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VN’s motorbike market falling into foreign hands
2011-0811
Vietnamese companies are fast losing their share of the hugely promising motorbike market, which sells about three million bikes every year, to foreign-invested enterprises (FIEs).
Long gone are the days when local manufacturers dominated the market, as foreign rivals have been holding the upper hand thanks to their better technologies and greater capital resources.
Continued foreign expansion
Despite sluggish trading at motorbike agents, Honda Vietnam (HVN) has recently poured over US$120 million to expand its production capacity.
The company has announced it will build a third motorbike manufacturing plant with an output of 500,000 units each year after having launched its second plant.
HVN started to produce motorbikes in 1997 and gradually scaled up its production to reach a capacity of two million units in 2011.
With the third plant to be up and running next year, HVN will bring its total output to 2.5 million bikes yearly.
According to HVN, the third plant will help meet increasing demands for motorbikes here. In 2010, HVN sold 1.7 million bikes and is expected to sell 1.9 million bikes for local consumers this year. Expansion is thus necessary, it said.
In Vietnam, motorbikes remain the most popular means of transport for residents and the market is expected to grow further in the near future.
Renowned European scooter producer Piaggio has also boosted investment in Vietnam, although it only started tapping into the market in 2007. After completing its first plant with an annual capacity of 100,000 units, Piaggio Vietnam is building a second plant to increase its total output to 300,000.
Piaggio has invested around US$30 million in the project.
Like HVN, Piaggio is trying to meet increasing scooter demands in Vietnam and other nations in Southeast Asia. Vietnam last year became the fourth largest motorbike market worldwide after China, India and Indonesia with 2.69 million bikes being consumed, a 20% year-on-year increase. The local market is more attractive now as the other nations have limited uses of motorbikes.
Meanwhile, Taiwan’s SYM Group, the first foreign motorbike maker in Vietnam, raised its output to around 200,000 bikes last year. Japan’s Yamaha Co. plans to churn out one million bikes in 2011 after producing nearly 600,000 last year.
Some FIEs also have export plans. For instance, Piaggio has decided to establish a research and development center in Vietnam to boost exports to Singapore, Thailand, Laos, the Philippines, Japan and Australia.
Shrinking market share for locals
Facing fierce competition from FIEs, domestic motorbike producers are struggling to survive.
Last year, around 30 Vietnamese bike manufacturers turned out only 47,000 units, or 2% of the total output. A decade ago local enterprises made up 80% of the market.
Most domestic firms do not invest in design and thus are failing to secure a strong brand on the market. A number of enterprises have turned to assembling Chinese-made bikes while foreign companies like Honda, Yamaha, Suzuki and SYM have made innovations in design and quality.
As a result, the number of Vietnamese bike firms has dropped from 56 to 30.
HCMC-based Hoa Lam Co, which used to be regarded as a strong bike assembler with the Halim brand, has left the main business despite its cooperation with Taiwan’s Kymco Co.
Technology is not a strong point of local enterprises while there is an increasing trend for energy-saving and environmental-friendly bikes.
A representative of a local bike company says that the bike market has fallen into the hands of FIEs.
Long gone are the days when local manufacturers dominated the market, as foreign rivals have been holding the upper hand thanks to their better technologies and greater capital resources.
Continued foreign expansion
Despite sluggish trading at motorbike agents, Honda Vietnam (HVN) has recently poured over US$120 million to expand its production capacity.
The company has announced it will build a third motorbike manufacturing plant with an output of 500,000 units each year after having launched its second plant.
HVN started to produce motorbikes in 1997 and gradually scaled up its production to reach a capacity of two million units in 2011.
With the third plant to be up and running next year, HVN will bring its total output to 2.5 million bikes yearly.
According to HVN, the third plant will help meet increasing demands for motorbikes here. In 2010, HVN sold 1.7 million bikes and is expected to sell 1.9 million bikes for local consumers this year. Expansion is thus necessary, it said.
In Vietnam, motorbikes remain the most popular means of transport for residents and the market is expected to grow further in the near future.
Renowned European scooter producer Piaggio has also boosted investment in Vietnam, although it only started tapping into the market in 2007. After completing its first plant with an annual capacity of 100,000 units, Piaggio Vietnam is building a second plant to increase its total output to 300,000.
Piaggio has invested around US$30 million in the project.
Like HVN, Piaggio is trying to meet increasing scooter demands in Vietnam and other nations in Southeast Asia. Vietnam last year became the fourth largest motorbike market worldwide after China, India and Indonesia with 2.69 million bikes being consumed, a 20% year-on-year increase. The local market is more attractive now as the other nations have limited uses of motorbikes.
Meanwhile, Taiwan’s SYM Group, the first foreign motorbike maker in Vietnam, raised its output to around 200,000 bikes last year. Japan’s Yamaha Co. plans to churn out one million bikes in 2011 after producing nearly 600,000 last year.
Some FIEs also have export plans. For instance, Piaggio has decided to establish a research and development center in Vietnam to boost exports to Singapore, Thailand, Laos, the Philippines, Japan and Australia.
Shrinking market share for locals
Facing fierce competition from FIEs, domestic motorbike producers are struggling to survive.
Last year, around 30 Vietnamese bike manufacturers turned out only 47,000 units, or 2% of the total output. A decade ago local enterprises made up 80% of the market.
Most domestic firms do not invest in design and thus are failing to secure a strong brand on the market. A number of enterprises have turned to assembling Chinese-made bikes while foreign companies like Honda, Yamaha, Suzuki and SYM have made innovations in design and quality.
As a result, the number of Vietnamese bike firms has dropped from 56 to 30.
HCMC-based Hoa Lam Co, which used to be regarded as a strong bike assembler with the Halim brand, has left the main business despite its cooperation with Taiwan’s Kymco Co.
Technology is not a strong point of local enterprises while there is an increasing trend for energy-saving and environmental-friendly bikes.
A representative of a local bike company says that the bike market has fallen into the hands of FIEs.
Source: Tuoi Tre
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