Motorbike market starts to heat up

The domestic motorbike market is heating up, with many companies announcing plans to expand their production while others are entering the market for the first time.

The race started when late last month, Honda, one of the biggest motorbike companies in Viet Nam, announced plans to construct its third plant in the northern province of Ha Nam with a capacity of 500,000 units per year.

With this fresh investment of more than US$120 million, the total capacity of Honda in Viet Nam will increase to 2.5 million of motorbikes per year.

Right after the new Honda plant was announced, Piaggio Viet Nam also said that their productivity would increase to 300,000 from 100,000 units per year by the end of next year.

From now until the end of 2012, the company would invest $40 million in developing production and setting up a research and development centre in Viet Nam to design motorbikes to serve Asian markets, head of the company's foreign relations department Tran Thu Mai told Doanh Nhan Sai Gon (Saigon Entrepreneur Monthly).

This came as a surprise, given that the company's first plant only became operational two years ago.

Piaggio's strategy has been actions as well as words. At the start of this month, the company introduced new products with the slogan "Art of the Motorbike".

The competition has also been made tougher by Yamaha Viet Nam, who affirmed that the company would invest more than $26 million in developing their production in Viet Nam.

The company will expand its plant in Soc Son District to increase their capacity to 1.5 million units per year.

Also this week, a company from Italy, HP Motorcycle, officially launched its products in Viet Nam, with three scooters designed for the Vietnamese market.

This competition among companies is easy to understand because Viet Nam is an attractive market.

A report from the European Chamber of Commerce in Viet Nam said that despite difficult economic conditions, about 2.75 millions motorbikes were sold in 2010, an increase of 20 per cent over the previous year.

The chamber predicted that the figure would increase to 3 million per year from now to 2012. If that predication is true, Viet Nam will become the fourth biggest motorbike market in the world.

However, the Ministry of Industry and Trade said although it was still increasing, the domestic motorbike market's growth rate had declined.

Traders shared the same view, saying that in the next three years, the market would hit a peak, then begin to fall.