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Vmoto news - from todays West Australian.

Last post 12-02-2011 03:09 PM by steve@ace. 30 replies.
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  • 11-09-2011 03:00 PM

    Vmoto news - from todays West Australian.

    Vmoto scooting to showdown

    PETER WILLIAMS, The West Australian November 9, 2011, 6:34 am
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    Vmoto 
scooting to showdown

    A long-running battle for control of Vmoto comes to a head in Perth this month when shareholders of the struggling scooter maker decide whether to sack its entire board.

    At the heart of the battle is the cultural identity of a nominally Australian company which has most of it operations - and management - in China.

    A group of shareholders believes that Vmoto has drifted away from its strategy of making quality, European-style vehicles and is heading down the path of producing Chinese knock-offs.

    Its directors accuse their challengers of threatening the company's future at a time when it is attempting to tap into the burgeoning global market for electric scooters.

    Melbourne investor Russell Goodman - Vmoto's biggest shareholder as at June 30 and former chairman - has succeeded in calling an extraordinary general meeting for November 29 to replace the board with himself and two supporters.

    Fireworks are also likely at the company's annual meeting two weeks earlier when most of the embattled directors are seeking re-election.

    Back in 2009, Vmoto's future appeared bright. Co-founder Patrick Davin was overseeing the completion of its Nanjing factory and its scooters and all-terrain vehicles were set to take on the world.

    But two years on, the wheels have all but fallen off. A big Vietnamese contract has been plagued by delays, net losses are mounting, the share price is plunging and the board and management have been revolving doors.

    Mr Goodman paints a gloomy picture to shareholders in a letter when describing an impromptu visit to the Vmoto plant in May.

    "The silence was deafening," he said. "The place looked messy and unkempt and buildings which I had been assured had been finished were just shells."

    Vmoto's management tells a different story. Its latest operations review says despite flat sales of $1.6 million for 777 vehicles in the September quarter, customers are on an upward trend. The company has also been trumpeting a trial of its electric scooters by Domino's Pizza in Australia.

    But a number of big orders were slowed or delayed and the company continued to record negative operating cash flow. Vmoto has had net losses of more than $4 million in each of the past three years and is now valued at less than $14 million.

    "Really, it's just a total dissatisfaction with the performance of the company, which has seemed to promise a lot and rarely deliver," shareholder and director candidate Gerard Fitt says of the revolt.

    Trevor Beazley, a Perth corporate adviser and non-executive director at Vmoto for five years, defends the direction the company is taking. "The electric market probably hasn't taken off as quickly as people would have expected but we're in a very strong position to be able to take advantage of it because of the decisions made a few years ago.

    "It's an industry that's going to grow very quickly and there isn't a large market out there for us to copy off anyway. To say that we're a copy is blatantly wrong."

    That is a view backed by  The West Australian 's motorcycle reviewer John Innes, who believes Vmoto's scooters are more comparable to European models than Chinese rivals.

    "They're all as good as anybody's scooters. The (electric) E-Max 110S is a magic bit of gear," Innes says. "I've heard nothing but good reports reliability wise."




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  • 11-09-2011 03:02 PM In reply to

    Re: Vmoto news - from todays West Australian.

    steve@ace:

    That is a view backed by  The West Australian 's motorcycle reviewer John Innes, who believes Vmoto's scooters are more comparable to European models than Chinese rivals.

    "They're all as good as anybody's scooters. The (electric) E-Max 110S is a magic bit of gear," Innes says. "I've heard nothing but good reports reliability wise."

    I'm not sure that I'm going to be trusting anything that John Innes says anymore...

     



    Ace Scooters - practitioners to the scooter addicted.

    www.acescooters.com.au
  • 11-09-2011 03:12 PM In reply to

    Re: Vmoto news - from todays West Australian.

    steve@ace:

    steve@ace:

    That is a view backed by  The West Australian 's motorcycle reviewer John Innes, who believes Vmoto's scooters are more comparable to European models than Chinese rivals.

