Last week we exclusively broke news that Paolo Timoni had resigned his position as President and CEO of Piaggio Group Americas. Timoni’s time at Piaggio was controversial, including years of unprecedented success, but also years of unprecedented struggle. We reached out to scooter industry veteran Joel Martin from Martin Racing Performance to explain what Timoni’s departure means for the for the company. — Ed.
So last week I got this email.
“This is to let you know that effective March 4th 2011 I have resign from my position as President and CEO of Piaggio Group Americas to pursue new professional and business opportunities. The industry is finally recovering and the company is now on a solid track and therefore I felt this is the right time for me to move on.”
This went largely unnoticed by the general motorcycle industry since it happened before a weekend. Most writers, motorcycle magazines and online blogs are eager to leave on a Friday afternoon. The guys at Dealer News didn’t even know until I told them. Most Vespa dealers didn't notice either since the 200 or so operating dealers are in the middle of restructuring themselves having survived the worst two years since the company started in America.
We wish Mr. Timoni well. We look forward to the future where we strongly believe a strong Piaggio USA with a stronger focus can help the rest of the industry emerge from the scooter sales apocalypse of 2009. Strong leadership at Piaggio Group of Americas (PGA) can guide the industry out of the recession. To misquote Charlie Sheen, "We need an F-18, bro!" We need strong leadership at the industry leader to guide the rest of us. I’m as serious as a warlock when it comes to this.
I got a chance to interact with some of the guys at Piaggio at the Indy Dealer Expo this year. Michael Lee the main parts manager has done an amazing job of keeping the place together as all the changes have come about. He even attended our class (presented by Scoot! Magazine) on keeping a scooter shop profitable. He was eager to talk and participate. I could tell he had been doing the same thing I had for two days straight yet he had the energy of a Tiger. Piaggio should promote this guy to head honcho. Team player all the way and a great communicator. Every dealer I met with told me how he goes the extra mile for them. I recognize he's got the resources, but he also knows how to use them to help clients. That's a good thing. Back to our topic at hand....
What is to happen to Piaggio USA? Well hopefully the new management (Mr. Martinez from Piaggio Spain) being put in place can deal with the coming boom and use the sales to liquidate some of the thousands of units sitting in warehouses. A few select dealers have been living like kings buying back all the GE units the last two years. If you check who the top Piaggio dealers are you will more than likely find a dealer that has been blowing out the units of all the other failed shops. So it’s not the best of situations for a dealer base to grow.
Paolo Timoni is a former member of the Motorcycle Industry Council board of directors from 2010 and had just recently left that position. This is not a sudden decision since supposedly a replacement has already been selected. Mr. Martinez will have to turn into the high priest Vatican assassin warlock that the company needs, because if they continue down the same path with ads that make no sense, pointless million dollar product placement campaigns in bad movies and setting up idiotic dealers that ask questions like "what is a luggage box?" I will flip out. I both admire, envy and wish I had such a position and opportunity as Mr. Martinez. Some of Timoni's decisions were probably based on bonuses and having these fun little ex-Harley guys run around the country setting up everyone they could without any realization that the market couldn't possibly in five years absorb that many bikes made by Vespa or the newer Asian models made by Zongshen (Piaggio Group) and Jincheng China (Aprilia). The Piaggio Fly 50/150 and Sportcity 50/125 that are made in china, the rest just use Chinese components.
When I got into the industry at first I admired Aprilia and Piaggio. I quickly learned that emulating them was not the way to stay in business. Not a single Malaguti Moto boutique lasted more than a year or two. Come to think of it neither did any of the Aprilia or Piaggio ones long term unless there were special deals behind the scenes. This happens all the time with flagship Ducati/Harley shops. The over-expansion techniques also didn't work. In the end the market has consolidated and over-expanded twice in ten years and Piaggio was at the front each time. Satellite shops closing also don’t count when its convenient for reporting purposes (these are the kiosks at malls, shops at airports, etc….) So a lot can be learned from all this. Industry watchers will recall that Piaggio USA has been restructuring since February, 2010 when they announced they had cut half their staff at their New York branches. Reduced unit sales of scooters in 2009 forced Piaggio USA to cut several top level managers in its sales operation and flatten out its sales staff. The over-expansion into Ford and Arctic Cat dealers was one reason, the other is they had a bloated staff of people from Harley and car companies that knew nothing about scooters. I know this first hand from having crashed several key Piaggio events over the years and talking to them myself. It was difficult even keeping track of the revolving door of employees that was PGA. I would meet someone and two months later after the Dealer Expo I would find out they were gone or fired. Seriously impossible to keep track of, it was like a list of eternal ex-girlfriends whose names I couldn't remember that I met on Myspace, no Friendster, no Facebook, you get the point.
At the same time the company is dealing with the massive lawsuit from Canada from the early termination of the Canadian distributor. These type of things are never good for business especially in a market like Canada which is really down when it comes to scooters. To the point where most Canadian distributors have been illegally dumping scooters in the USA since the start of 2010. So instead of building a market organically you have a president that will get held back with depositions, visiting failing shops, flying around the country dealing with big shops with big inventory that are about to fold.
