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As Domestic Demand Falls, Vietnam’s Motorbike Producers Look to New Markets

Even though Vietnam is the land of motorbikes, a struggling economy and market saturation have resulted in drop in domestic sales. As motorbike manufacturers expand their production facilities in Vietnam, their focus is shifting to international exports.

Vietnam was the fourth largest motorbike market by sales in the world last year after China, India and Indonesia with 3.1 million units sold. According to the Ministry of Transport, there are 37 million bikes registered in the country of 90 million.

However, last year saw a 6.6% drop in sales, the motorbike market’s first decline since 2000 based on statistics from the Vietnam Auto, Motorcycle and Bicycle Association. And 2013 sales are expected to drop even further to 2.5 million units in 2013.

Companies with large production facilities in Vietnam such as, Honda, SYM, Suzuki, Yamaha and Piaggio are expected to produce 5.5 million units by the end of the year. With weakening domestic demand, these companies must focus on exports, said Pham Cuong, chairman of the Vietnam Auto Motorcycle and Bicycle Association. “If the motorbike makers want to survive, they must seek to boost their exports.”

Vietnam motorbike exports have been increasing by 10 – 20% annually and this trend is likely to accelerate.

Many producers already export to other Asian countries and distribute to buyers in Africa. Data from the Vietnam General Department of Customs revealed that the export value of transport vehicles (mainly motorbikes) jumped 32.2% last year to $4.6 billion, 4% of the country’s total export revenue.

Honda, which has been aggressively expanding production facilities in Vietnam, already exports motorbikes to Japan, Laos, Malaysia, Cambodia, the Philippines, Pakistan and Italy.

"Exporting is good not only for Honda, but also for Vietnam… and we will focus on the production of our best-selling models in Vietnam for export, including our SH and LEAD models,” said Masayuki Igarahi, director general at Honda Vietnam.

Unfortunately, while domestic motorbike sales are flat, cars are becoming increasingly popular in Vietnam.

[WSJ

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