Buggies Light Fire to the Off-Road Market

Unlike the scooter industry, which I often write about, there is a lack of information on buggies. There is no DOT, consumer safety board or even a consumer reports magazine testing these units in the United States. It’s caveat emptor for the dealers when they are doing research on a particular brand they wish to carry.

Industry Boom

Motorcycle sales this year have been awful. So far the V-Twin and ATV markets have softened; dirt bike sales are abysmal; and you can pretty much forget about Harley buyers using the house as collateral. Besides scooters, only UTVs and buggies seem to be the ray of sunshine dealers have been looking for. They are distant cousins, and the crossover between designs that has occurred in the past year is amazing. Every time I see new UTVs, they look more like buggies and sand karts. When I look at the new karts, they are including features typically only found on UTVs.

Buggies Are Hot

Nationally it’s not as evident as the rush to start selling scooters, but when you talk to industry players it’s clear more and more distributors are entering the buggy market. The often overlooked off-road buggy market is riding high despite high gas prices and the rise in shipping costs.

While the manufacturers and distributors agree that sales are up, it’s impossible to pin down exact numbers; I asked for sales figures from 10 importers, and nobody really responded. Industry trades have put the figures at 150,000 units for 2008, despite a gloomy economic outlook, but nobody knows for sure.

The Industry Matures

You can pick up a 110cc buggy at your local Pep Boys for $900 or order a 1200cc behemoth for $60,000. Last year, the segment with the strongest growth was the Asian-made 90cc to 300cc karts based on the GY6 150cc and CN250 engines. This year 250cc CF Moto engines and the 400cc-plus categories using Yamaha ATV engines are smokin’.

JCL, a newcomer to the U.S. scene, is perfecting its entrance with the Linhai 300cc ATV engine in its buggy. This is a more powerful ATV design steering clear from the traditional scooter CVT found in some of the other karts in the market. The company has also seen a lot of growth in its crossover buggy – sand rail – off-road car 1,000cc design, which looks like a 1970s sand buggy but uses all of today’s technology. According to Tony Tarell, sales manager at JCL, they are offering different models, ranging from 90cc to 1100ccs in 2008. “Our best sellers are the MG250A and MG110A smaller capacity units, but the biggest area of growth is with 300cc and above,” says Tarell.

One name that is extremely familiar in the buggy world is Hammerhead. According to company sales manager Henry Li, their best seller continues to be the SS250cc model, offering dealers a 32 percent margin. Li goes on to state, “The SS250 is single-handedly the most powerful 250cc go-kart with the most features; because of this it continues to smoke the competition.” Their area of attention is the new 400cc unit and a 500cc UTV/kart to be presented by the end of the year. The company is bucking the trend of smaller mainland 250cc to 300cc units, and jumping to the 400cc-plus category. Word on the street is that Hammerhead (the official representative of PGO buggies in the USA) is talking about importing the 500cc Piaggio-based, PGO-designed buggy. The company already supplies PGO with all its buggy frames and has started testing the waters by showing off the new PGO designs.

Hammerhead, like many new kart companies, is switching to the new CF Moto engines, which are quickly becoming the preferred engine among U.S. buggy dealers. It’s liquid-cooled design offers 20 percent less fuel consumption than a comparable air-cooled version, something that is music to buyer’s ears — particularly those consumers counting every penny before buying a new model. Also, the new focus on buggy racing LC engines tend to hold up better when put out in the field.

Carter Brothers is promoting the higher capacity 300cc unit. Based on the Sang Yang Motor Co., the GTX is on the high end of the kart spectrum, with nicer suspension and a brand-name engine. Since Carter is a partner with SYM, it will be interesting to see if Kymco steps into the off-road kart market, since it is huge in Europe and the Kymco UXV 500 4×4 is just now entering the UTV market. Currently, the best selling buggies in France are the PGO 250cc and 500cc units, both powered by Kymco CVT engines. Could Kymco be far behind if their engine client is selling karts?

One company that doesn’t hide the crossover appeal is Joyner. Starting at the 250cc range, the company aims for the higher capacity units as their main sellers. Their best selling units, according to Glade Mason, owner of Edge Powersports, are the CF Moto-based 250cc Sand Viper and the 650cc Sand Spider. As the units grow in size, their uses start to change from buggy to extreme off-road UTV, once again blurring the line between karts, buggies, and UTVs. When analyzing the full range, you begin to realize there might not be much of a difference, as each category begins to absorb aspects of the other.

