Motorcycle industry earns robust growth

The local motorbike market this year has seen a boom for manufacturers and retailers despite the current economic uncertainty.

In the first eight months of the year, Honda Vietnam sold around 1.32 million units, up 20% year-on-year, according to general director Koji Onishi of the leading motorcycle maker in the domestic market.

However, it wasn’t only Honda but other manufacturers such as Yamaha Vietnam and SYM have also had strong growth, maybe even up to 40%, Onishi reckoned.

Costantino Sambuy, general director of Piaggio Vietnam, said his firm’s business result in January-September was high compared to previous years but he refused to disclose any detailed information.

Owning just a modest share in the local market, Taiwan-based Kymco’s business growth in January-September has soared 13% year-on-year.

Suzuki Vietnam claimed in the first eight months of 2011 the company had sold 40,000 units of various kinds, doubling the figure of the same period last year. Some 70% of products sold in the period were scooters, according to Masami Haga, general director of Suzuki.

Most manufacturers fail to explain their good performance under the current climate. Nonetheless, some reckoned the reason was that motorcycles are still considered indispensable and a popular means of transport for most people.

Such positive retail results have encouraged a number of manufacturers to expand their existing plants, or in the case of Honda Vietnam or Piaggio Vietnam, build more factories.

Lower profit margins for retailers

While motorcycle makers enjoy strong growth, most retailers lamented lower profit margins due to tougher competition.

Nguyen Thi Ngoc Diep of Phat Tien Enterprise, which owns six stores distributing products of Honda Vietnam in HCMC and Long An Province, revealed that her company had to accept a low profit to maintain sales.

In January-September, Phat Tien Enterprise experienced a 5% growth year on year. The number of motorcycles sold is on the rise but firms’ profits have considerably shrunk.

Like other industries, motorbike retailers have to compete with each other in terms of retail prices and services, Diep said, adding some retailers sometimes had to sell products at a discount and launch promotion programs to lure customers.

Phat Tien offers a price lower than the one set by manufacturers even with the best-seller PCX, Air Blade, Lead and sometimes it will incur a loss of VND5-6 million for every PCX sold, Diep noted.

That is the reason why Phat Tien’s profit margin this year narrowed compared to the same period last year, even though it has recorded high sales.

The same situation also occurs with other distributors, who are seeing falling profits in contrast to the rise in consumption in the first nine months of the year.

Le Xuan Thai, owner of the retail store Visacoop on Cong Hoa Street in HCMC’s Tan Binh Street, told the Daily that sales at his store had increased 5%-7% this year, while profits had dramatically reduced.

A number of motorbike traders, whose shops are located on Ly Tu Trong and Cach Mang Thang Tam streets in District 1 or An Duong Vuong Street in District 5 confirmed the increase in demand for the bikes as well as the market’s stability, but all had to apply low prices to maintain their business activity.