Vietnam's motorbike market is increasingly crowded

Consumption is still among the top in the world, but the downward trend in recent years shows that the Vietnamese motorbike market is gradually becoming saturated, forcing car manufacturers to find ways to change to protect their billion-dollar "empires".

According to the Ministry of Industry and Trade, Vietnam currently has more than 45 million motorbikes of all kinds (equivalent to one motorbike for every two people). This number has far exceeded the planned 36 million vehicles by 2020 and has caused the market to gradually fall into a state of saturation.

Although still among the top countries consuming the most motorbikes in the world (along with China, India, Indonesia) and where car companies have reaped billions of dollars in revenue in recent years, even these giants have to admit that the market is showing signs of slowing down.

Specifically, Vietnam's motorbike consumption in 2015 reached about 2.71 million units, a sharp decrease compared to the peak of 3.3 million units in 2011. Previously in 2012 and 2013, consumption also gradually decreased from 3.11 million to 2.79 million units.

Improved incomes allow Vietnamese people to afford more expensive cars.

Considered the largest motorbike manufacturing factory in Vietnam, where big companies like Honda and Piaggio are headquartered, statistics in Vinh Phuc show that the province's motorbike production in 2015 reached 1.91 million vehicles, down 12.5% ​​over the same period.

Explaining this, provincial leaders said that the Vietnamese motorbike market is saturated, the number of motorbikes per capita is high, the demand for motorbikes has decreased, causing the output and sales of factories to also decrease.Motorcycle production and assembly output in the first quarter of 2016 also continued to decrease by 13% compared to the same period, reaching 429,200 vehicles.

In a specific case, Honda, its 2015 production in Vietnam also decreased by nearly 16%, reaching nearly 1.8 million units. This decline continued when in the first quarter of 2016, production reached only 402,000 units, down 14% compared to the same period.Two years ago, Honda Vietnam also continuously reduced production.

Similarly, Piaggio Vietnam Co., Ltd. also recorded a total production volume of about 91,200 vehicles last year, down 5% in volume and 14% in revenue compared to 2014.Enterprises' budget contributions also decreased by 36%, to nearly 231 billion VND.

"The domestic production of motorbikes by Honda and Piaggio Vietnam has decreased since the last months of 2015 and continued in the first quarter of 2016. Although it coincides with the Lunar New Year, people's demand for motorbikes has reached saturation," said the Management Board of Vinh Phuc Industrial Park.

According to the locality, businesses producing spare parts and components are also affected by this situation. Data atVietnam Precision Industry Company Limited 1 also showed that its output in 2015 reached 68.5 million products, down 1% compared to the previous year, and budget contribution decreased by 2%.

Automobile industry giants also quickly boosted scooter production and exports.

Faced with this situation, car manufacturers have also shown their own strategies to adapt. For example, Honda is shifting strongly to exports, aiming for an average localization rate of 95% to expand into markets such as China, India, Indonesia, etc. The output of completely built-up exported cars in fiscal year 2015 reached 91,000 vehicles (245 million USD, up 179% over the same period).

Besides, a clear trend is that manufacturers are shifting to promoting scooters, or others are developing a line ofsmall motorcycle, sports car.In fact, with the increasing average income, Vietnamese people have accepted to spend more money to own vehicles. Sales of scooters are surpassing those of manual transmission motorbikes when in a recent vehicle introduction, - Chairman of the Association of Motorcycle Manufacturers (VAMM) -Minoru Katosaid the sales rate of scooters and motorbikes at the largest brand in the market is 54% and 46%.

Many other companies such asPiaggio, SYM, Yamaha… also have a rapid growth rate of scooters, focusing on segments from 30-45 million VND. ParticularlyPiaggio notedThe growth rate of scooters over 45 million VND has reached 900% since 2009.

According to VNE