A relative newcomer who made an appearance for the first time at the 2008 Dealer Expo is High Rev Motorsports. According to president Andy Huang, the company has been a direct manufacturer of several private label name-brand products for the past 11 years. As a result of the rise in sales, the company decided to open the North American markets directly to dealers and bypass the importer route. Their lineup is based on the higher capacity Maxi units, starting with a 250cc Yamaha engine based unit. The flagship model is their 400cc buggy. According to Huang, the company intends to bring in bigger karts and expand in this area of growth with both UTVs and crossover buggies. I just recently test drove the 400cc model, and I have to say I was utterly impressed and cannot wait until their dealer base grows, because it has exactly the right amount of power U.S. customers want in a buggy.

Dealer Growth

The passion of the hard core dealer base is at an all-time high. One man who’s followed his passion for buggies is Thomas J. Syc, owner and operator of SYC Powersports. He decided to go into business because of his love for a Blade 150cc kart he purchased for his son in 2004. He had so much fun riding that he purchased more and eventually found himself with a store. Since then, he’s expanded and is now fully dedicated to the racing league.

Tom Stevens, the owner of KidNme Motorsports has seen an incredible rise in his business since the beginning of the year. They carry UNI air filters, MRP parts, Dr. Pulley Hit Clutches, Comet accessories and XP Coils. Stevens stocks several OEM parts and accessories, which are an integral part of his online sales, “Our parts and accessories orders for stock buggies have gone through the roof this year, and I’m hearing that from several MBRA dealers as well.”

Dealers like Stevens who sell accessories for sport buggies tend to sell more buggies. We spoke to 30 dealers in our informal survey and most sell upwards of $10,000 per year in buggy accessories. The range fluctuated from zero sales to dealers retailing over $100,000 in online sales alone, indicating that there is an underground market not being met by traditional dealer networks. The best-sellers online are the OEM parts that are unavailable at local big box retailers such as Pep Boys, or brands that are no longer on the market, such as Yerf Dog. Racing parts, such as sliders or XP coils for the Carter, Hammerhead and Kinroad lineups also sell well.

The Big Box Retailers

One reason the traditional dealer networks haven’t embraced karts as fast as they should has to do with the big box retailers. Many big box retailers, such as Northern Tools, have flooded the market with less expensive models. Since they don’t need a dealer’s license to retail them, it has been easy for them to enter the market with generic units. The same has occurred with Baja Motorsports and Pep Boys, which have taken advantage of the boom in sales and moved up to the larger 250cc category.

Two former heavyweights, Manco and Brister’s, combined to form American Sportsworks; they are no longer promoting the Ronin Subaru engines, but have upgraded to the new Chinese GY6 and CN 250 engines. The company has not gone above the 250cc range, and they are selling through Tractor Supply Co. This is a common technique for reaching out to larger rural areas, since there is a lack of traditional dealers in certain areas of the country.

Unlike the retailing of motorcycles, there hasn’t been a big dealer backlash with the entry of Bass Pro shops or TCP into the UTV market. Big Box sales of buggies have actually been beneficial in a way to the traditional dealer, since it’s allowed more riders to take an interest in the sport and generated parts sales for these models. The fact that Pep Boys and Sam’s don’t do on-site service creates a boom in business for smaller dealerships engaged in buggy repairs. I strongly believe this is due to the limited scope of buggies, but expect the two distribution networks to clash as the sport grows and smaller dealers start to resent the bigger stores.

Becoming An Importer

A negative trend I have spotted this year is of bigger dealers wanting to be importers. The problem here is that they become responsible for all recalls, problems and end-user issues. A life-threatening manufacturing error could expose a company to an incredible amount of liability.

The traditional 3 percent free parts that Chinese suppliers provide in lieu of an acceptable warranty reimbursement program doesn’t cut it in the off-road business, where defects are common.

Every dealer has aspirations of creating their own brand, but as appealing as that sounds, it makes the dealer the primary source of parts; and once you start importing, you need to decide if it’s worth your time spent filling a warehouse with parts for a buggy or UTV that might not be manufactured next year. Dealers need to look at the fine print before buying from a foreign supplier and becoming an importer. The margins might be appealing, but the liability and problems are often not worth it, in this writer’s opinion. I think it’s better to buy from a reliable brand that advertises, offers warranties and has insurance.

Growth In A Down Year

Dealers are finally getting the tools they need. As GE, Texatron and other financial companies have seen growth, they are now offering consumer and dealer financing for many new models. Despite the lack of overall industry sales figures from the MIC or MBRA (www.MBRAonline.com), reports are up. Most of the dealers I speak with are extremely cheerful and positive about buggy sales for 2008 and 2009. They all report higher than normal sales, and that’s good news for dealers, considering a new source of revenue in this challenging economy.

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