Sept. 1, 2008 – Trying to meet scooter demand

By Mike Davin
Contributing writer
U.S. scooter sales have skyrocketed in recent months, which has led to inevitable inventory shortages at dealerships. The question now is whether those shortages will prevent continued retail sales growth.
The Motorcycle Industry Council sales report for June it showed year-to-date scooter sales up an impressive 65 percent, with June sales alone up almost 90 percent over the previous year — a rapid pace that left some customers waiting for sold-out models.
Manufacturers now seem confident that increased production will make waits for scooters relatively brief. Still inventory shortages could keep second-half retail sales numbers from approaching the impressive figures seen in the first half.
Eric Bondy, CEO of KYMCO USA, said in late July that he didn’t think the inventory was out there to match those first-half numbers.
“I don’t think there is enough immediately, and I’m hearing this anecdotally from other people in the business as well. I think everybody is in a pretty similar situation,” he said.
Like other OEMs, KYMCO USA is doing its best to get product out, even setting up a temporary West Coast distribution center to try to eliminate some shipping time and get inventory into the Midwest and the western part of the country more quickly.
KYMCO USA relies heavily on a close relationship with its manufacturing partner, KYMCO Taiwan. Rick Pawelka, marketing and communications manager for KYMCO USA, cited this partnership as the reason they have been able to increase their original sales plan to try to keep a steady flow of scooters going to customers through the fall.
Henio Arcangeli, Jr., motorsports group company president at Yamaha Motor Corp. USA, says Yamaha also has been able to modify its original 2008 scooter plans.
“Factories have been quite responsive and flexible, so we’ve actually upped the production for scooters,” he said. “So we’re hopeful we’ll be able to meet our dealers’ demand for product during the second half of the year.”
Paolo Timoni, CEO of Piaggio Group Americas, says his company’s inventory has largely kept up with demand this summer because production was increased when the company recognized interest would be high back in the spring.
“In early May, we revised the production plan with Italy for June, July and August,” Timoni said.
That’s not to say their scooters haven’t been selling out. Timoni noted that they ended July with zero units available.
Andrew Hadjiminas, owner of Vespa Brooklyn, agreed that Piaggio has met its order targets. At the beginning of August he said his inventory was good, but he’s still had so-so luck keeping units in stock.
“Certain models we can keep in, others we can’t,” he said.
Timoni says Piaggio was able to make the quick adjustment because the scooter market is not as mature in the U.S. as it is internationally. “A big jump in North America is marginal compared with worldwide production, which is how we are able to accommodate it,” he said.
Robert Belmont, vice president of sales for Carter Brothers, which distributes SYM products, says SYM’s facilities have been able to handle increasingly larger scooter inventory requests, and they will be ramping up production for next year.
“That’s not to say we’re not sold out of scooters, but we haven’t made an order SYM couldn’t fill,” he said.
Belmont says he has placed more orders this summer than in the last 21?2 years. Nevertheless, his warehouse was void of scooters at the beginning of August. He anticipates he will be able to get more scooters to dealers later in the month.
United Motors also was out of inventory, according to Jose Villegas, vice president of sales and marketing. He says they ran out in mid-June, and although he was able to get a few more from international distributors, it was not enough to meet demand. However, 2009 models will arrive in September.
Cobra Powersports’ President Bill Peirce, whose company distributes PEIRSPEED scooters, received inventory in mid-August.
Bill Savino, manager of motorcycle press for American Honda Motor Co., said his company’s ’08 models are gone, but dealers do have the ’09 models in stock.
Glenn Hansen, American Suzuki communications manager, said his company also has inventory of their Burgman scooters, but it is low. Suzuki, he said, won’t increase production of current model year scooters, but will wait to judge demand when dealers place orders in the fall.
Suzuki’s somewhat cautious approach is typical: Although almost everyone has increased orders for next year, companies are proceeding carefully. Savino, for example, noted American Honda is pursuing a “long-term strategy” as it looks to the future, rather than assuming that current trends will hold indefinitely.
Villegas of United Motors agrees with that approach, saying he thinks importers who are not careful may end up with an inventory surplus in the fall. “Timing is critical,” he said, “because we aren’t going to sell the same number of units in October, November and December as we did in May, June and July.”
Still, strong demand has led big companies, like Yamaha, to put an increased emphasis on scooters. According to Arcangeli, “We think scooters are going to be an important part of our business going forward. We’ve invested in the business and we expect to be a strong player in that business going forward.”
And Belmont of Carter Brothers, who is receiving dealer orders at a time of the year he hasn’t seen before, said his dealers anticipate strong sales through the end of the year.
“My crystal ball only has the capacity to see so far,” Belmont said, “but it’s hard to see this thing slowing down anytime soon.”

–Neil Pascale contributed to this report