A whole year later and the industry, much like PGA, is still in salvage mode. The thousand plus bikes re-purchased from Scooter Super Stores will not be easy to handle since many were from 2007-2009. They actually struck a deal to buy half at first, but after G.E. (short in the industry for Get’s Everything) squashed any chance of a re-structuring of Scooter Super Stores they now have to buy back all the units and find homes for them. Considering several OEMs have 2012 units coming this May that only puts more pressure on the dealers to buy back bikes from other defunct dealers. Cannibalism has turned into a way of life in our industry as we adapt with the roller-coaster of gas prices, the economy and both dealers/distributors closing. I know this for a fact for I have become a cannibal myself and I recognize others when I see them. Vampire Vespa shops have survived one off the other.
Despite all the bad news. There is hope and the best idea I heard in front of Piaggio employees at Dealer Expo 2011 came from Josh Rogers (owner / editor of Scoot) who made an incredible suggestion at the Dealer Expo as he was talking about the fact that there are no scooters at MSF courses. Josh is a registered instructor who has, on more than one occasion, made suggestions to the board of the MIC on how to improve scooter sales, scooter safety and the course itself only to get ignored. In all fairness I am friends with Tim over the MIC, but I strongly believe since scooters are such a small part of the industry our ideas get ignored unless gas prices are above $4. So Josh made the suggestion to Piaggio Group that instead of paying a million for product placement, instead get a Vespa scooter into every single MSF course in the country. Bypass the MIC, do this on your own and get it in the hands of the instructors. Someone like Josh with a fleet of Vespa units could do more for sales than all the Michael Bay 60 second Vespa/Transformers cameos in the universe.
Under Timoni the company lost the lead to Kymco and Genuine (PGO)/LML, who capitalized on their own retro models and marketing especially with the LML lineup. Piaggio never quite adjusted its pricing for the Chinese invasion or fixed the high pricing of the Chinese Aprilia models from Jincheng. Still, Vespa can help America make scooters more than just toys and take it to a higher level. I put forward Mr. Rogers’ idea, I strongly believe it would help move some of the 2008-2009 products sitting in the warehouses. New riders will feel what its like to ride a Vespa and might never even consider the competition. Several Piaggio employees have emailed me and said they had similar suggestions in the past and even reached out to the MSF.
Vespa has the brand recognition and the power to make the industry happen. It can rise or fail based on the market leader and in terms of marketing they are the market leader. Hands down, no questions asked. It's basically the Superman of the Justice League of America. A store will gain upwards of 50 percent more foot traffic by calling itself "Vespa of ----" in the USA since the brand is synonymous with the idea of the scooter. The bikes themselves might no longer be made 100 percent in Italy, but the brand is the Xerox of bikes.
I'm hoping the new CEO, Mr. Martinez, works closely with Mr. Lee. I hope he calls Josh Rogers next week and gets some feedback from a reluctant leader (he’s more of the Martian Manhunter who is always in the background). I hope they regain the retro-vision needed to push forward in this market. Work with third parties wisely. It might make sense to bring back Derbi and to build its own reliable, less expensive Asian brand for the US market.
Derbi had a huge following. It's sad, but I actually think Ozzy at Cycle Imports sold more Derbis than Aprilia sold scooters in its first three years in the USA. What does that tell you? If a small importer from Miami with limited resources can do a better job than a big corporate triple-stacked cheeseburger of a company? Maybe they should ask him what he would do to increase sales.
Then again, if I know the corporate world, they are more than likely to keep focusing on Moto Guzzi which is only a tiny fraction of their overall business. Aprilia sportbikes which are highly unprofitable for small shops not in the racing world and unpopular Piaggio models like the MP3. Mr. Martinez will have to bring the hybrid MP3 to the market, re-energize the scooter brands, bring in the Chinese-made, lower price point models that have higher margins, in a bad economy. This is one hell of a challenge and I look forward to reaching out to him. As critical as I am it just means I love the brand in my own way. Even Coca-Cola makes billion dollar mistakes (Anyone remember how good Frutopia tasted in glass bottles when it was more than 15% juice? How about KMX Energy Drink? Exactly). This will all pass with time.
Anyone can survive in a good economy. A clown with an Italian accent can run a multi million dollar company when every person on the street qualifies for a $500,000 mortgage. It takes a super exec to bring a company to victory in a bad economy when the corporate heads are looking to Asia and emerging markets for real growth. How do you make America relevant to the powers back in Italy? America, much like Canada, requires double the costs, plus triple the effort for a tenth of the sales. Why do it? Well this is America after all and for any company to be a success back in Italy you must lead in America. When space aliens invade nobody cares about Berlusconi’s response, they look to America.
It's what you do in the bad times that shows what you're made of. The Mad Max of the recession is what Piaggio Group of the Americas needs right now. Someone who can grow the company in the coming gasoline spike of 2011 and continue that growth in 2012 and 2013. To lead Vespa beyond Thunderdome and into the vast uncharted territories of the future. If Vespa finds real success in the USA then the tide rises for all of us in the scooter industry. Let's see what happens. I hope the new management lead by Mr. Martinez brings in a sniper. A Charlie Sheen crazy CEO that is a full of energy and a full time sniper. Just not the current Charlie Sheen, the one from Red Dawn who had is act together.
Joel Martin is the former importer of Malaguti Moto, SYM, and has spent the last decade in the trenches of the motorcycle industry. He is currently the president of Martin Racing Performance a company that has acquired and absorbed nine scooter distributors in the last two years, making him an expert in merges and acquisitions in the US Scooter Industry. A version of this article also appeared on his blog.
This article represents the opinion of the author and does not necessarily represent the position of HellForLeatherMagazine.com or any of its parent companies, subsidiaries, or affiliated organizations.