Motorcycle manufacturers in Vietnam may be seeing the beginning of the end of an era of rapid growth for the industry.
Vietnam Association of Motorcycle Manufacturers (VAMM) reported gloomy figure for the last months of 2019, a time when the industry typically expected a boom in sales revenue. Instead, VAMM members, which conspire Honda, Yamaha, Suzuki, Piaggio and SYM, sold just over 227,000 units during October and 230,000 units in November, a drop of 6.5% and 2.2% compared to the same periods in 2018.
Business has been poor during the first three quarters of 2019 as VAMM members struggled to boost sales, according to the association. A report by VAMM said sales by its members have dropped by 6.13% during first quarter, 4.39% second quarter and 3.8% third quarter compared to the previous year.
An estimated figure put total sales for 2019 by VAMM members at around 3.2 million units compared to nearly 3.4 million units sold in 2018. Of which, Honda, the country's largest motorcycle manufacturer, alone sold 2.6 million units followed by another Japanese brand Yamaha, which sold over 400,000 units.
Industry experts have long forecast the decline of the motorcycle industry. As Vietnamese families' income increases, more and more consumers have been switching to buying cars. In addition, a rise in demand for electric bikes and the nation's direction to reduce the number of motorcycles, especially in large cities, have all contributed to a sharp fall in demand for motorcycles among the population.
Rise of e-motorcycle
2019 saw a rise in popularity of electric motorcycles with major brands including Vietnamese Vinfast consolidated their hold of the domestic market with aggressive sales promotion programmes including heavy discounts to offering free charging for their vehicles.
Vinfast, a subsidiary of VinGroup, have sold thousands of Klara e-motorcycles since its debut in late 2018. The electric vehicles have proven to be wildly popular among city dwellers, especially young students for their lightweight and modern-looking design.
As of now, owners of e-motorcycles are not required to obtain a driver license, which counts as another advantage for e-motorcycle makers over their traditional motorcycle counterparts.
Foreign e-motorcycle makers also wasted no time to enter the fray with South Korean brand Mbigo rolled out several models with prices ranging from US$ 1,700-2,600.
Chinese brand YADEA has recently joined the market in October 2019 with their latest offering YADEA G5 priced at US$ 1,700 and a factory in northern province Bac Giang.
Sales of combustion engine motorcycles will likely continue to fall to just under 2.5 million units by 2024, according to industry experts as competition from e-motorcycles is set to intensify in the years to come.