Vuka pays to sell Loncin's bikes
R4m deal secures southern African rights to distribute Chinese brands
September 7, 2009
By Roy Cokayne
National scooter and motorcycle retailer Vuka Scuta has acquired distribution rights to retail Loncin in southern Africa, as well as the stock and parts inventory of Loncin South Africa.
The deal is valued at between R3 million and R4m.
Vuka Scuta is wholly owned by Luna Corporation, whose major shareholders are entrepreneur Barney Esterhuyzen and his family trust, Titan Nominees.
The company introduced a range of Chinese-made two-wheelers to South Africa two years ago, and has ambitious plans for the southern African market.
Kevin Ferreira, the managing director of Vuka Scuta, said on Friday that the deal was effective from the beginning of this month.
Ferreira said Vuka had been approached by Loncin and viewed the buyout as a perfect opportunity for market consolidation in the current economic climate.
"Loncin SA was looking for a buyer, which could offer its own distribution channels, retail outlets and maintenance support. Loncin is a well-established brand with prime quality products and the deal will enable us to introduce a number of new models within a short period of time in addition to the existing Vuka range."
Ferreira said Vuka looked at the transaction as a great way to diversify its product line-up and believed the new brand could help the company to penetrate new markets.
He said Loncin had entered the South African market about five years ago and had about 4 000 bikes on the road.
Ferreira said Loncin had only a few independently owned outlets compared with Vuka's 25 company-owned and about 30 independently owned stores.
Vuka would retail Loncin through its own stores and other platforms and aimed to sell about 5 000 units over a 12-month period.
There were opportunities with other retailers that it could use to penetrate the market that it did not want to do with Vuka, Ferreira said.
He said Vuka had concluded a deal with House & Home last month to retail bikes through the furniture outlet's 44 countrywide stores.
"In current conditions this might be quite tough but we're confident there will be a bit of an improvement in the market next year," said Ferreira.
He said there were also opportunities to sell Loncin products to neighbouring countries.
"We have been appointed by Loncin China to distribute to their wider territories, such as Lesotho and Swaziland, and will definitely explore distribution opportunities to the rest of the African continent. With their wider range of models priced between R6 000 and R30 000, Vuka will also be able to meet a broader consumer demand and appeal to new customers.
"Loncin is a major quality manufacturer and is the only Chinese manufacturer taking part in the 125cc class of MotoGP. Loncin was appointed by BMW Motorrad to manufacture their 650cc cross country engine, due to their technical capability," said Ferreira.
Ferreira said Vuka was committed to continue serving Loncin's existing customer base with services, spare parts and routine maintenance.
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