    "They're all as good as anybody's scooters. The (electric) E-Max 110S is a magic bit of gear," Innes says. "I've heard nothing but good reports reliability wise."

    I'm not sure that I'm going to be trusting anything that John Innes says anymore...

     

     

     Here Here Yes

  • 11-09-2011 04:34 PM In reply to

    • emil_io
    • Top 100 Contributor
    • Joined on 03-16-2011
    • Melbourne, Victoria
    • Posts 323

    Re: Vmoto news - from todays West Australian.

    steve@ace:
    A group of shareholders believes that Vmoto has drifted away from its strategy of making quality, European-style vehicles and is heading down the path of producing Chinese knock-offs.

     

    Um...when did they ever make quality, European-style vehicles?

    As far as I know their entire range has always consisted of Chinese scooters that were not designed by them and can be purchased under a number of different badges and names...

    How can John Innes say they are more comparable to European rivals than Chinese ones? They are exactly the same scooters as their Chinese rivals!

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  • 11-09-2011 04:43 PM In reply to

    • allen
    • Top 10 Contributor
    • Joined on 07-19-2007
    • Sydney NSW Australia
    • Posts 6,248

    Re: Vmoto news - from todays West Australian.

    Yes I must admit I didn't think the strategy had changed. Funny article

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  • 11-29-2011 11:40 AM In reply to

    • emil_io
    • Top 100 Contributor
    • Joined on 03-16-2011
    • Melbourne, Victoria
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    Re: Vmoto news - from todays West Australian.

  • 11-29-2011 12:27 PM In reply to

    Re: Vmoto news - from todays West Australian.

    One from the good old days Big Smile

    Vmoto scooter.

  • 11-29-2011 07:00 PM In reply to

    Re: Vmoto news - from todays West Australian.

    pyrah:

    One from the good old days Big Smile

    Vmoto scooter.

    That's Janelle (if I remember correctly) - she worked for Vmoto back in the day (and indeed still might).  For a while she used to work for the Vmoto dealer in Freo, who then dropped Vmoto (due to the quality issue) and became a Bolwell dealer.  She used to bag Vmoto something awful. Until she went back to work for them again...

    I'm always surprised about the investing community.  If I was going to invest in a company like Vmoto, I'd first have a good look at the fundamentals of their company.  And by that I don't mean their "business case", their "financial plan", EBITDAs and Board of Directors - but actually what they produce.  And then talk to the people who use it and sell the product. But they don't, and then they get annoyed that they've lost all this money! Surely the fact that the dealer network was rotating faster than a spinning top might have given them a clue. Apparently not.

    Mind you, I used to work for an investment bank in London as a director in the IT department.  One of their specialities was Technology Company start-ups.  However, did anyone in the Investment Banking division or the Research department ever come to the IT department to ask us what we thought about the technology that these start-ups were trying to raise money for?  Not a bit of it.  And how many of these companies went ***-up in the Dot.com bubble?  The vast majority.    All those investors, venture capitalists et all were probably surprised too.  Go figure.



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  • 11-30-2011 11:25 AM In reply to

    • jonners
    • Top 150 Contributor
    • Joined on 12-13-2010
    • Perth (western 'burbs)
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    Re: Vmoto news - from todays West Australian.

    I would have thought that way back in the day, Vmoto had real potential. They seemed to time their entry into the market perfectly. They got in right as scooters were really taking off again. They absolutely dominated the Perth market in the 50cc category during those early years of the most recent scooter boom. (well, that was how it looked to me anyway). They brought in funky looking scoots that were cheap and they advertised in a youth focused way.

    Then it appears that others entered the market and priced their products lower. So Vmoto lost that price edge. When you've got a cheap and nasty product, losing your price advantage is pretty catastrophic. Vmoto didn't lower prices to meet the competition but crucially they also didn't offer anything more - not better quality nor better service, to set them apart from all the other sellers of chinese import scoots.

