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Ilya Hait: Ural bikes yet to reach sales potential

General Director of Irbit Motorcycle Works (IMZ) Ilya Hait filled Motonews.ru in on where the producer of Russian Ural motorcycles currently stands.

Irbit Motorcycle Works has reported strong sales of Ural motorcycles in the United States. So, for the record, just how many motorcycles did you sell in the United States in 2011? And how many did you produce in 2011 in total?
In 2011, we sold 496 bikes in the States. In total, the plant produced 900 motorcycles in 2011, the bulk of them being sidecar motorcycles.
I expect to hear comments about the numbers being fairly modest, so I’d like to point out a few things right from the outset.
First, very few producers, even well-known brands, have so far managed to sell such a number of bikes in the U.S. Ural, for one, has outsold such famous motorcycles as Moto Guzzi and Aprilia.
Second, not only is the U.S. motorcycle market very competitive, it is also going through some rough times. Compared with peak sales, the market almost halved, and it has been at its low for the past two years. Against this gloomy backdrop, Ural sales climbed back almost to their pre-crisis levels, which didn’t pan out for many other producers.
Third, it’s also very important to bear in mind that Ural operates in a very narrow niche of sidecar motorcycles. The culture of sidecar motorcycles has been virtually extinct in western countries for decades now, and what Ural is doing is essentially restoring a whole segment of the motorcycle market. The task is extremely difficult, but we are dealing with it gradually, one step at a time.

How many dealerships does the Ural brand have worldwide?
Well, let’s count them. 60 in the United States, another 60 in Europe, 10 in Canada, 5 in Australia, 3 in Japan, and some more in South Korea, New Zealand, Persian Gulf countries – roughly 140 dealerships in total.

Do you have any plans to develop your dealership network in Russia? How many dealers do you have here?
To begin with, I’d like to refute the allegations that Ural motorcycles are not for sale in Russia. I’ve heard and read some comments to this effect, including a report on the news program Vesti. We absolutely do sell motorcycles in Russia. We have two dealerships in Moscow. Buyers from other regions buy ex-works.
As for the development of our dealership network, it’s purely a matter of economic expediency. As soon as we see an opportunity to market considerably more Ural bikes in Russia at a price we find adequate, we’ll invest money in the expansion of our retail network. It could be as early as next year.
For now, this year, at least, we’ll be going with the existing scheme: using dealerships in Moscow and direct ex-works sales.

It is my understanding that Russians like just about everything better than domestic products because of certain deeply ingrained stereotypes… Nevertheless, I have to ask: Have you considered offering any especially appealing terms for selling Ural motorcycles in Russia? To give buyers an incentive through prices, features, or anything else?
Artyom, the fact of the matter is that despite what they generally say about us, the features of the bikes we sell in Russia are exactly the same as they are elsewhere. There is virtually no difference whether a bike is bound for France, or, say, California, or Rostov-on-Don. It makes no sense to us economically to devise a configuration of cheap and low-quality features specifically for some 3% or 5% of our total output. Not to mention that it would be stupid.
As far as prices are concerned, we believe that the prices for our bikes are quite reasonable, and adequate to the quality of the component parts we use, the size of our output and other conditions of production and sales. And finally, we have launched the so-called T series specifically targeting buyers who regard price as the decisive factor. It is, effectively, a standard motorcycle stripped of all features that are not essential to riding. We have kept prices on T motorcycles almost intact worldwide, including in Russia, for the last three years. In Russia, the bike costs RUB 260,000.

