State of the Scooter Union – The Great Depressurization

Sat, Aug 21, 2010


(I just got out of Dr. Buzz’s lecture on the scooter business and it was harsh.)

During my dreadful pondering and languid contemplation of exactly how to address the current state of the scooter industry; longtime scooter industry guru, father and creative-type who would likely drink free at Comic-Com for being confused with a famous cartoon creator, Bryan Bedell, laid it down on his site 2StrokeBuzz.

I read his piece and I have to say right now things in the scooter biz are as bad as Bryan makes them sound… maybe worse.  Yes, I admit that I’m known for being overly optimistic (foolish?) at times, in the hopes that I can influence the world by sheer will and positive thinking, but the reality of the situation right now is grim and the future of the scooter market in the USA lies in the hands of the distributors and shops that can manage to stay afloat on a shoestring budget for the next couple of years.

Imagine you owned a distributorship, let’s call it Gensymko.  You’re proud of the high quality products you import from overseas.  You’ve invested millions of dollars in scooters, parts, warehousing, employees and all the requirements that go along with that.  You do your best to keep your customers (the Dealerships) happy and hope that support reflects on their customers (scooter consumers).  A happy scooter consumer comes back for parts, accessories, gear and service.  You count on your sales people to grow your dealer base, you count on your dealers to market and promote their shops and you also count on them to do their best to project their sales for the year.  Why?  So they can place advance orders with you and you’ll know what to order from your manufacturer so that you aren’t stuck with a warehouse full of aging scooters.  And, what’s the fuel that keeps this cycle moving?  Financing.  Consumers need it to buy stuff, Dealers need to to stock their showroom floors, and distributors, like you, need it to stock their warehouse.  The way this “fuel” keeps things moving on the business side is through the power of interest or “juice”.  Your dealer is “inspired” to move scooters because every month a financed (floored) scooter sits in the store the amount of money they make on that scooter is diminished until at some point, the dealer is upside down; paying juice on a scooter that is taking up space and depleting their income.  If your dealer isn’t selling, then they end up backing out on the advance orders they placed with you and your warehouse is stacked to the rafters with dusty crates.  The thing is, you NEED those things to be gone before August if you want to get in your 2011 models.

Imagine now, the perfect storm of rotten luck for your company Gensymko.
*  Sky-high gas prices make 2008 a stellar year for scooters.  Consumers don’t know what they want and don’t care.  They just want to buy something that gives them 100 MPG, end of story.  If you nailed a couple of wheels to a weedwacker, they’d buy it.  You move so many scooters through your warehouse that you end up begging your manufacturer to send more container loads ASAP before the season ends.

*  A dealer frenzy begins.  Optimistic dealers take note of their success and begin placing large pre-orders for 2009.

*  Smelling the “blood” in the water, new and inexperienced dealerships spring up from everywhere.  Your two dealership town now has six.  Competition is getting fierce.  Dealers are grabbing up every brand they can get and scooter consumers are taking them home as soon as they hit the floor.  Dealers are actually collecting deposits on expected shipments!

*  Your backup containers finally come in just as the 2008 season is cooling and you quickly whisk them off to your dealers who are happy about their sales for the summer, but feeling a bit pensive as gas prices begin to slide and our Titanic economy heads straight for the iceberg of shady financial trading.

*  2009 spins up and you’ve got your 2009 models in the warehouse or on the water.  Dealers are fully stocked.  The “juice” clock is ticking and your sales people are having a tough time selling to your existing dealer base.  Fortunately for you, there are still some late coming opportunists sprouting up dealerships, but they are entering the game with caution because they are new and they want to see this “scooter frenzy” in action before they really jump in.

* CRASH! The economy is going down and taking all of your customers with it.  Gas prices are almost half what they were the previous summer.  The frenzied scooter consumer of 2008 is already posting their purchase on craigslist, low miles and cheap.  Very few people are visiting their local dealerships because gas isn’t as scary any more.  There are those who are pissed off at the shocker that oil prices gave them last year, but the banks won’t lend them money to buy a scooter.  What do they do?  Lowball the multitudes of craigslist sellers.         The dealers?  Are scared.