    Seems to me that they just lost their way a bit. They didn't move with the times and keep on top of the market movements.

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  • 11-30-2011 12:22 PM In reply to

    Re: Vmoto news - from todays West Australian.

    jonners:

    I would have thought that way back in the day, Vmoto had real potential. They seemed to time their entry into the market perfectly. They got in right as scooters were really taking off again. They absolutely dominated the Perth market in the 50cc category during those early years of the most recent scooter boom. (well, that was how it looked to me anyway). They brought in funky looking scoots that were cheap and they advertised in a youth focused way.

    Then it appears that others entered the market and priced their products lower. So Vmoto lost that price edge. When you've got a cheap and nasty product, losing your price advantage is pretty catastrophic. Vmoto didn't lower prices to meet the competition but crucially they also didn't offer anything more - not better quality nor better service, to set them apart from all the other sellers of chinese import scoots.

    Seems to me that they just lost their way a bit. They didn't move with the times and keep on top of the market movements.

     

     Good summery was thinking on those lines myself Yes

  • 11-30-2011 08:28 PM In reply to

    Re: Vmoto news - from todays West Australian.

    jonners:

    I would have thought that way back in the day, Vmoto had real potential. They seemed to time their entry into the market perfectly. They got in right as scooters were really taking off again. They absolutely dominated the Perth market in the 50cc category during those early years of the most recent scooter boom. (well, that was how it looked to me anyway). They brought in funky looking scoots that were cheap and they advertised in a youth focused way.

    Then it appears that others entered the market and priced their products lower. So Vmoto lost that price edge. When you've got a cheap and nasty product, losing your price advantage is pretty catastrophic. Vmoto didn't lower prices to meet the competition but crucially they also didn't offer anything more - not better quality nor better service, to set them apart from all the other sellers of chinese import scoots.

    Seems to me that they just lost their way a bit. They didn't move with the times and keep on top of the market movements.

    You are very right.  They did all those things and more - they gave away scooters for competitions in return for press coverage, getting front page exposure in the West and the Herald for a week for next to nothing.  Very smart marketing.  But I think that they made a few fatal errors which impacted their medium to long-term success.

    First big mistake. In addition to wholesaling, they retailed as well (and undercut their Perth dealers...  naughty, naughty but apparently not illegal in Aus as it would be in the US). They claimed they didn't, but once you've seen a couple of customers contracts carelessly left under the seat whilst you are servicing them, that revealed otherwise.  And financially, you just aren't going to be able to compete with your supplier, so if you are sensible, you give them the flick. But that restricts your outlets on your home turf.

    Secondly, they didn't listen to the dealers suggestions for improving the products (they always knew better). So the guys at the bleeding edge, having to field the problems that the customers encountered were ignored. Plus originally they didn't fund warranty other than parts, which meant that your workshop was busy but wasn't making any money.  Except for Vmoto.

    Thirdly they set up as many dealers as they could, over-saturating the market in the short-term but then finding themselves without a distribution platform as dealers just dropped off. Plus customers lost continuity of service.

    Fourthly (and probably fatally), they believed their own hype.  They thought that people would buy a Vmoto as a commodity item - have it for a couple of years and then chuck it away.  Of course most customers didn't have that mindset and expected something a little bit better that would last a little longer.  Many bought them to save money on fuel, so wanted something inexpensive but reliable.  They got the former only.

    Fifthly, they expanded too quickly.  Before they finished sorting the business model out in Australia (good products, a good range, an established and healthy dealer network, etc), they moved to NZ, Europe, the Middle East etc, AND went into manufacturing in China (which requires a lot more skills and deeper knowledge than they clearly had).  Completely lost focus on their home market (outsourced their distribution to a third party which lost interest quickly when they realised that this was NOT the same as distributing KTM)  which suffered dramatically, and probably terminally.

