Issue #243 Something Old Something New | John, Business, His, Had, Kawasaki

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Issue #243 Something Old Something New

Written by Nancy Irwin
Wednesday, 16 July 2008
Significant dealer closures these past few seasons have made it difficult, though not impossible, to buy new Japanese motorcycles in the Greater Toronto Area. On the flip side there is one business that’s growing: Cycle World Superstore, which purchased the former Ontario Honda’s phone number and, recently, the old Cycle World East building and its name. Cycle World East and West were among the high-profile motorcycle dealer closures in the GTA. CWS is the evolution of a business formerly named The Motorcycle Superstore—which was located downtown on River Street where it sold used bikes, accessories and clothing, both at its brick and mortar location and at motorcycle shows. That store, though, had been sold to a land developer before news of Cycle World’s demise hit the streets. Its owner, 55-year-old John Pugh, was “a man in love with motorcycles,” who had made the decision to retire from the business once he had realized a final profit from soaring land values. But the Cycle World East location was seductively close to his Agincourt home—part of Scarborough—and, after 34 years in the bike business, John was unable to withdraw. The good news is that after months on the market a deal was made and the Cycle World Superstore was born. The trick is that, by not selling new bikes, the owner remains independent of distributors who can suddenly, unilaterally, cancel their standing dealer agreement with him. John’s history is an interesting one. His start in business began in high school with a lawn mower, gas can, sheers, a rake and a hoe that he towed behind his 10-speed Peugeot bicycle. While others were enjoying the Summer of Love John was cutting lawns at $3 a pop. He pocketed a thousand dollars in his peak year. Cutting grass provided valuable business experience, and yard maintenance progressed to renovations for real estate investor Gerry Ewins who later (along with partner Less Butterworth) agreed to back John in his dream of running a motorcycle business. This involved telling his parents he was doing something they had specifically forbidden him to do, which was ride a motorcycle. It also required John to quit during his first year of university, right before final exams, because under the rules of the Ministry of Consumer and Corporate Affairs he could not hold a Motor Vehicle Sales Licence and have any other “job.” John went to Honda, Yamaha and Suzuki but finally chose Kawasaki because they appeared to have the greatest growth potential and the weakest dealer network in Toronto. The partners co-signed a loan, and in February 1974, at age 21, John put $15,000 down with Kawasaki. He rented a 20-foot storefront with 2,200 square feet at 4455 Sheppard Avenue East (strangely close to his current location at 4545 Sheppard Ave. East). Ontario Kawasaki opened with 36 motorcycles in stock. John clearly recalls the models which made up his Noah’s Arc: two each, starting with Z1 900, H2 750, H1 500, S3 400, S1 250, the F9 350, F11 250, F7 175, and F6 125 enduros, G5 100 street bike, a G4TR (10-speed transmission) off-road bike, a MC90 and KV75 mini bike. He says he was told by Kawasaki that he had to sell everything at list price, which he assumed was standard. At the grand opening he didn’t sell a single bike, though many people wanted to make a deal. Back then the profit margin on a new bike was 20 per cent, but he couldn’t seem to sell any. After six weeks or so, he learned from customers that they’d bought bikes down the road for a few hundred dollars less and so realized he had to lower prices to make sales. At the same time he started something novel for the times by displaying helmets, oil, hand grips and so on, that people could look at and actually touch. This was at a time when places such as Canadian Tire operated as warehouse stores where your order, written on paper, was retrieved from the back, perhaps by people on roller blades. John began making sales of aftermarket exhausts and other items which were in full view and where profit margins were larger. Then Kawasaki sent him a letter saying they were selling bikes at 80 per cent of what they’d sold them to him months earlier. He couldn’t afford to buy more bikes but the ones he had bought were now worth 20 per cent less, which was the entire profit margin. John was living with his parents, riding a bicycle to work and getting ever deeper in debt. He did, however, sell 15 bikes the first year. The second year he broke even (without taking a paycheque) and in the third year he sold $700,000 in parts, accessories and motorcycles. John was literally turning Kawasaki’s sales plan around, selling twice in service and accessories combined than what he did in motorcycles. In 1977-78 he sold over a million dollars. The year after, at the request of Kawasaki, he opened a second store at Dundas and Dixie, followed by another in Oshawa. John Pugh had become a success in the motorcycle business, but in the early 1980s a government investigation into the pricing of new Kawasaki motorcycles was followed by an out-of-court settlement, and then the cancellation of all three of John’s dealerships. Seemingly, a significant rift had developed between Kawasaki and its former star Canadian dealer. John’s business relationship with Kawasaki finally ended in 1984, and he has yet to return to selling OEM. But he continued in the bike business, at first buying then shipping used bikes destined for sale in Holland. In 1992, he bought the 5,500-sq/ft. River Street location and named it The Motorcycle Superstore, where he continued to sell bikes, parts and accessories, though the motorcycles were all previously loved. And now, full circle, he is maintaining the Cycle World name, created by John Bagby, a man whom he held in high regard. The new two-building location is, at 16,500 sq/ft., three times the size of the River Street shop. It opened this spring with 170 used bikes on the showroom floor, 15 employees, eight visible service bays and a motorcycle showroom in the back building. While it’s encouraging that one resale business is growing where others have failed, personally, I’m saddened about the businesses lost and concerned over the high cost of insurance and rising price of gas. But there is a future and I plan to be a part of it. Comments (0) Subscribe to this comment's feed Write comment You must be logged in to a comment. Please register if you do not have an account yet.