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Local motorbike manufacturers abandoning, foreign scaling up production
While many domestic motorbike manufacturers have stopped production due to unprofitable business, foreign-invested manufacturers are trying to expand their production in order to meet the increasingly high demand in the market.
Honda Vietnam on August 29 inaugurated its second manufacturing workshop. This one can churn out 500,000 units a year. The new workshop, which has the investment capital of $65mil, covers an area of 300,000 sq m and creates 1,400 jobs.
The second workshop, which focuses on scooters, was set up after the manufacturer realised the high scooter demand in Vietnam’s market. Its scooter model Air Blade has been selling like hot cakes since it was marketed in April 2007. The manufacturer’s suggested retail price is VND28.5mil/unit; however, buyers always have to pay VND30-31mil/unit to get them.
With the two workshops in Vietnam, Honda’s capacity has been raised from 1mil to 1.5mil units a year.
Yamaha Motor Vietnam in mid 2007 kicked off the construction of its second workshop in Noi Bai Industrial Zone in Hanoi.
The new workshop, covering an area of 15 ha, capitalised at $43mil, is expected to be put into operation in October 2008. By that time, Yamaha’s total manufacturing capacity will be raised to 1.5mil units a year (the first workshop in Trung Gia commune in Soc Son district in Hanoi has the capacity of 700,000 units a year).
As such, the two big motorbike manufacturers alone can churn out 3mil units a year. If counting the products made by SYM, Suzuki, Piaggio Vietnam and 10 domestic motorbike manufacturers, the total motorbike capacity is over 4mil units a year.
According to the Ministry of Industry and Trade (MOIT), Vietnam consumed 3.6mil motorbikes in 2007, 70% of which were made by foreign-invested manufacturers. It is expected that over 3mil units will be sold this year.
Kojji Onishi, General Director of Honda Vietnam, said that Vietnam’s motorbike market is developing well. Honda Vietnam upgraded the capacity of the first workshop in May 2007 to 1mil units a year. However, the capacity had become inadequate by the end of 2007, which explains why Honda set up the second workshop.
Yamaha Vietnam also finds Vietnam’s scooter market very attractive. In January 2007, scooters accounted for 20% of the total sales of Yamaha Vietnam, while the figure rose to 30% in June of the same year.
MOIT has forecast that by 2010, Vietnam will have some 25mil motorbikes in circulation, while the figures will rise to 32mil by 2015 and 35mil by 2020. As such, the number of motorbikes in circulation will be nearly double the current number (20mil units).
Currently, in Hanoi and HCM City, there is one motorbike for every two persons, while the ratios are 1/3 in Dong Nai, Ba Ria-Vung Tau, Binh Duong provinces, and 1/6 in other localities.
Japanese experts believe that Vietnam’s motorbike market will become saturated when every two or three persons in rural areas have one motorbike. Currently, the ratio in rural areas is 1/6. Meanwhile, Hanoi and HCM City markets are becoming nearly saturated with the sales in the first eight months of 2008 down by 10-20% compared to the same period of 2007.
VNN
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