    Finally, as Jonners correctly identified, they didn't keep competitive with their market.  If your market strength is being cheap, you've got to keep being the cheapest.  Or you've got to have better margins for your distribution chain (your dealers) than the other cheap products (because thats what helps your retailers push them over the other cheap stuff).  For a good while their marketing (and sales success) did allow them to be a draw card product which kept them in some dealers showrooms, but they haven't had that status for a few years. So a problematic product range, too high a price, too low a dealer margin.  They simply haven't evolved.

    If they had decent products, they might have succeeded.  But every new product has given more troubles and been difficult to establish, so they are still selling Milans, Monzas and Monacos.  The foray into electric appears to be proving unsuccessful (again) so its not surprising that as a company they are struggling.   It was a house of cards from the start.

     



    Ace Scooters - practitioners to the scooter addicted.

    www.acescooters.com.au
  • 12-01-2011 02:25 PM In reply to

    • jonners
    • Top 150 Contributor
    • Joined on 12-13-2010
    • Perth (western 'burbs)
    • Posts 248

    Re: Vmoto news - from todays West Australian.

    steve@ace:

    The foray into electric appears to be proving unsuccessful (again) so its not surprising that as a company they are struggling.   It was a house of cards from the start.

    An unproven product, being sold by a company which has lost the confidence of the market. Doomed from day one.

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  • 12-01-2011 02:42 PM In reply to

    • emil_io
    • Top 100 Contributor
    • Joined on 03-16-2011
    • Melbourne, Victoria
    • Posts 323

    Re: Vmoto news - from todays West Australian.

    jonners:

    steve@ace:

    The foray into electric appears to be proving unsuccessful (again) so its not surprising that as a company they are struggling.   It was a house of cards from the start.

    An unproven product, being sold by a company which has lost the confidence of the market. Doomed from day one.

     

     But its "German Engineered"....just like the Sachs Amici....

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  • 12-01-2011 03:17 PM In reply to

    • jonners
    • Top 150 Contributor
    • Joined on 12-13-2010
    • Perth (western 'burbs)
    • Posts 248

    Re: Vmoto news - from todays West Australian.

    emil_io:

     But its "German Engineered"....just like the Sachs Amici....

    haha indeed! Big Smile

    the problem with electric is we're still in the "early adopters" stage of the product lifecycle. The vast majority of people will wait until battery technology improves and electric vehciles are more mainstream and that wont happen until we get to the point where electric vehicles are closer to petrol engined vehicles in price.

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  • 12-01-2011 05:45 PM In reply to

    Re: Vmoto news - from todays West Australian.

    jonners:

    steve@ace:

    The foray into electric appears to be proving unsuccessful (again) so its not surprising that as a company they are struggling.   It was a house of cards from the start.

    An unproven product, being sold by a company which has lost the confidence of the market. Doomed from day one.

    They announced a price drop at the Perth Bike and Scooter Show from $3990 to $2300.   What that tells you is:

    1) they were originally highly over-priced (no surprises there)

    2) they couldn't sell any at that price (no surprises there either)

    3) they probably need to turnover stock pdq

    According to the spec, they can run for 170km on a charge (but only if you go at 25kmh), or 90km (at 45kmh).  Doesn't say what it is at speeds that you'd want to be travelling at, nor does it say anywhere that it weighs about 160kg.  

    It also doesn't say how long the batteries are expected to last for, and how much they will cost to replace which are two critical factors in any financial decision.   German engineered indeed. 

    Or maybe the new Taku is going to be the model that gets things back on track.  The Rolls Royce of scooters apparently.  Interesting pictures too.  The LHS which traditionally holds the transmission looks suspiciously like the RHS.  Or maybe it really does have no CVT and two exhausts.

     



    Ace Scooters - practitioners to the scooter addicted.

    www.acescooters.com.au
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