Forklift News - Mitsubishi competitors reject factory-direct sales

In Forkliftaction.com News #277, we reported that Mitsubishi Caterpillar Forklift America Inc (MCFA) dealers were unhappy about a website offering factory-direct forklift sales, initiated by an MCFA-owned dealership.

Forkliftaction.com News contacted several materials handling professionals to get their views on factory-direct forklift sales. The professionals, none of whom wanted to be named, are involved in the Japanese, European and South American forklift markets.

The marketing & international business director of a North American OEM’s former Brazilian subsidiary said using the internet for factory-direct forklift sales as a "support tool" could be understood in the current forklift market.

"Competition has been growing more in today’s global markets and OEMs must be increasingly more creative and innovative in getting their products across to end-users.

"Forklift dealers do not always share the same interest as the OEMs they represent. They often have other product lines in their business, such as construction equipment, that carry more added value per unit and hence attract their priority, to the detriment of forklifts."

He had proposed to his boss in the US, in 1999, a "distribution channel basket" consisting of factory-direct forklift sales, a dealer network and a dealer-run authorised service network.

The percentage assigned to each channel could change over time and was a corporate decision, he said.

"It is rather difficult for an OEM to sell 100 per cent factory direct because of cost factors, the peculiarities of diversified markets, cultural differences and geographic implications in global markets.

"However, the 100 per cent classical dealer distribution network does not properly respond to the needs of today’s markets for OEMs and end-users," he said.

A sales & marketing manager for a Mitsubishi competitor in the European market did not think selling factory-direct forklifts on the internet was a good idea.

"… unless you have no other choice. One thing is for sure, we will never do this," he said. "This is absolutely ridiculous towards your dealer network.

"This will definitely be an opportunity for newcomers to have good dealers, like the Chinese brands for instance, which are all trying to set up dealer networks in Europe.

"At Prologistics, in Brussels, there were rumours a Belgian forklift dealer had bought 240 units of Toyota 8 series models in Japan while the launch in Europe is scheduled for 2007." He said he had heard it was possible to buy some Japanese forklifts direct from the factories.

"In Japan you can go to the factory, show your money and order whatever you want … this is apparently the Japanese way of doing business."

A consultant for a Japanese forklift OEM, who has more than 30 years’ experience in the industry, disagreed.

"I personally do not believe this is the Japanese way.

"No Japanese OEMs, except MCFA, consider direct sales in areas where a dealer has been appointed. There are very few exceptions, that is, sales to a national account or key account, which the local dealer can’t approach or manage."

He said the OEM he worked for sold forklifts direct to key accounts but reserved after-sales business for dealers.

"Some [of our] dealers might sell to a certain buyer knowing he will export the forklifts. Of course, this is a breach of ‘sales within his territory’. Our overseas dealers contact us when they find such sales in their territory. We trace [the dealer] from the product’s serial number and give the dealer a warning."

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