KYMCO USA taps increased support from Taiwan

Publish Date: 
Mar 24, 2008
By Guido Ebert

FORMED IN 1963, Taiwan's Kwang Yang Motor Co. Ltd. (Kwang Yang) grew its operations through a long-term supplier partnership with Honda Motor Co. Ltd., started marketing KYMCO brand product in October 1992, and now features research and development, production and testing campuses in Taiwan as well as multiple subsidiaries worldwide.

The top three manufacturers of two-wheelers in Taiwan are: 1) Yamaha, 2) Kwang Yang and 3) Sanyang Industry Co. Ltd. (SYM). In Europe, where Kwang Yang laid the cornerstones for its KYMCO brand through its scooter business, the Taiwanese OEM has assumed a leading role in the burgeoning ATV market — KYMCO is the second best-selling ATV brand in Spain, behind Suzuki, and a leading supplier in Germany. Now Kwang Yang wants to mirror those results in the United States.

A former importer of Tomos brand products, and formerly operated as STR, Inc.-Motorsports Division, KYMCO's U.S. operations are based out of a newly purchased 80,000 sq. ft. facility in Spartanburg, S.C. STR, now incorporated as KYMCO USA, Inc., imported and distributed its first KYMCO scooter in 2000 and its first KYMCO ATV in 2003. The company serves as the exclusive KYMCO representative in all 50 states, Puerto Rico and other U.S. territories in the Caribbean.

Kwang Yang purchased 50 percent of KYMCO USA in July 2007. The Taiwanese OEM helped finance a recent move to a new, larger headquarters facility and subsequently sent two officials to live and work in South Carolina to better understand the needs of consumers in the U.S. market.

Eric Bondy took the reins as president and CEO of KYMCO USA in early 2005, assuming day-to-day responsibility for all operational aspects at the importer/distributor. Bondy spent the previous nine years in various positions at Arctic Cat, Inc., in Thief River Falls, Minn. He left as marketing services manager, working with outside vendors and assisting with the manufacturer's systemwide computer project. Dealernews visited with Bondy last month in his office in Spartanburg, a few miles up Interstate 85 from BMW North America's sprawling automobile production facility and in the neighborhood of multiple NASCAR team facilities. The following is an excerpt of the conversation, edited for brevity and clarity:

DN: How many units did KYMCO USA sell last year?
Bondy: Retail scooter sales were up 12.8 percent and ATV sales were up about 8 percent. As far as wholesale, we did around 15,000 pieces total. Wholesale sales were down a pretty significant amount in both categories, and that was due to kind of a combination of things; economics, obviously, and dealers are extremely conservative right now with ordering inventory. And, frankly, as a small player in the market, we're in a lot of multi-line dealerships where, if they're taking a lot of inventory from another manufacturer, they're not going to take a lot more from us. So it's been a struggle in 2007.

DN: What's KYMCO USA's main goal for 2008?
Bondy: This should be a phenomenal year for us. From a product standpoint, this should be the best year we've ever had. For the first time I think we'll be able to go into a dealership and say 'You should buy this product, not because it's priced lower, but because it's a better product.'
And I think that really is a big, big step for us. Not that our other products haven't been great products — they have — but we've always tried to feature them with value — similar features for less money. Well, the reality is that that former price advantage has gone away. The people who really are price-driven now are the Chinese, and we can't compete in that realm nor will we ever try to.

DN: What do you feel is the company's main barrier to improving business in '08?
Bondy: I think the single toughest issue we have in the U.S. market is branding. We really struggle to get our brand well known with consumers, and so we're going to be focusing a lot of our advertisements and a lot of our promotions on developing the KYMCO brand to be very recognizable to the U.S. consumer. People still have a tendency to lump us in with many of the lower-priced Chinese brands and other offshore manufacturers, so it takes a little longer and a little more to tell the story of KYMCO.
We don't have a tremendous price advantage, nor will we ever, and that's not going to be the mode for penetrating the market. So we need to convince U.S. consumer to look to KYMCO for what the product offers — the features and benefits.

