nonfranchised dealers. If you have made the commitment to be a franchised dealer for a major brand, deal only with the source.
Lest I offend our brother and sister independent dealers who are starting on a shoestring, we do understand. I am not implying that the big box operation is more worthy, they just have so much more at stake. They must be more cautious. If we didn’t start at the level you are at, our daddies did. As an independent dealer, you have to take a chance. We are just one generation removed from when the Kawasaki and Suzuki names sounded as weird as the current offering of Chinese products sound today. The need for established dealers to be selective could work to the advantage of a currently independent dealer, if you can pick well.
If you have proven yourself as a dealer, only do business with a supplier that has proven they can at least deliver a commercially acceptable product and support it in a commercially acceptable manner. And, let’s ask if they are members of the Motorcycle Industry Council. If they are going to be serious players, and want everyone to take them seriously, make a sincere commitment to the U.S. industry.
Since we are talking about commitment to the industry, it is a real shame the majority of retail dealers in the United States do not belong to their state dealer association. Please take your future seriously, put aside any reason you have ever conjured up for not joining, and just do it. Be serious. psb
Ed Lemco has been involved with the powersports industry for more than 30 years. Lemco, the former owner of Lemco Management Group, is the founder and executive director of the National Council of Motorcycle Dealer Associations. Lemco currently operates a call center for dealers in St Croix.

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