Fall of UM Motorcycles is a combination of poor management and ignorant dealers and customers

UM Motorcycles recently received a legal notice from the Federation of Automobile Dealers Association ordering an immediate shut down of operations leaving dealers in a sticky situation. Here's what went wrong for UM in India.

By: | Published: October 24, 2019 2:38 PM

um-renegade-review-main

UM Motorcycles has been in the news for the past few days but for all the wrong reasons. Well, it's not that they did manage to make any good news in their brief period of struggling existence but this time it's even worse. Federation of Automobile Dealers Association (FADA) recently sent a legal notice to UM Lohia Two Wheelers Pvt. Ltd for shutting down operations abruptly and leaving dealers in a tough situation. The failure of UM Motorcycles in India is claimed to have led to a loss of over Rs 150 crore to its dealers and over 2,500 jobs have been lost. In an already tough economic environment, this is the last thing anyone would want to go through but unfortunately, it's happening.

So what led to the fall of the so-called American motorcycle company that had aspirations of taking on the likes of Royal Enfield. Yes, as absurd as it might sound their plant had a capacity of 100,000 units per annum! Now let's see where things started to go wrong and right at the start of operations is where I would put it to be precise.

First, a company like Lohia with no experience in the area of proper motorcycles joins hand with an American company to sell bikes made out of cheap parts imported from China and assembled in India. The role of the American firm was merely to mask the Chinese roots of the products.

The second thing that went wrong was that with no experience and no actual technical knowledge, a newly-formed entity had astronomical aspirations in terms of volumes. Well, a sympathiser (if there are any) could argue that Tesla also came in out of nowhere and revolutionised the electric car industry to the extent that 100-year-old carmakers are still trying to catch up with Elon Musk's company.

The big difference though is that any new entrant that has historically created a disruption and sustained it are those who are technically proficient. Unfortunately, that wasn't the case for UM Motorcycles as the technology was outdated and none of the partners had a clue about making decent motorcycles.

Then, of course, there were things such as poor management, which led to illogical and assumptive sales goals and the lack of technology that made it hard for their motorcycles to meet even the existing emission norms, forget the upcoming ones.

Now, while all this was the fault of the parties involved in the venture you must be wondering why I said the dealers and customers were ignorant. Let's take the case one at a time. As a dealer, it's hard to understand how people were fooled into investing their money in a brand wherein the model is to import low-quality stuff from China and assemble and sell it. As much as my heart goes out for those whose investments are stuck and jobs have been lost, the chances of UM Motorcycles becoming successful were as slim as a single end from a split-end hair.

Customers who bought UM's motorcycles, however, are quite a surprising case. The motorcycles sold by UM had outrightly questionable build and material quality at first sight and the extent of low-quality was such that you didn't need a trained eye for it. Their products excelled in no area except for the fact that they looked bigger than the motorcycles in a similar segment and were quite loud and hence were quite simply ego boosters for those with little or no knowledge about motorcycles or riding.

A quick two-minute search on the web was enough to show that UM Motorcycles had put up a false facade to cover its actual roots. We didn't review all their products but the one time that there was an exception we didn't even feature it as a review. A small picture gallery with little text made it clear that the motorcycle is low on quality and isn't fun to ride either. We also wrote on earlier occasions how the company is ripping designs from KTM, the modus operandi for many Chinese automakers.

Lessons for Future

The UM case is now in the hands of the law so we all need to wait and see what happens but here's how dealers and customers can avoid getting into such a mess.

Getting an automotive dealership isn't exactly easy even if you have the money. Try taking up a Maruti Suzuki or Royal Enfield dealership to kick out any arrogance you might have on the back of your money. This is where companies such as UM come into the picture as they don't have any credible history and are eager to have multiple dealers to boast of a wide network.

As a dealer, you need to understand that such companies are using you collectively to make up for their lack of credibility and claim a wide network from the start without any significant investment from their pockets. Basically, you end up paying to give their business some worth but are left at the edge of the cliff when it comes to backing up your investments and risk.

As a customer, especially when it comes to two-wheelers, always approach all-new brands with caution and try and research them properly. Check their origins and their experience in making scooters or motorcycles. Check if they own the technology or are simply importing and assembling vehicles. If it's the latter then I suggest you wait for at least one year to see how the company and products are performing and what are the future plans.

‘Nobody wants Ather 340’: Ather 340 electric scooter discontinued as buyers prefer Ather 450

Yes, there are exceptions to this scenario and some such companies are already operational in India. The biggest difference here though is the fact that these companies own the larger part of technology and have a dedicated R&D setup and hence funding from large and established automotive and non-automotive companies.

In short, avoid being a customer for any two-wheeler company that imports, assembles and sells. Sooner or later but inevitably for sure, this business model will end up biting the dust and dragging along your investments with it.

Do you know What is Automated Manual Transmission (AMT), Electronic Brakeforce Distribution (EBD), Anti-Lock Braking System, Power Steering? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Get the latest cars price and upcoming bikes price in India exclusively at Financial Express. Stay tuned for new cars and bikes reviews, follow us on twitter, Facebook and subscribe us on YouTube for latest auto news.

Next Stories
1Fire sales to end after Diwali: Maruti Suzuki
2Diwali 2019 Discounts: Big savings on Nissan and Datsun cars this month
3Mahindra eKUV100 spotted testing: Launch likely at 2020 Auto Expo