Moneycontrol.com reports venture capitalists Warburg Pincus plan to purchase at least 14% of LML. The deal would generate enough cash to cover about half LML’s immediate financial needs. LML will continue to seek additional investors.
What’s going on with Italjet?
Since our report last night about the return of the Velocifero, in which we reported that ItaljetUSA.com was going through a domain name transfer, several other long-dormant Italjet sites, all working last night (Italjet.com, Italjet.it, and Australian importer ItalScooter), have also been replaced with domain transfer announcements. Is Italjet gearing up to market the Kinetic-manufactured scooters internationally? Will the Kinetic Italiano scooters bear an “Italjet” badge? Who will be the U.S. importer? Will they get it right this time?
LML new partner?
More rumors are developing about a new LML partner, but nothing substantive yet.
Velocifero will return to US
Kinetic Engineering announced today that the Velocifero, the second in its line of license-built Italjet scooters, will debut soon. What comes as a fairly huge surprise is that the Kinetic Velocifero will be “exclusively manufactured for exports to (the) U.S.” ItaljetUSA has been dormant for a few years, and it’s unclear who’s running the show. The italjetusa.com site appears to be changing hands (or at least hosts), so watch it closely for more info. (a “whois” search revealed nothing). Kinetic chairman Arun Firodia was quoted in a release as saying “We plan to export 20,000-30,000 scooters in a year. Each vehicle’s cost is around $500-$600.” (that’s their cost, not yours, settle down)
Can Kinetic sell up to three times as many scooters in the U.S. as Vespa? Can they do it with a 50cc Indian-manufactured scooter that debuted here more than ten years ago? The Velocifero design was highly regarded when it came out, and aesthetically it holds up well. Quality was respectable, but supply of vehicles and parts,–and service support–was dismal. Italjet prices were comparable to similar Vespas and Aprilias. Both Italjet and ItaljetUSA seemed dormant by early 2003 (the Italian site is frozen in time in early 2002–by which time the Velocifero had been discontinued), but the Italjet announced the Kinetic deal late in 2004. If Italjet USA hopes to sell that many scooters, they’ll need all cylinders firing: advertising, sales, service, parts, quality, and a price lower than the $3200 they were asking in 2000. Adding the Dragster to the U.S. lineup sure wouldn’t hurt, either.
This review of a prototype Kinetic Velocifero indicates that it maintains the look and steel body of the Italian version (a 2000 Italjet model is pictured above), but calls the 50cc 2-stroke engine “hopelessly underpowered.” The Velocifero, along with the other six scooters in the “Italiano” family, is to be manufactured at its Pithampur plant in Madhya Pradesh. The first of these models, the Blaze, was released in India a couple months ago, to a good amount of fanfare, and is selling about 10,000 units a month. In a world full of respected brands selling their names to Asian companies, this may be one of the few cases where the final product earns more respect than the original.
LML labor unrest escalates again
As 2500 locked-out LML employees tried to collect their long-disputed temporary checks today, they discovered that LML had terminated 12 employees active in the union, including union president Jai Prakash Pandey and general secretary Suresh Singh. In the ensuing chaos, the enraged and chanting employees did not collect their checks, and union officials, including Pandey, were refused permission to enter the factory to meet with management. Two labor inspectors were present as specified by the original agreement, but were apparently unable to quell the masses or mediate any discussion. As we suggested last week, if you have your heart set on a Genuine Stella, don’t wait for the next batch to come in.
LML lockout continues, future uncertain
Indian scooter manufacturer Lohia Machines Ltd (LML) continues to fight financial and labor woes, as a lockout starting May 7–following strikes and protests–continues amid complaints from the workers’ union that interim payments are not being distributed properly. (It also appears they’ve blown off their web hosting bill). It’s unclear if LML has produced any scooters at all since the beginning of the year. While the Indian business press has frequently reported on potential investors and buyers, nothing has come of these rumors to date.
With demand for small motorcycles and modern automatic scooters on the rise (in India and worldwide), the Honda Eterno, Bajaj Chetak, and LML Star together accounted for only 16% of Indian scooter production in 2006, including 95,000 Eternos, and a combined 70,000 Stars and Chetaks. The Chetak presumably outsold the Star in the Indian market, so LML could certainly benefit from the Chetak’s recent demise (not to mention the demise of the Vespa PX150). Another sales boost comes from the hot, but relatively small, market for the Stella and Belladonna (both LML-manufactured variations of the Star) in the USA and New Zealand, respectively.
As it stands, most US Stella dealers are running very low on stock, and Genuine’s large backorder is–at best–months away (LML surely has domestic obligations, and Belgian, British, and other international dealers are promising a 2006 model). Sadly, it may never come, unfortunate considering US demand has never been higher. Genuine’s deal with PGO (manufacturers of their Buddy 50, 125, and Black Kat, along with other models likely to be announced soon) should reduce the shock on Genuine, their dealers, and scooterists, and Belladonna has introduced a Vino knockoff to their lineup. But those with their hearts set on a Stella would be wise to act fast and settle for whatever color they can get (some colors appear to be sold out nationwide), or place an order for what, if it comes, will likely be the last batch of metal-bodied 2-stroke geared scooters to ever see American soil.
