VietNamNet Bridge – Worries have been raised about the overly hot growth of the Vietnam’s motorbike industry, which is believed to create a lot of difficulties.

Motorbike factories getting expanded

According to the General Statistics Office (GSO), in the first 10 months of 2011, 3.37 million motorbikes were manufactured and assembled domestically, an increase of 20.2 percent in comparison with the same period of the last year.

In October 2011 alone, 398,800 motorbikes were manufactured, up by 25.6 percent from October 2010

The index of industrial production in the industry also increased significantly of 7.5 percent in October 2010 in comparison with September, and 24 percent in comparison with October 2010. By the end of October, the index of industrial production had increased by 19.9 percent over the same period of the last year.

While both the output and the industrial production index increased sharply, the consumption growth has increased more slowly, by 18 percent. The report by GSO has pointed out that by October 1, 2011; the stock index of the motorbike industry had increased by 49.5 percent.

The increases in the output have not surprised anyone, because a lot of manufacturers have announced the plans to expand their production scale over the last year.

Honda Vietnam, for example, which is now holding more than 50 percent of the market share, in 2010, invested 70 million dollars more to expand its factory, thus raising the total capacity of the two factories in Vinh Phuc province from 1.5 million to 2 million products a year.

Just one year later, the joint venture announced the building of the third plant in Dong Van 2 Industrial Zone in Ha Nam province, which has the investment capital of 120 million dollars. As such, with the three factories, Honda Vietnam will have the total capacity of 2.5 million units per annum.

Another Japanese manufacturer, Yamaha, has also decided to invest 30 million dollars more to expand the existing factory to increase the production capacity to 1.5 million units per annum.

Well known as the big luxury scooter manufacturer, Piaggio Vietnam made the ground breaking ceremony for the expanding of its factory in Vinh Phuc province in April 2011, which allows it to increase the capacity to 300,000 products per annum.

Especially, the Italian manufacturer has revealed the plan to relocate its regional headquarter to Vietnam instead of Singapore, which means that it plans to build Piaggio Vietnam into the main production basis of the group in the region, from which products will be churned out and exported.

Analysts say they now can see signs of oversupply; especially, the risk is becoming more obvious when expanded factories begin churning out products by the end of 2012.

If Honda churns out 2.5 million products a year as per its designed capacity, Yamaha 1.5 million, Piaggio 300,000, SYM 300,000, Suzuki 200,000 and some others 100,000, the total output of motorbikes on the domestic market would reach 5 million.

Meanwhile, in 2009, Vietnam consumed 2.75 million products only, while the figure was 3 million in 2010.

The market may get saturated soon

Analysts have said that it is very likely to see the motorbike market getting saturated sooner than previously forecasted.

The Ministry of Industry and Trade once estimated that 33.5 million motorbikes would be in circulation by 2020, or 2.97 people would have one motorbike. In Thailand, the figure is now 2.9, and the market has reached the saturation point.

Japanese Professor Kenichi Ohno once said that once the Vietnamese market has 30 million motorbikes, it would get saturated. And that moment was expected to come in 2017-2020.

However, a report by the Ministry of Transport showed that by August 2011, the number of motorbikes in circulation had reached 33.4 million already. This means that the Vietnamese market has nearly hit the saturation threshold.

Source: TBKTVN