Potential motorcycle ban may add to manufacturers’ woes

July 01, 2016 | 16:22

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The recently announced plan of the two major cities to “comprehensively develop transportation”, which includes a ban on motorbikes in some streets in the inner city area by 2025, may drive motorbike producers into the corner.

On June 29, director of the Hanoi Department of Transport Vu Van Vien said the department was building a project on increasing the management of personal vehicles in order to alleviate traffic jams. The project includes limiting the number of personal vehicles and eventually banning motorcycles from some streets in the inner city area.

Hanoi currently has 5.5 million personal vehicles, 500,000 of which are cars and the rest motorbikes. The city thus accounts for 11 per cent of the country’s total number of motorbikes, which stood at 45 million at the beginning of June, according to data from the Ministry of Industry and Trade.

In a related development, the Ho Chi Minh City Department of Transport said yesterday that it may also limit motorbikes from entering the city centre.

None of the big motorbike manufacturers in Vietnam, namely Honda, Yamaha, Suzuki, and Piaggio, are forthcoming with comments.

The number of cars sold in Vietnam has been steadily increasing over the past three years and shows no signs of stopping. Starting from July 1, the excise tax on imported cars of cylinder capacity under 2,000 cubic metres is going to decrease at varying rates. The decrease in the tax is going to make it easier for Vietnamese people to buy cars.

In 2015, the sales of motorbikes bounced back to 2.9 million from 2.7 million in 2014 and 2.8 million in 2013. The market is expected not to grow in the near future. Therefore, in order to maintain their market share and make a profit, motorbike manufacturers in Vietnam have been increasing exports to regional countries and developing new products integrating new technologies.

According to Honda Vietnam, which holds a 70 per cent share of the market for motorbikes in Vietnam, it exported 128,000 completely built units in 2015, up 40 per cent on-year. The export revenue was $293 million and the company planned to increase this number to $312 million in 2016. Another major manufacturer, Piaggio Vietnam, meanwhile, started exporting its products to other Southeast Asian countries in 2010 and to China and Europe in 2015.

Experts said that competition for a share of the saturated Vietnamese market of motorbikes is going to heat up in the next few years, with companies targeting the few remaining niche markets and raising the quality of after-sale services.