Mexico’s Masters of Mopeds: ItalikaBy Elliot Bullman
In 13 years, Italika filled Mexico’s streets with low-priced products. But the company of Ricardo Salinas Pliego was not satisfied: He has increased production capacity and has set his sights on higher segments.
Italika has not done anything wrong, but believes that it can do better. The mobility problems of Mexican cities are a big opportunity for Italika, which is part of the Ricardo Salinas Pliego business conglomerate. The company has just opened a new assembly line at its Toluca plant, to launch models for medium and high-end segments.
Italika has a 70% market share in Mexico. Italika’s CEO Alberto Tanus says its goal now is to take it to 80% or 85%. "Every year, we continue to earn [participation] points and we have not had a year of setbacks," he says. "At least we earn two or three points annually."
Last year, the market value of motorcycles in Mexico amounted to 1.186 bn pesos, an increase of 19.1% compared to the same period a year earlier, according to Inegi. This year was even better: from January to June, sales totalled 716.4 million pesos, almost 32% more than in 2016.
Italika is part of Grupo Elektra, the entity formed by the commercial and financial businesses of Grupo Salinas, which, unlike the television business, reported improvements in the second quarter of the year: an increase of 17% in revenues and 25 % in operating flow (Ebitda).
The fourth assembly line at the Toluca plant, with an investment of between 40 and 45 million pesos, will expand the manufacturing capacity of Italika, from 500,000 to 650,000 units per year.
"The growth [of the market] has been very accelerated," says Tanus. "We have 13 years with the brand and nine assembling, so, going from one to four lines in such a short time is an explosive growth."
A novelty of the new Toluca production line is that it has the flexibility to produce all 45 Italika models: from scooters to work motorcycles and sports models. The ones with the highest production are the work models (FT and DT models), whose price ranges from $12,600 to $30,000 pesos.
Italika sells 430,000 motorcycles a year in Mexico, according to the company itself, which are assembled locally, with components from China. "The technology is developed mainly in China although some of our models have technology and design of German and Italian origin," says Tanus.
The Toluca factory will be able to expand even further and reach seven production lines. "The configuration of this fourth line was a major movement in the factory, because we left the ship ready to put more lines," says Tanus, who joined Grupo Elektra in 2000. Of the 2,000 direct jobs at the Toluca plant, which opened its doors in 2008, 10% goes to the new assembly line.
One of the keys to the growth of Italika is how it has addressed the problem of mobility in places like Mexico City, which has the world's highest volume of vehicular traffic, according to a study by the firm TomTom. At the end of 2015, the capital of the country had a level of traffic congestion close to 59%, which expresses the extra time spent traveling in the city, compared to a day of light traffic. In 2010, the indicator was at 57%.
The brand takes advantage of this problem with an offer of affordable motorcycles, with its network of Elektra stores and with loans from Banco Azteca, which also belongs to Elektra. "The motorcycle market in Mexico was more focused on sports, hobbies and distribution," says Tanus. "In the country, the motorcycle was not considered as an alternative for mobility".
Italika is sold in 1,000 Elektra stores and 2,500 third-party outlets, which include self-service stores and department chains. Tanus says that the brand has about 4 million customers in the country. "We have made sure to be present and with accessibility in terms of geography for all customers," he emphasizes.
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