* The new dealers with the flimsy, clone scooters are packing up and going home.  They got ‘em for cheap, marked them up 300% found out why they were so cheap and backed out.  Their leftovers are hitting the auction block by the hundreds and now your well established dealers are having a hard time selling your quality Gensymco’s.  In this economy it’s hard to compete with craigslist and these dirt-cheap auction scooters.  The consumer who was once interested in a scooter is buying some of these ’cause they’re as cheap as your dealer’s freight and prep charge!

*  Early summer 2010 nearly half of your well established, seasoned dealerships can’t take the strain any more.  They’ve got 2009′s and 2010′s on their floors and the juice is killin’ em.  Your warehouse is fully stocked with 2009′s and 2010′s.  Sales are almost non-existent and August is approaching quickly.

*  Your competitors in the distribution game are changing up their strategy in strange and desperate ways… selling directly to consumers, auctioning off all their 2009′s or pulling out of the game completely, leaving their dealers high and dry, dumping all their scooters onto the auction block and offering up their parts to MRP.

*  NOW comes the hard part… When your dealers go down they have to ditch their product and you know who has to buy it back?  You… at full price.  Remember those late shipments in late 2008?  Remember how your dealer’s floor was completely stocked for the anticipated, blockbuster 2009?  Yeah, well you’re gonna need to find some space in your full warehouse because you’re about to get a $#!+load of 2008′s and 2009′s to go with your 2010′s JUST IN TIME for your 2011′s to start arriving.

*  Sound bad yet?  Well, Gensymco… consider yourself lucky.  Some other distributors have it even worse as they battle with a suspicious EPA who have come to the game a bit late.  Don’t they know those dirty, cheap scooter companies have already flown the coop?  It doesn’t matter.  Dry dock fees are expensive and adding up daily as these “inspectors” do their best to insure their job security during these tough times.

So, what’s my advice?  Well, if you’re a dealer, you’ll need to keep your belt tight for a bit longer.  Let this flood of auction bikes wash over the consumers, support your loyal customers and pray that the Rich Oil Barons (the people who run this place) crank up the price of oil.  If you’re a scooterist, be there for your local shops… get a service done, buy a toy scooter for your office desk and a copy of Scoot!  Pick up some winter gear.  If you’re a distributor who is not funded by publicly traded stock and is still in business, hang in there brother.  You know how to best steer your ship.  Maybe consider doing what Honda did in with the Ruckus for 2010… they didn’t make a 2010 Ruckus, they just sold carry over 2009′s.  In Japan, model year doesn’t mean anything… there’s not a reason for it to mean anything here in America other than to encourage people to upgrade to the latest model.

If you’ve got some ideas you’d like to share, now would be a good time to do it.  We’re all listening.

17 Responses to “State of the Scooter Union – The Great Depressurization”

  1. RickRussellTX Says:

    Open any business book and look up “The Bullwhip Effect”. Short summary: small changes in customer demand are converted to huge variation in upstream inventory, due to the lack of clear information and signaling between merchandisers, distributors and manufacturers, and the tendency of all these groups to try to protect their own position and use simplistic (typically linear) prediction methods.


  2. Wanda (Scooternut) Says:

    geez that’s dire, but also true of what’s happening here in Australia. Every bit of it.


  3. Steve Guzman Says:

    Thanks for the tip Rick! Time for me to dig thought some Wikipedia. ;)

    Hey Wanda! Sorry to hear it’s that bad down under too. We’ve lost more than half of our distributors in the States. Do you have any contact with SYM over there? I wonder how they are holding up. Ours burned down not long ago.


    • Wanda (Scooternut) Says:


      not well enough to ask the question & expect an honest answer.

