Genuine Scooter hopes fun spirit will carry it through downturn
FEB 17, 2010
Scootering has grown into a lifestyle. An orange "Buddy" with a surfboard rack sits outside of Rt. 66 Modern Classics in Marina Del Rey, Calif.
For its first five years, Genuine Scooter Co. registered annual sales growth of close to 50 percent as rising fuel prices prompted people to look for alternative modes of transportation. Then, in 2008, sales of the North Side distributor skyrocketed in a banner year for the scooter industry.
Genuine built a base of loyal customers, like Angie Buettner, a 54-year old X-ray technician from outside Cincinnati, who bought a pink 2006 "Buddy" 125cc, despite a fear of motorcycles and no riding experience, and put over 40,000 miles on it in close to 40 months.
"I knew nothing about the brand before I started shopping, but it is an awesome piece of machinery," she said. "They are affordable, maintainable and dependable."
Struggles for Genuine and the scooter industry came in 2009 when the recession forced millions of Americans to cut back their spending. Even if someone wanted to buy a scooter, financing companies tightened lending standards and turned down many loan applications.
Genuine Scooter and its network of nearly 230 dealers nationwide don't know what 2010 will bring. However, its strategy of keeping costs and prices low and maintaining a loyal workforce is keeping the self-proclaimed "Smallest Scooter Company in America" in the game. A 50cc base model is listed at $1,999 and the highest-end 150cc model has a price tag of $3,599.
"We have no less of a challenge than the big guys for the next year coming out of the economic spin we are in, but we like our chances for survivability because of our unparalleled level of passion with our dealers," said Genuine Scooter President and founder Phil McCaleb, 54. "Now is an example of a big challenge and we are excited to get through it and beyond."
McCaleb says his company sets itself apart because of the spirit of fun it projects--bright colors, curvy designs, stickers and decals, and optional accessories like topcases and seat covers--and its sense of community. Industry followers say this has been a major part of Genuine's success.
"People feel better about buying a product from a company with some personality," said Los Angeles native Eric Almendral, the creator of modernbuddy.com, an independent forum with more than 5,000 members. "Owning and riding a scooter is an extension of a someone's personality."
Genuine Scooter grew out of Scooterworks USA, a mail order business for scooter parts and accessories that started 20 years ago in McCaleb's basement. After taking on scooter distribution in 2002, Genuine gained notoriety with a re-introduction of an older model Vespa branded as the "Stella."
With dealers nationwide, Genuine Scooter Co. keeps its headquarters at the corner of Damen and Balmoral Avenues on Chicago's North Side.
Riding Stella's success, the company partnered with a factory in Taiwan to create the product that would elevate the company to one of the nation's top scooter sellers.
Genuine's flagship brand, known in the U.S. as "Buddy", is made in Taiwan and was an existing product that did not succeed in Asia or Europe. According to McCaleb, Genuine made modifications, renamed it and started a new life for it in America. In its partnership with Taiwan's PGO, a scooter manufacturer, Genuine assists in all designs destined for European and U.S. markets.
"Phil and his team understand the scootering community and put together products to serve it," said April Whitney, managing editor of Scoot! Magazine. "They knew from the beginning the importance of customization, colors and after-market products that a lot of distributors don't pay attention to."
The fascination with scooters Genuine exhibits comes straight from its president-scooter-obsessed since he was a teenager.
McCaleb had a Sears Allstate Vespa that he shared with a neighbor at the age of 15, but really found his passion while living in Greece in the early 1980s. He bought an old, wrecked Vespa and with mail-order parts from England and his neighbor's assistance, he rebuilt it and got it running.
"I rode that thing eight miles each way in Athens traffic," he said. "It was nuts, but I loved it."
After coming back to the states in the late '80s, McCaleb sought to bring back old Vespas because the company no longer kept a U.S. presence. After making trips to Italy to find sources for parts, he put a catalog together to service enthusiasts and collectors interested in restoring Vespas. His business was housed in his condo basement in Edgewater.
"I become president of the condo association because the president controlled the building's basement," he said. "That's where I stored and collected the first scooters and worked every afternoon fixing and restoring old bikes."
McCaleb's rebuilt bikes gained visibility in advertisements by Banana Republic and Ralph Lauren that were looking for a European flavor, and Scooterworks became The Place to go for old bikes and parts. The company still puts out a print catalog in addition to maintaining an online store.
Scooterworks USA now stocks 7,000 parts and accessories in a 50,000 square-foot warehouse on the city's West Side. The company is headquartered at Damen and Balmoral with a dealership next door that is undergoing renovations. Genuine competes in a crowded scooter market that features companies with more resources and smaller companies with more name recognition.
Japanese powerhouses Honda and Yamaha, and Taiwanese manufacturers Sym and Kymco, produce scooters in Genuine's price range, but scooters are a small part of those companies.
Vespa, produced by Europe-based Piaggio, is the most recognized name in the industry, but its lowest end model runs at least $1,000 more than the base model Buddy.
Magazine editor Whitney said that Genuine is unique among its competitors because it advocates making its scooters more a part of someone's life than just a means of transport. To her, it looks similar to a certain staple in American motorcycles.
"They understand it's a lifestyle so they make a product that applies all over your life from key chains to sweatshirts, because they understand that is how you support the brand," she said. "Harley Davidson makes tons of money on its 'junk' because it is a lifestyle brand. People are buying into the lifestyle."
After the successes of 2008 surprised even the biggest scooter advocates, the recession quickly brought a decade of momentum to a screeching halt.
While many owners use a scooter as their exclusive means of transportation, the majority see them as a fun complement to their car. Still, as millions of Americans lost their jobs, buying an extra vehicle didn't even enter the picture. "People are saying 'Do I get a scooter that I'll ride in the warm weather or pay rent?'," Whitney said. "People are going to buy those necessities first and that really hit the industry hard."
According to Whitney, companies got into trouble when they used the 2008 boom as the benchmark for 2009 orders. Since companies like Genuine have their products made overseas, orders are placed well in advance and there is no way to quickly cut back when the economy sours.
Recent trends show that when the economy recovers, the scooter industry could resume its growth.
As the cost of fueling a car becomes more expensive and technology advancements make scooters even more fuel efficient, the combination could bring more people to alternative transportation, manufacturers and distributors hope.
"Scooters have come a long way from just being a toy to being adopted as great alternative transportation," McCaleb said. "You can insure it for a fraction of car insurance, it gets 100 miles per gallon and requires minimum maintenance."
The demographics of scooter owners are also expanding, widening the potential market. The age range of owners has broadened and an increasing number of women are riding scooters.
When she first got involved in scooters, Whitney said, women were outnumbered three-to-one at organized rides or events. Now, she finds, the mix is closer to 50-50.
Where the original age range was between 30 and 55, McCaleb is noticing growth in the 18 to 24 segment and Whitney sees an uptick in post-retirement riders.
The geographic range of scooters is also expanding. Genuine's top-performing dealers are in Denver, Seattle and Minneapolis where the climate could discourage year-round riding, but McCaleb says those areas have huge scooter clubs and strong dealer followings.
"More people are riding year round," he said. "People bundle up, use it for everything and save a ton of money. They are in the fresh air and having fun."