Bike brands hitting the fast lane

In a recent meeting on implementation of 2013 business plans of the Vietnam Engine and Agricultural Machinery Corporation (VEAM) the business set a target of achieving 10 per cent hike in supporting industry production revenue from supply to Japan-backed motorbike maker Honda Vietnam Company (HNV).

Since VEAM holds a 30 per cent stake in HVN, after HVN kicked-off operations, VEAM’s several member companies made great efforts to become HVN’s production satellites through spare part and components supply.

VEAM’s four members, Machinery Spare Parts JSC 1 (Futu1), Pho Yen Mechanical JSC (Fomeco), Song Cong Diesel Co (Discoco) and Vikyno Co, have become HVN satellite units.

In 2012, VEAM reaped VND842 billion ($40 million) from component and spare part supply to HVN. Of this, except Vikyno which earned only VND4.2 billion ($200,000) revenue posted by Futu1, Fomeco and Vikyno was in the range of VND250-VND300 billion ($12-$14 million) each.

Apart from production units, VEAM’s some other members providing transport services for HVN like Vetranco JSC and Matexim also revealed fairly good business outcomes in 2012.

Also in 2012, Futu1 inked a contract on technical devices supply worth VND128 billion ($6 million) to VAP, a joint venture in which Japan Honda and HVN hold a ruling stake.

Generally, motorbike parts manufacture generated VEAM revenue of VND1.2 trillion ($57 million) in 2012, accounting for 30 per cent of its total industrial production revenue.

However, it took several years before some of VEAM’s member units were acknowledged as HVN production satellites as the products needed to meet strict quality standards at reasonable costs, according to the executives at HVN satellites.

However, in return when scores of mechanical businesses faced stagnant production due to lack of orders and low consumption, HVN satellites held stable production with better year-on-year revenue figures.
Labourers’ average per capita incomes at HVN satellites are from VND5-9 million ($240-$430) per month, almost double to those at other mechanical units.

Thereby, concentrating resources into parts manufacture for HVN is a priority for VEAM and its members.

A VEAM executive unveiled this year VEAM would strive to witness 15 per cent hike in component and part supply to HVN against 2011 which was the year HVN eyed record production output exceeding two million motorbikes, in which HVN satellites target 10 per cent hike in supporting industry production value against 2011.