      I spotted you on the AmeriVespa video, it was good to see you out from behind the computer & on a scooter ;)


  4. CliveP Says:

    Sorry to hear this. Shouldn’t be reading it to see how I can get the best deal as a consumer. Actually I will respectfully consider this story next time I haggle with my dealer.

    I love my scoot and my local sales man (notice I don’t include all of the dealership in this statement) is a very nice guy (I think?).

    I will be getting my UK (Northern Ireland) Honda service (which I could do myself) soon and I will still be riding (advertising) every day and I do get asked about the bike.

    Go back to a car. Never! (Fuel is very expensive here £1.20 per litre). Well maybe a car as backup someday but for now I’m prety broke too and I’m very happy with my transport.

    Now I understand how slow and steady seems to be better but I expect we will head for another boom and bust as sure as night follows day. Question is how selective our memory will be in remembering this tail.


  5. Tim Says:

    Thanks for the depressing read there Steve! :D I hope things start rebounding soon. Ugh.


  6. Jeffraham Prestonian Says:

    I think a wise thing to do (and I don’t know that PoCPhil’s group *isn’t* doing something like this) would be to pull together a simple brochure using peer-reviewed data making one simple comparison:

    Two Car Family vs. One Car, One Scooter Family: Costs

    The number of people I see every week who don’t consider a scooter a viable transportation option (instead seeing a scooter as toy for rich people, or for kids of rich people) boggles my mind, being a scooter-only guy since 11/2006.

    We have to convince people that the money they’re going to save on insurance ALONE makes a scooter a serious consideration for just about anyone not living in the middle of nowhere.


  7. allworld Says:

    This has been put on paper what I knew for a while, and it is difficult to process.
    Here in the northeast the season (for some) is short and for the dealers it can be, and most likely will be another long cold winter.
    Perhaps dealerships should consider scooter rentals and lease options. Those who do repairs may want to consider other small engines like snow blowers. (Yikes! did I just say that?) Desperate people do desperate things.


  8. Steve Guzman Says:

    That’s right! Now might be a good time to consider consolidation, teamwork and product / service diversity because the opposite doesn’t sound like a good idea at this juncture. Less dog-eat-dog, and more pack hunting (so to speak).


  9. allworld Says:

    I ride a Yamaha, Tmax and see how Europe, UK and Asia, get more options, more accessories and way more after market parts. There are scooter shows, not unlike SEMA and other auto shows dedicated to scooters and MC. There are track events and manufactured sponsored events such as rallies and cross country rides.
    Here is the USA, you won’t even see a TV add for any scooter.
    If the USA scooter market was nurtured in every way possible including ample, reliable parts and service then maybe, just maybe more people would be riding them. When I tell people I ride a scooter, they immediately think of Audrey Hepburn in Roman Holiday, they can’t imagine me hitting a buck on the highway. Why can’t the manufactures come to their own rescue and give themselves some exposure?
    Perhaps, Hollywood should take up the task and create a modern day scooter action movie, maybe some video games, or a TV show, something even weeds need a little water to survive. J


  10. Mike D. Says:

    I’ve been looking a new scooters for the last year. My 89 Riva needs the top end redone but Yamaha no longer supports it, On the other hand I have been using this scooter as my daily transportation for the last 6 years. This mens I can no longer justify the savings of riding a scooter. Now my employer is requiring me to take days off without pay and pay more of my benefits. This is a bleak time for us all. To top it off the other day my son asked me why don’t scooters or their riders get any respect.


  11. Bill Says:

    If there’s one good thing that came out of 2010, it’s the Chinese scooter companies disappearing. They did far more harm than good to the US scooter market. They are the reason people think scooters are unreliable.


  12. Danny Says:

    Wholy doom & Gloom Batboy! It’s far from the end of the world.
    I know things are bad out there and this reducing of the market is nothing new but.. The Beginning of the end?? C-Mon !

    If you were around in the 1970′s and early 80′s you saw the passing of Jawa, CZ, Benelli, BSA, Hodaka, Ossa, Bultaco, Husky and more but the off road/ dual motorcycle industry still exists doesn’t it? Some came back some didn’t deserve to (Roketta Sunl). The USA is a tough market.