When Russians hear about Ural bikes, many of them tend to wrinkle their noses and compare the bike to the models that IMZ produced during World War II. Could you please outline the main differences of the modern Ural bike from what was made, say, 50 or 60 years ago to dispel the myths?
I will try, although I am pretty positive I won’t be able to dispel all doubts. Since 2003-2004, we have been focusing on the quality of the bike. Essentially, a bike’s quality rests on the quality of its component parts. So we decided to use only first-rate components to deal with the issue of the reliability of certain units. Import expenditure currently accounts for almost two thirds of our spending on materials and component parts. We import components of the brake system (Brembo front floating disc brakes),the entire control gear (switches, levers, cables, mirrors, handles, etc.), all suspension elements (Sachs dampers, Marzocchi forks), all electric components except the starter (Denso alternators, Ducati Energia ignition systems, and wiring produced by Austria-based company Eltrona), Keihin carburetors, internal components of the engine and transmission from Germany and Switzerland (gears, valves, valve seats, bearing, oil seals, springs, gaskets, etc.), seats and instruments from Italy, aluminum rims, tires, hardware, paints and chemicals, even stainless steel, which we use to make the exhaust system. All in all, we import components from 15 different countries.
At the end of the day, if we compare the running gear of Ural sT and Moto Guzzi V7, we can see that the components used are almost identical. And maybe it couldn’t have been any different: there are only so many producers of motorcycle component parts, and everyone knocks on the same doors.
We’ve also made hundreds (literally, hundreds) of changes in the engineering design of the bike and separate units of it, and also in the process of manufacturing the components that we are produce on our own. At certain stages, we engaged foreign engineers, manufacturing engineers, and quality specialists to implement the changes.
Ural has probably not yet reached the level of reliability of, for instance, Honda. Either way, even compared to motorcycles produced in the 2000s, the modern Ural is a few light years ahead.

Which global markets are catching up to the U.S. one?
Well, if we’re talking about motorcycles in general, I’d say that the U.S. market has long ceased to be the leader in terms of sales volumes. The top markets currently are China, India, and Brazil. All the producers are trying to get there, designing models specifically for them, moving production facilities there, etc.
As for IMZ, Ural bike sales have yet to reach their sales potential in the United States, which implies an increase by several times rather than just by a few percentage points. That said, it’s still a top priority market for us, especially since we already have so much invested in it. We’ll see what happens next. We have to boost sales in Europe, which took a dive because of the crisis. And some new markets that I have already mentioned are also very appealing.

Some time ago, there were reports on the Internet that Brad Pitt was riding around on a Ural bike in California. Is that true? Did Brad Pitt buy the bike from one of your dealerships? What other celebrities are known to own a Ural bike?
Pitt’s representatives came to our dealership in Long Beach right before Christmas and bought a bike. Since it’s our policy not to disclose the identities of our customers, we didn’t tell anyone about it. But it only took a week for the paparazzi to reveal the secret.
As for other celebrities, Ewan McGregor already has two Urals – Solo sT from Hammarhead and Gear Up Sahara, which he makes no secret of.
We have other celebrity customers as well, whose names the public would probably like to learn. When they themselves disclose their identities, we’ll certainly make the information public.
Since we are talking Hollywood now, I’d like to mention that three movies featuring Ural bikes will be released this year: Olive, the first feature film to be shot entirely on smartphones, The Finder television series (a spin-off of the Bones series), featuring Ural bikes as the main vehicle of the characters, and, finally, Ghost Riders 2 with Nicolas Cage riding a Yamaha, and his opponent, naturally, a Ural Solo.

Where are you on military modifications for the Ural motorcycles? Is there any chance the modern Ural bikes can be included in the inventory of the armed forces? Or frontier troops, or the Emergency Ministry, etc.?
To answer briefly – nowhere. The last time we supplied bikes to Russian defense or law enforcement agencies was in 1999, when we delivered bikes for frontier troops. We had a hard time receiving payment for that. We now have no orders from the Defense Ministry, or the Emergency Ministry, or the Interior Ministry – and chances are slim that we’ll get any. We’re a small company, we have no resources or intention to engage in lobbying and similar things, which government orders normally require. We understand the workings of a regular retail motorcycle market where everything depends on us alone, and we will keep our focus on that.

As a brief reminder, Irbit Motorcycle Works (IMZ-Ural OJSC) is based in the town of Irbit in the Sverdlovsk region. It was registered as an open joint-stock company in May 2000, and has a share capital of RUB 280m. The plant dates back to 1941, when it was transferred to Irbit from Moscow after World War II broke out. In 1953, Irbit motorcycles found an export market. They were mainly exported to developing countries and Eastern Europe, mostly to meet the needs of the armed forces or law enforcement agencies. In May 1967, the 500,000th bike rolled off the IMZ line, and in May 1975, the plant produced its 1,000,000th motorcycle. In October 1993, the number of bikes topped 3,000,000. In 2010, IMZ-Ural produced 800 motorcycles, most of them with sidecars. The company employs 155 people, with 145 of them engaged at the plant in Irbit. IMZ-Ural exports over 95% of its total output to the United States, the European Union, Canada, Australia and Japan as its major markets.

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