VietNamNet Bridge – Viet Nam's motorbike industry could fail to become a major manufacturer in the region by 2015 due to sluggish demand in the domestic market and a gloomy export forecast.

An engine assembly line at a Piaggio Viet Nam factory in northern Vinh Phuc Province. The domestic motorbike industry could fail to become a major manufacturer in the region by 2015 due to sluggish demand in the domestic market and a gloomy export forecast.

The industry's development strategy, which was approved by the government in 2008, determined Viet Nam would become a strong motorcycle producer and become a regional centre for the design, production and assembly of motorbikes.

However, motorbike sales in Viet Nam have started to decline in the last three years largely due to a slowdown in the country's economic growth.

Domestic motorbike sales for 2013 dropped to around 2.5 million compared to 3.1 million in 2012, according to the Viet Nam Auto Motorcycle and Bicycle Association.

In addition, 2012's growth was down 5.03 per cent over 2011, the slowest pace in 13 years, the association said.

The country's two largest motorbike manufacturers, Honda and Yamaha, which account for over 90 per cent of the local market share, may experience another bad year in 2014.

According to a source close to these firms, Yamaha's sales may drop by 10 per cent to 750,000 units this year, while Honda expects to hit 1.5 million in sales this year, lower than 1.8 million last year.

Honda Viet Nam (HVN), which currently exports an estimated 12,000 Lead 125s and SH scooters to Japan annually, earns more than $40 million per year in export turnover from the Dream and Wave models to regional countries.

SYM Viet Nam exports about 3,000 to 4,000 motorbikes per month to Malaysia, the Philippines, Singapore, and Indonesia, as well as Myanmar, Laos and Cambodia.

Piaggio Viet Nam also ships about 30,000 units to the ASEAN market. It also exports products to South Korea, Australia, the United States and Europe.

Economist Le Dang Doanh pointed out that most motorbike exports from Viet Nam were made by foreign invested producers such as Honda and Yamaha as local makers do not make high-quality vehicles.

"Therefore, if you just look at the export volume and ignore the local content of the exports, you won't notice that exports do not bring any benefits to Viet Nam," he added.

Viet Nam's motorbike market is the fourth-largest in the world after China, India and Indonesia.

Motorbikes are the most common means of transport in Viet Nam, which has a population of 90 million, and 37 million motorbikes have been registered, while the number of cars is just around 2 million.

Motorcycle association

The Viet Nam Association of Motorcycle Manufacturers (VAMM) made its debut on Wednesday (Feb 19), in Ha Noi, with the aim of building a healthy motorcycle industry and overcoming the current difficulties.

The association's five founding members include Honda, Yamaha and Suzuki of Japan; SYM of Taiwan; and Piaggio of Italy, which account for more than 96 per cent of Viet Nam's market.

"VAMM will help in the creation of a common direction, according to the wishes of the concerned manufacturers, for long-term investments in Viet Nam. This will also effectively contribute to the development of industries in Viet Nam and help gather resources to form common standards for customers' interests," said Honda Viet Nam's General Director Masayuki Igarashi.

Masayuki, who is also the chairman of VAMM, noted that the association will act as an intermediary between the motorcycle manufacturers and the government and help create favourable conditions for policy proposals relating to the development of the motorcycle industry and its ancillary industries.

"With the current trend of international integration and potential exports of motorcycle CBU and components, the association will play a primary role in negotiating for environmental and technical standards for exports with motorcycle associations of other countries and regions," he remarked.

While Honda controls the largest portion of the market, with 1.87 million motorcycles sold last year, SYM followed with 82,000 units; Yamaha, 731,000; Piaggio, 56,300; and Suzuki 50,500.

Source: VNS