    What I do see is an awful lot of repairs and mods in my shop. I use this as a thermometer for the health of the scooter community.
    Economically, I use the sales of new scooters and Yes they are down to a crawl,
    But, More importantly is the traffic. The desire is still there. Smaller numbers yes but that just means less people have the money to fantasize with. So little, it’s not even worth the investment.
    That is to say As the economy worsened I observed some buyers looking to find economical transportation and some just fun transportation. Now that the economy has tanked and people have lost optimism and confidence, it shows in my new scoot sales figures.
    Yes. We have had to buckle down a lot but it in no way feels like the end.

    THINGS we now HAVE To Do;

    The A/C is kept up to 79 degrees.
    A renegotiation with the Landlord was necessary to insure my and his future. (they have it worse than us, no-one is looking for retail space.)

    We maintain our inventory making sure the necessaries are always available for the customers BUT, frivolous $100 helmet brake lights are not reordered. However A good Helmet selection is.

    Our accessory purchases are almost exclusively shopped at the close-out section of our suppliers so we can pass the savings on. People are savvy and know a good deal!
    As a result we see a lot of non scooterists shop here.

    THINGS we won’t stop doing are,

    I try to keep the bikes out front on our busy street,
    Our weekly BBQ. Rally has become Monthly and everyone is encouraged to come.
    Most important I’m diligently taking care of my customers whether they bought from me or elsewhere. They tell others and always come back.

    Yes the storm is here but it is not the end of the world.

    You can’t try to do the things you do on a sunny day if it’s raining out. I will stay indoors and do whatever I can till the sun shines again.
    It always does,


  13. Steve Guzman Says:

    Hey Danny! Way to have spirit, man! And, I’m not saying it’s the end of the world for EVERYBODY, just some. The thing that really scares me is the idea of possibly loosing all of our good Taiwanese brands like we did our Korean brands. TGB is basically gone, same with SYM for now. Genuine is putting up the good fight, but it’s no walk in the park and Kymco is keeping their chin up but also taking one-on-the-chin from all the buy backs.

    My report wasn’t to conjure up feelings of doom and gloom, just to report the reality of the current situation. Things have hit bottom, but not rock bottom.

    My hopes are that the committed scooter riders continue to represent on the roads and continue to support their local shops. I hope that dealers will sharpen their strategy like you’re doing up in MA. Tighten the belt a bit, but continue getting the word out and supporting the scene. Thanks for sharing your advice on how Danny’s Scooter Shop is handling things. I agree with you on the shop work and upgrades. I know some shops that are really hanging in there pretty good with that and even developing their own custom parts and upgrade packages to set themselves apart.

    I’d like to hear back from some other shop owners to see how they fair. Do you think you can pull through another 2010 sales year for 2011? 2012? Are your shop owner senses telling you something different?


    • Danny Says:

      Thanks Steve,
      You are right and I don’t think people realize just how important it is to support your local shop right now. I’m just now having a hard time listening to customers talk amongst themselves about the great deal they got at New Enough or DK when I have a similar product on the shelf or rack for them to try on or touch and read.
      As for the other Steve, Bingo! Myself being a motorcyclist for over 35 yrs, riding Scooters made me very aware and prompted us to promote their ability to nurture the three essentials to happiness. According to a philosopher (who’s name escapes me) are, Friends Freedom and a chance to Reflect. Our shops Motto.


  14. Steve Williams Says:

    I wonder if (and when) manufacturers will begin looking at a market beyond the choir of customers already riding and making a choice among various manufacturers towards bringing new riders into the riding world.

    When one considers cooperation it seems like the manufacturers should band together and present a vision of riding in America that is not about style, leather, or speed and instead touches on other things riding delivers like relaxation, friends, a sense of freedom and and sense of joy.

    It’s time to expand the market….

    Steve Williams
    Scooter in the Sticks



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