A bold prediction regarding the Indian scooter market
The Hindu Business Line waxes nostalgic about the discontinued Bajaj Chetak. This can only mean one thing: a “new” Bajaj Chetak is on the way. Mark our words.
LML seeks investors as Bajaj sales soar.
As LML seeks partners to help get back on its feet, (wasn’t Piaggio’s Roberto Colaninno just talking about investing in the Indian market?) Bajaj Auto reported a 37% increase in motorcycle sales this April (“Big deal,” you might say, “it’s spring, of course they sold well,” but that’s 37% over April 2005’s sales). Apparently the 137,858 bikes they sold last month are justification that it was time to ditch the Chetak.
The death of Chetak
With a dearth of Bajaj Chetak news for the foreseeable future, here’s the story of The Battle of Haldighati, featuring Chetak, the horse after which the Bajaj scooters (and the HAL helicopters) were named.
RIP, Bajaj Chetak (1972-2005)
Though we reported the end of the Bajaj on April 1, this India Times story from January 2006 (a reprint– the India Times page is popup-tastic, and thanks for the link, Matthew) says production officially stopped at Bajaj’s Akurdi plant on December 31st, 2005. (apparently Maharashtra continued building them from ‘CKD packs’ for three months.) The story is depressing, with chairman Rahul Bajaj citing their importance to Indian Culture (“â€¦marriages did not happen without Chetak. It was a compulsory dowry item,” he says), while his son and Bajaj Managing Director Rajiv Bajaj argues, “Holding on to anything from the past is a sign of weakness.” Even if Rajiv has been reading too many western business management books, his statement that “”Like the Volkswagen Beetle, the product had lost its relevance,” is ridiculous, the redesigned Beetle (and soon Rabbit) thrive on nostalgia. Perhaps, like Costantino Sambuy slamming then embracing the Vespa P-series design, he’ll change his story when a “new” Chetak appears in a year or two. In any case, we still have the LML Star, for the time being, and the new Scooter World 2006 Buyer’s Guide for some reason lists the Chetak and Legend, probably because ArgoUSA still had some ads left in their contract.
First Kinetic “Italjet” released
As reported on The Scooter Scoop: Kinetic, who acquired rights to produce seven Italjet models way back in 2004, has at last released their first model: the Kinetic Italiano Blaze (thankfully renamed from the Italjet Millenium, which seems, erm, dated). Kinetic’s site features an overhead photo of all seven planned “Italiano” (apparently they’re not using the Italjet name) models in a popup window (note the Blaze is labeled as the “Blade”). Those Kinetic Dragsters may be a reality yet, not to mention the long-awaited Kinetic circa-1993 Velocifero, the first retro-RETRO scooter. Hopefully someone with Indian scooter importing experience and nothing else to do at the moment will bring them to the USA.
UPDATE: also from Scooter Scoop, here’s a test ride and review.
More labor unrest in India
Following last month’s strike at the LML factory that produces the Stella, thousands of contract workers at Hero Honda’s Gurgaon plant called a strike today, demanding more reasonable benefits from the plant that produces 6,200 motorcycles a day. A strike at Honda Motorcycles and Scooters of India several months ago resulted in highly-publicized police beatings and national outrage, and many labor actions have followed, including last week’s strikes at the State Bank of India and a Bangalore Toyota plant. China, if you’re reading, this is your future.
Bajaj announces LPG/CNG-powered scooters, fights Chinese imitators
On the heels of the hybrid Vespa prank comes news regarding a real “green” scooter: Bajaj Auto announced today plans are underway to bring a liquid-propane/compressed-natural-gas-powered scooter to the market next year. Bajaj rival Kinetic plans to release two electric scooter models in 2007 (presumably after they get those Dragster 180s on line). Bajaj might look for design inspiration from China’s Chongqing Union Auto Co., who are already selling Bajaj-branded CNG-powered three-wheelers, without permission. Bajaj has promised to challenge Gaongqing, but trademark infringement justice is hard to come by in China.
Bajaj stops production of geared scooters, ArgoUSA future uncertain
Maharashtra Scooters, the factory that produces the Bajaj Chetak, has stopped production of manual-transmission scooters. 2,450 Chetaks remain on the factory floor, and it appears ArgoUSA (formerly Bajaj) isn’t expecting any more: (From their site)
“We are working to solidify relationships with other scooter manufacturers that can provide us with the quality and reliability that is expected by the American scooter rider.”
BajajUSA’s sales message of economy and practicality was ahead of its time in the US, when other importers were pitching scooters as luxury toys to internet millionaires, and $3/gal. gas was unthinkable. A serious blow was dealt by the introuduction of the similar, but trendierâ€”and not-much-more-expensiveâ€”Genuine Stella about a year later. The Bajaj featured a more modern and fuel-efficient 4-stroke engine, and owners and dealers gave the Chetak and Legend high marks, but the Stella’s arrival, and a seeming lack of interest in the US market from Bajaj HQ, loomed over BajajUSA for the last couple years. (Another Maharashtra Scooters story)
LML locks out workers at “Stella” factory.
DNA India reports that LML has locked out workers at their Kanpur plant, where Genuine’s Stella scooter, among other scooters and motorcycles, is manufactured. LML declared the lockout this morning in response to “external rowdy elementsâ€¦disrupting the peaceful atmosphere and working of the factory.” LML management failed to pay employees full wages and has suspended production in response to financial losses and restructuring.