LML’s big export plans

I’m a little behind on news, sorry (we’ll catch up tonight), but this certainly caught my eye today:

Remember how LML was preparing for a February comeback? We all knew that wouldn’t happen, and it didn’t. But at today’s LML annual general meeting, LML director Deepak Singhania announced that LML will restart production by next month (whatever that means in India time), for the export market only. Here are some exerpts from the India Business Standard story (their links are unpredictable). Remember this is the LML Star/Genuine Stella/Retroscooter Belladonna, etc., that we’re talking about here.

…Deepak Singhania, chairman and managing director of the company, said the company had received substantial orders for the export of scooters and intended to recommence operations by next month. Further, he said the company was also in discussion with certain organisations for financial/strategic partnership…

…Singhania told Business Standard: “We are the only one manufacturing two-stroke scooters in the world. Neither Bajaj nor Piaggio is making that anymore. There is worldwide demand for these scooters. Besides we will make three-wheelers, again only for export. We will move out of domestic marketing.�

…a perusal of the annual report shows a daunting task is ahead of the LML management. It has shown a loss of Rs 168.89 crore for the 18-month period from March 2005 to September 30. In the earlier period, the company sold 190,561 two-wheelers and in the period March 2005 to September 2006 it sold 111,083 two-wheelers. However, its exports were at 34,879 units as against 19,969 units in the previous financial year. Vehicles were exported to 36 countries, including the US and EU countries…

LML knows what we’ve known all along, the international 2-stroke geared Vespa-style scooter market will never go away, and it’s all theirs if they can get their act together. It’s a good strategy, but a very big “if.” The Financial Times story (editorializing just a little) insists that the strike/lockout was a symptom of LML’s problems rather than a cause. Even if the workers are paid, a contract is agreed upon, and production starts as planned, LML appears to have serious management issues and financial needs that won’t solve themselves.

11 thoughts on “LML’s big export plans”

  1. Smart move if LML can pull it off — I’m sure their export market is much more profitable on a per unit basis than domestic sales.

    I bet we see a significant jump in Stella MSRP when/if it comes back. Not a huge deal, as I think they could raise prices by $500-$600 and still hold a sizable value advantage over the PX150. More than that and I’d bet people start to grumble.

  2. The PX150 is no longer being produced, and from what I’ve seen/heard, in very short supply at U.S. dealers, so the Stella’s biggest competition would be the used Vespa market. I don’t think most Stella buyers would have shelled out for a new PX150.

    Love or hate Stellas, there were some quality-control issues, if they could get the quality to a higher and consistent level, they could definitely jack up the price. For $5,000, Stella riders would be a little less willing to deal with minor inconveniences like sheared cranks and cracked steering tubes, but at $3500, people knew what they were getting into.

    Then again, for $5000+, you’d think the GTS would have fewer issues.

  3. What if the the price pushes $4k? My source says that’s likely.


  4. I think 4K is asking a bit much unless they really pull out the stops for quality. If they could put a five-year powertrain warranty on there, then they’d be making a quality statement no one’s willing to match. Remember that Vespa’s US importer offered a lifetime guarantee on the powertrain back in the late 60s and early 70s!

    If and when production restarts, there are likely hundreds of bikes that have been gathering dust half-assembled for over a year, and there will surely be logistical problems and quality problems until they nail down suppliers and build employee loyalty. Until that happens, I don’t think it’s fair to raise the price, and it would take some convincing to make me buy one of the first 2007 Stellas off the boat. A really solid warranty could do that. Then again, there are plenty of people out there buying scooters without doing any research other than looking at a list of what colors they come in, so what do I know?

  5. Wasn’t prognosticating, was saying what I’d pay. I know of about a dozen Ps and used Stellas (!?) for sale in fine condition–and that’s just among folks I know, “foafoafs,” or reputable-ish online sources.

    What can I say: I’m cheap. To paraphrase Gorilla Monsoon (talking about Classy Fred Blassie), “I have short arms and deep pockets.”

  6. I’d love to have the Stella back in our shop. We’ve been able to push 40-50 of them out the door each year since ’03. But after watching the LML circus unravel over the past year plus I can’t begin to get excited or even plug them back into any reasonable business plan.
    Customers are willing to pay more. Probably not a ton more but a $ 3500- $ 3800 tag would fly. We have been able to sell used Stellas at close to the original retail.
    Quality or failure issues tend to get way overblown. I have a test group of 200+ Stellas with two big end bearings and a couple of cruciforms (learning how to shift) that required spliting the cases. Two percent does not constitute quality issues.

  7. The funny thing, that nobody knows, when the whole thing gonna start again. I want to have those scooters for market in Russia, I have connection with fabric, but now it turns out nothing is like it seems to me. They are not raising their price however. I will go to Kanpur in April and see everything with my own eyes. I certainly hope they start the process by that time. One thing I’m sure about, LML is not going out of business.

    And what about quality of lml?

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