Saturated motorcycle market: Calculating export routes

With sales reaching about 2.88 million units, 2013 was the second consecutive year that the motorbike market declined. Some say that the Vietnamese motorbike market is unlikely to continue growing, especially in the context of the Government's policy of restricting motorbikes in big cities.

Motorbike shops in Hanoi are all deserted. Photo: ST

Decline

According to data provided by Mr. Masayuki Igarashi - General Director of Honda Vietnam (HVN), in 2013, HVN - a joint venture that accounts for 68% of Vietnam's motorbike market share - only sold 1.87 million vehicles, equal to 96% compared to 2012.

According to statistics from the Vietnam Association of Motorcycle Manufacturers (VAMM): The joint venture ranked second in the market, Yamaha Motor Vietnam, sold only 731,000 vehicles; SYM Vietnam sold 82,000 vehicles; Piaggio Vietnam sold over 56,000 vehicles and Suzuki sold over 50,000 vehicles. Thus, in 2013, the entire Vietnamese motorcycle market sold only about 2.88 million vehicles, reaching 90% compared to the previous year. The decrease in 2013 was higher than the previous year (9% compared to 4.6%).

This downward trend is predicted to continue in 2014, when market demand in big cities is decreasing, the Government has a policy of restricting motorbikes in big cities and the economy is predicted to remain difficult.

Although very confident, HVN only dares to set a target of producing and selling 1.8-1.9 million vehicles in 2014, equal to 2013. Other joint ventures are also cautious when setting plans for next year.

Supply exceeds demand

With its leading market share position, in 2011, HVN seemed to be somewhat optimistic when deciding to invest in the third motorbike assembly factory in Vietnam located in Ha Nam.

Considering that the assembly capacity of the factories is “internal” information of the enterprises, at the press conference to launch VAMM, the joint ventures refused to provide official figures on this issue. However, based on the data announced by the enterprises when building the factories, it can be seen that the joint ventures are currently not producing at full capacity. For example, with HVN, just counting the two existing factories, HVN's vehicle assembly production capacity has reached 2 million vehicles/year. Investing in a third factory, HVN's vehicle assembly capacity has increased to 2.5 million vehicles/year. Yamaha Vietnam currently also has 2 factories with a capacity of about 1.5 million vehicles/year, SYM has 2 factories with a capacity of 500,000 vehicles/year, Suzuki has 2 factories with a capacity of 300,000 vehicles/year and Piaggio has 2 factories with a capacity of 300,000 vehicles/year. It is estimated that with 5 large motorcycle manufacturing joint ventures (accounting for 90% of market share), the capacity has exceeded 5 million vehicles/year, not to mention a few other domestic motorcycle manufacturing enterprises.

According to the Ministry of Industry and Trade, Vietnam's average motorbike consumption is about 3 million units per year. Obviously, the assembly capacity of factories has far exceeded the consumption level. Due to the difficult consumption, in 2013, HVN's two motorbike assembly factories did not operate at full capacity, and at times these two factories had to cut down on labor. This is one of the important reasons why HVN's third factory was slow to start operating this year.

Other "giants" of the motorbike market are also in a state of excess capacity, even with excess capacity many times larger than output such as Suzuki, SYM, Piaggio Vietnam...

Solve the problem

To increase consumption, motorcycle manufacturers continuously release new models, although the changes are not significant. At the beginning of 2014, HVN launched the 2014 version of PCX. The representative of this joint venture said: in 2014, the plan is to launch a new model each month with upgraded improvements and new designs to compete, attract customers, and maintain market share.

At the end of 2013, Yamaha Vietnam launched 5 models for the 2014 market: Nouvo SX, Nouvo GP, Exciter GP, Nozza European version and Jupiter Fi with improvements in design and technology. In November 2013, Piaggio also launched the completely new Vespa Primavera and GTS Super duo, replacing the Vespa LX model. Suzuki Vietnam continued to renew the Hayate product line with Hayate SS and Hayate SS FI, Viva 115, Axelo 125 and especially launched the new Raider 150cc manual clutch model.

However, the continuous release of new models does not help motorcycle manufacturers increase sales. And the problem of maintaining and gaining market share among the "big guys" is also becoming increasingly fierce.

Although admitting the fact that the ratio of scooters and manual motorbikes is almost equal (52% scooters and 48% manual motorbikes) and scooters currently have better business results, with the current trend of limiting motorbikes in big cities, according to the representative of HVN's leadership, expanding the rural and mountainous markets with suitable product lines (manual motorbikes) is considered the "door" out of the current difficult situation for businesses.

The revelation of Yamaha Vietnam's leader also said that the development focus of this joint venture is currently not Hanoi or Ho Chi Minh City but the Central region with the focus being Da Nang, Vinh - Nghe An.

However, according to Mr. Masayuki Igarashi, this trend is not good. Because instead of producing modern, advanced, high-tech, environmentally friendly models, the fact that businesses are turning back to producing cheap, low-tech manual transmission vehicles is considered a "regression" step for the Vietnamese motorbike industry.

Exit by export

The fact that HVN has just introduced the PCX model to the Vietnamese market has surprised many people. The surprise is because firstly, this is a model that has not been successful in the Vietnamese market. Secondly, the motorbike market is showing signs of difficult consumption, especially high-end scooters. Only when Mr. Masayuki Igarashi - General Director of HVN, revealed the reason did many people realize that this is Honda's global model, and Vietnam is identified as the center of PCX production for export to countries around the world.

This move shows that Vietnam's largest motorbike manufacturer has been actively exporting products in the context of declining domestic consumption.

It can be said that it is not until now, when the market tends to decline, that motorcycle companies have considered the export problem. Promoting product export has been "calculated" by companies for many years. However, this path is currently only achieved by two "big guys" HVN and Piaggio Vietnam.

Mr. Ho Manh Tuan - Deputy General Director of HVN said that in 2013, HVN exported about 40,000 complete products and over 800,000 sets of components. This number is expected to increase in the coming year 2014 with a planned plan of over 100,000 sets of components/year and over 50 complete products, mainly focusing on scooter models such as SH, SH Mode... The newly launched PCX model alone is expected to export 30,000 vehicles/year.

For Piaggio, exporting products has been considered by this joint venture since the construction of the factory with the goal of making Vietnam an export center for products to countries around the world. However, the number of exported products of this joint venture is currently still at a low number - a few tens of thousands of vehicles.

In reality, exporting is not easy, because the big motorcycle companies themselves always set a goal that wherever there is a big market, there will be production. Big markets such as India, China, Indonesia... have all become big motorcycle production centers and are also aiming for export.

According to.haiquan.online