DN: Describe what's been going on with your dealer network.
Bondy: We added 134 new dealers last year, which was remarkable in a year like 2007, and we're real pleased with the number of dealers, good dealers, who were added across the country. But, on the downside, we also certainly lost more than we would have liked. But a lot of that was, again, dealt by economics — the business and the industry. We had some guys who dropped out but whom we really wanted to be able to keep on board, and unfortunately they just couldn't hold on.

DN: What type of dealer are you looking for?
Bondy: I don't think there is a type. We've had great success with small mom-and-pop retailers and we've had great success with huge, multi-line dealerships. Really what we look for are good business people who have the passion for being in the industry.

DN: I hear many people say a lot of good things about your product and operation. Still, not everything can be rosy, can it? Are there places for improvement?
Bondy: Tons. Tons. Every day we learn something more about what we don't do well, and then try to facilitate change in those areas.
I think the biggest thing for us is in really supporting our dealers and helping grow that dealer network. Dealers may argue sometimes that we don't appear that way, but what we really try to focus on is how we're working with the dealer and what we can do to better support that business.

DN: KYMCO USA plans to have its first-ever dealer meeting next month. What do you expect retailers to want to discuss?
Bondy: Certainly talk of the economy; some issues regarding parts availability, which we're already working on; a call to bring new product to market faster; and to help some of our dealers to become better trained in service. We haven't taken that step, so I think we really need to start facilitating some service training. We have a very nice partner in Dealership University and we think we have some opportunities to leverage that for some training.

DN: KYMCO USA has hooked up with a number of vendors to aid its processes.
Bondy: We have a full extended warranty program that's privately labeled KYMCO, we have Dealership University, we have ARI's PartsSmart and WarrantySmart, we have a retail finance partner in Sheffield, a wholesale finance partner in GE…we have all of the basics that are really necessary to grow the business.

DN: Kwang Yang purchased 50% of KYMCO USA last year. Who did they purchase that share from?
Bondy: STR, Inc. is a company based in New Jersey that does a lot of trading in offshore goods and was the parent company that owned STR Motorsports, an independent distributorship that was a 100 percent owned subsidiary.
When I got here, we started looking at what KYMCO needs to be in the future. As an independent distributor, the odds of being able to make a long-term commitment with an OEM are relatively small. And so we started looking at ways to bring KYMCO Taiwan into this partnership. I really believe it was the right thing to do for the long term. They can look at the U.S. now and know that whatever they invest they will reap the benefits of — like R&D for U.S.-specific products, advertising, and all of the things you need to grow a brand.

DN: How are the two gentlemen from Taiwan influencing KYMCO USA's operations?
Bondy: The biggest attribute is in communication. It has opened up tremendous channels of communication. Now we can go straight to R&D, straight to spare parts, straight to IT. In the past, we'd have to go to overseas sales and then we would have to wait for overseas sales to disperse our messages.

DN: KYMCO USA used to be majority scooter, minority ATV. What's the product ratio now?
Bondy: It's almost the exact opposite now — about 60 percent ATV to 40 percent scooter. And it's not because our scooter business has dropped but because our ATV business has grown.

DN: I know you've increased consumer advertising and event marketing. Are your efforts on track?
Bondy: I think so. We have a truck that's rolling 52 weeks of the year going to events and doing demo ride after demo ride after demo ride, and I think we're taking the right approach to it. We don't have billions of dollars to spend on advertising and promotion — if we did we would be on TV and everyone would know our name — so we're really trying to do things on the consumer side that we can afford and that gives us a nice return.

Kwang Yang Motor Co. Ltd. supplies worldwide operations from its multiple facilities in Kaohsiung, Taiwan.

KYMCO USA is a member of the Specialty Vehicle Institute of America and promotes the ATV Safety Foundation and Motorcycle Safety Foundation.

KYMCO USA keeps a minimum $1 million in 'Genuine KYMCO Parts' available for distribution from its warehouse in Spartanburg, S.C.