PennDOT Stops Deliveries of Chinese Bikes

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Scooter sales are through the roof. But some dealers in Pennsylvania haven’t been able to deliver a single scooter for the past two months. There’s even been talk that at least one dealer has gone out of business. Is it a supply-and-demand problem? No. The dealers have plenty to sell, and people are willing to buy. It’s a registration problem.

In an online bulletin dated September, the Pennsylvania Department of Transportation informed dealers that they could no longer issue temporary registrations and tags for any scooter or motorcycle with a VIN that begins with the letter “L,” the country code for China. Instead dealers must send these title applications to the department’s Special Services Unit in Harrisburg. The unit inspects the applications and decides if a title may be issued. The unit checks each VIN with an online database maintained by the National Highway Traffic Safety Administration (NHTSA), the federal agency to which importers submit their paperwork.

According to the PennDOT bulletin, the change was “due to questions concerning the eligibility of certain vehicles to be titled and registered in Pennsylvania and the increase in the number of imported vehicles (especially motorcycles) coming into the department for processing.”

Dealers Caught Off Guard
Wayne Kuhns is the owner of The Scooter Shop in Allentown, Penn. He says the new examination process took effect on or around Sept. 1, but that the government did not contact him about the change.

A couple of weeks into the month, Kuhns says, his customers began receiving their title and tag registrations back. They also got a note telling them to return to his store for a refund of the fees and tax. Kuhns claims PennDOT did not post the bulletin on its Web site until about this time. “The state doesn’t mail us anything anymore,” he complains. “PennDOT has left us in the dark about when and how the problem will be resolved. We had been licensing these vehicles for years, and then all of a sudden they said stop. All the dealers are sitting on inventory now.”

Dealernews contacted PennDOT, and a representative says she will respond to our questions later this week.

Since the change in processing, Kuhns hasn’t been able to sell any of his Chinese scooters, which include brands TNG, Lance Powersports, United Motors and QLink. The importers have told him, he says, that PennDOT has told them that they have not properly registered some of their Chinese scooters with NHTSA.

Kuhns has tried to get answers from the government and his vendors. He says CMSI Inc., the importer of TNG scooters, ensured him that the scooters now being shipped from China will have correct numbers. “I replied, ‘What about the old ones that I have in inventory?’ And they don’t know. They said, ‘Maybe we can get a dealer from out of state to buy them.’

“But I was told this thing was going to go to other states,” Kuhns adds.

He also says CMSI told him that he could legally remove the invalid VIN tags from the scooters. Reportedly the importer said it could send him valid ones along with, Kuhns assumes, new manufacturer’s statements of origin, or MSOs. “The problem is the VIN numbers are also stamped into the frame,” he says. “So they say, ‘You can change that. You need to grind that off, and then you have to etch in the new number.’ And I don’t see how that would be legal.”

Dealernews left voice messages with CMSI, but no one had replied before this story’s posting. Our attempts to contact United Motors also failed.

Dennis McCartney is owner of dealership CBXman.com in Edwardsville. He says his vendors, United Motors and QLink, told him that they submitted their corrected paperwork weeks ago. But NHTSA has yet to post the information on its Web site, he says.

“QLink buys from about three different Chinese manufacturers,” McCartney tells us (and QLink later confirmed). “One of the Chinese manufacturers did not offer correct VIN decoding information.” As many readers know, vehicle manufacturers use their own system to create most of a VIN’s 17 digits, which contain data like engine displacement. The government asks for a decoder to interpret the VIN.

United Motors imports many vehicles from South Korea, and McCartney can register those units as usual. Other UM units, however, are made in China. “UM has two different issues,” he says. “This is going to sound wild, but the paper that the MSOs were printed on was not acceptable — it was not that bond-type paper.” UM’s second problem, McCartney says, was that it placed its own name on the MSOs where the manufacturer’s name should go. [UM later denied any problem with its paper. McCartney said PennDOT had told him of the problem. Click here for a full report on the discrepancy and UM’s comments.]

Again, McCartney says both importers told him they had addressed these problems weeks ago.

Some Chinese scooters — the QLink ones made by compliant Chinese factories, for example — do pass the special examination. “That’s a good thing,” McCartney says, “but the bad thing is the consumer wants to be able to drive the vehicle away, and they can’t.” Most people won’t wait the couple of weeks it takes PennDOT to approve the paperwork.

McCartney recognizes that illegal imports are a problem. He’s even glad that Pennsylvania is trying to crack down. But he questions the method. “In the long run, this is going to be a good thing; in the short run, people are going out of business. … We’ve actually gone to our legislators and asked them for help on getting PennDOT moving, and we can’t get them moving. I don’t know what it takes to get a bureaucrat moving. Light a fire under their chair?”

Importer Claims Discrimination
Gene Chang of Lance Powersports says the sudden change rattled his company. “It was out of the blue. If they were going to announce this, I wish they would have given us some additional time to prepare,” he says.

Johnny Tai, sales manager for QLink, calls the actions discriminatory. He says he’s noticed that some Taiwanese manufacturers are not even in the NHTSA database, though he declines to say which. “I feel the whole thing is a scheme,” he says. “Why do they only target Chinese bikes? As the government, you should treat everybody equal. The government can’t punish us for selling Chinese products. Why don’t they punish Wal-Mart?” He partly thinks it’s because he and his dealers run small businesses.

Chang is also familiar with the discrimination theory. “From what I’ve heard, Pennsylvania is a very conservative state, and they’re leaning a bit on the bias side,” he says. “From what I hear, a lot of the upper government agencies, they’re trying to shy away from any imports.”

Tai adds: “What makes it worse is that we don’t get any instructions. We don’t get any help from either PennDOT or NHTSA. I even need to get my attorney to call NHTSA; otherwise, I don’t get any reply. I admit there are a lot of illegal Chinese bikes coming to this country, and the government wants to regulate. That’s a good thing. But before you do that, first you need to give us instructions; second, you need to set a grace period.” (In NHTSA’s defense, a Dealernews investigation did uncover a 37-page document titled “Requirements for Motorcycle Manufacturers” posted on the administration’s Web site. It seems to contain detailed instructions for submitting paperwork.)

As mentioned earlier, NHTSA required Tai to submit a decoder for one of the QLink manufacturers. He did this, but then the government told him the address of the manufacturer was wrong.

Tai worries that NHTSA will continue to drag its heels. He insinuates lobbyists may be behind the delay. “I’ve heard from several manufacturers that they submit that information every year, but they never got updated. That’s why I sense this could be a scheme. I have to say that, for example, some Japanese manufacturers, they have lost market share.”

But Pennsylvania is just one market among many for both Lance Powersports and QLink. Tai says he knows where the true burden lies. “The most important issue is — dealers. They are going out of business.”