A growing number of Vespa/Piaggio dealers report they are unhappy with the company's expansion efforts in the United States, saying that the OEM is poaching its already small customer base and cheapening its brands with the rapid growth campaign.
The problem started when the Piaggio Group abandoned its Vespa Boutique concept in favor of multiline dealerships, some dealers claim. Since then dealerships have sprung up in competitive territory, country feed shops and in rural markets where the demand is low.
Piaggio Group America's Paolo Timoni acknowledges the growing pains, saying he knows there are unhappy dealers but adding that the discord is a byproduct of the OEM's growth-oriented run at its competitors. The goal, he says, is to compete in 85 percent of all local markets in the United States.
"The way we look at this, we are really committed to trying to transform scooters into a significant phenomena in alternative transportation. It's currently very difficult to say if this can only happen in New York and San Francisco, or if it can also happen in small communities," says Timoni, PGA's president. "The only way you can understand that is if you try."
In some cases he knows this will not work, but doing it is the only way to find out. Furthermore, Timoni says dealers were told about the growth strategy at dealer meetings first in 2005 and again last year.
"We told the dealers very well that we are not willing to remain a niche brand," Timoni says. It's not in the interest of the company to say, "the United States is a huge market but I'm only going to serve customers in the 10 largest cities. That's not going to work and I don't think the brand can be successful with such a strategy."
Still, some of the veteran dealers who helped reintroduce the Vespa brand to the United States say they've been "hooked and crooked" by an OEM that's more interested in pushing units than in keeping dealers profitable.
Ron Katz, the former owner of the Vespa Memphis boutique, says his relationship with the OEM soured right from the start.
"When we first opened we were selling some scooters because there was a pent-up demand," Katz says, adding that just as quickly sales dropped off. "Memphis is just not a scooter town. They thought Vespa was a Catholic prayer," he says. "Down here it's all Harley-Davidson."
He closed up shop after four years. "There's just not enough scooter sales here in the mid-South to justify [staying open]."
Joe Bitzan of Vespa Charlotte in Charlotte, N.C., echoes Katz, saying that Piaggio doesn't have the dealer network's interest at heart. This from a dealer who took on the product five years ago because he loved its reputation, Bitzan adds. "It has gone right down the dumper in the last two years," he says.
Another dealer who asked to remain anonymous because he still deals with Piaggio and fears repercussions, says "My main worry is they're going to dilute the fantastic name of this product."
In response to these charges, Timoni notes that many of the original boutiques have not survived in the smaller markets. Four or five years ago when Vespa reentered the United States there was no way of knowing how fast or slow the market would move, he says. "Now what we have been telling those dealers currently is they basically have two options: They can quit and sell the business to an established powersport dealer in their own market or if they want to remain in business they need to add additional product lines," Timoni says.
Those dealers who don't alter their business plans are likely to fade away in a couple of years, Timoni says. Those who stick around will be the ones who know the reality of the powersports industry, that it's hard work that requires experience and capital.
Timoni points to the company's numbers as proof that the expansion efforts are working. Piaggio/Vespa had a 16 percent market share in 2005 and a 19.1 percent marketshare in 2006. That's a 3 percent gain in one, he says.
"What do we do with those dealers which are stuck in a difficult situation?" Timoni asks. "We have been coaching those dealers. We're not preventing those dealers from embracing new brands. We told them based on the market ... there is no way for the next three to five years you can have a stand-alone motorscooter business."
One current dealer says he doesn't have much confidence in the future of the company. William Ashley, owner of Best Value Motorsports in Columbus, Ga., says he also suspects there are recurrent management problems. As an example he says he ordered three differently colored Mojito scooters for the year, and the company sent him six in black without any prior warning. When he questioned the shipment, "Their answer was 'That's what we have in stock,'" he says.
Ashley was an Aprilia/Moto Guzzi dealer before the Piaggio Group bought the two brands. After the acquisition he took on the famed Italian marques thinking Piaggio could turn them around. He's since changed his mind.
"If Vespa/Piaggio doesn't change their ways, Aprilia and Moto Guzzi too, dealers will not buy their products just like they didn't before," Ashley says. "It's going to turn, really simply, to people not trusting the brand."