Việt Nam motorbike market slump to continue

A saturated market and general tightening of belts again drove motorbike sales down, forcing Honda and other leading brands to sell at below cost last year.

Industry insiders said the market has been gloomy despite various promotions and discounts even during peak sales seasons like the New Year and the start of new school year, pushing sales down to 2.79 million motorbikes in 2013, down 10 percent year-on-year.

Sales had fallen by 6.6 percent in 2012.

A report from the General Department of Customs showed that the number of motorbikes imported fell by half to 18,866 units and by 40 percent in value to less than US$42.3 million.

Major foreign companies like Honda, Yamaha, SYM, Suzuki, and Piaggio have a total capacity of more than five million units a year in Vietnam, besides which some Vietnamese companies too manufacture motorbikes.

Kiyokazu Sasabe, deputy general director of Honda Việt Nam, was quoted as saying by Thời báo Kinh tế Sài Gòn (Saigon Times) Online newspaper that his company’s two factories in the northern province of Vĩnh Phúc had to lay off 500 employees last year as did its competitors.

The companies say profits, if any, now come from repairs, replacements, and sale of parts.

Many shops selling imported motorbikes in Hồ Chí Minh City have closed down.

They said the economic situation is the major factor when people decide to buy a motorbike, but admitted the market has almost reached saturation point.

The less important players have been developing niche markets to avoid competition.

Suzuki, Yamaha, and SYM last year launched many sports and below-50-cc models, segments ignored by Honda, which dominates the market with a more than 60 percent share.

They also offer smaller, cheaper models for students and housewives, and fuel-efficient vehicles.

motorbikeNew models introduced by Honda at a fair in Việt Nam last year 

Driving out

Insiders said 2014 is likely to be another difficult year with competition being harsher than ever.

Masayuki Igarashi, general director of Honda Việt Nam, said the economic indicators do not seem bright yet, so “the motorbike market will surely continue to be difficult.”

He expected the company to sell 1.8-1.9 million motorbikes, the same as last year.

But the company would not cut back on production and instead would use Vietnam as an export base.

It has decided to open its third factory — in Hà Nam Province near Hà Nội — this year, a year later than planned.

The factory will have a capacity of 500,000 motorbikes a year and is expected to produce 10,000-15,000 motorbikes in the first year.

Igarashi said the difficult economy would keep the Vietnamese currency stable, an export advantage.

“Businesses will surely boost their exports and turn Việt Nam into a motorbike manufacturing center in Asia.”

Honda plans to take more of its luxury models to the US and Europe.

A Piaggio Việt Nam source also said the company is eyeing new markets.

But insiders admitted exports would not be easy since producers in other Asian countries like India, China, and Indonesia are also gearing for export.

Source: Thanh Niên News


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