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April 6, 2007

Hyosung Motors, At War With the Big 4

Breaking into the world of the Big 4 motorcycle manufacturers is not easy. The list of failed and bankrupt motorcycle businesses grows each year. I have been doing some research on Hyosung Motors and it looks like they might have a new approach to gaining market share.

Here are a few things they have done and are looking to accomplish…

1) Build a universally appealing engine.
There is no denying the success of Honda Hawk GT 650 and Suzuki’s SV650. They have universal appeal to beginners and experienced riders. We have all read the reviews. Smooth, linear, controllable power and plenty of character. This makes the 650 vTwin a great choice. If you can only build one engine, why not a 650 twin? Hyosung has built 2 very different motorcycles with it. The GT650 sport bike and GV650 Avitar power cruiser.

2) Licenses the 650 Hyosung Motor.
The long awaited Fischer MRX 650 and Italjet’s prototype Bazooka are two of these companies. Heck, United Motors licensed the entire 650 and 250 Hyosung lineup to be re-badged under their name. They will eventually make their own machines and only use the Hyosung engines. How will Hyosung use all this money these companies are paying them?

3) Build economies of scale to lower manufacturing costs and gain the attention of the aftermarket parts manufacturers.
The more engines and machines in the hands of customers, the more need there is for parts to fix them. The more parts that are manufactured and sold, the lower the cost per part. This also creates a larger pool of customers looking for aftermarket upgrades and go fast parts. Where there is a need you can be sure people will step up to make money. Having ways to customize a motorcycle gives that bike credibility and attracts more customers who see the possibilities for customization. This only makes the lower retail price of the Hyosung’s more attractive.

4) Have other companies help build brand recognition and trust for their product.
Not only does Hyosung collect royalties by sourcing to other companies, it lets other companies do an extremely difficult job for them. A job so important if not done correctly it can make a fantastic product fail miserably. The job of building visibility, respect and trust with the motorcycle buying population.

Having another company saying your product is good is much more effective than you saying your product is good. It provides instant credibility. For example, every time a magazine or blog mentions the Fischer MRX650 they mention that Hyosung supplies the engine. This is free marketing that people actually listen to. I doubt millions of dollars of Google ads would have a similar impact because people ignore conventional advertising. Motorcycle consumers are very loyal to brands so any help they can get will go a long way.

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