While the demand for motorbikes has been increasing, the number of domestic motorbike manufacturers has been decreasing. In the “golden age”, domestic brands accounted for 80 percent of the market share, while the figure has plummeted to two percent.
Motorbikes are the major means of transport of Vietnamese people, which explains why the demand for motorbikes has been increasing steadily. Dai Doan Ket has quoted its sources as saying “that the motorbike consumption has soared from 2.8 million to 3.2 million a year in the last few years.”
In 2010 alone, 3,147 new motorbikes were put into circulation, while it is expected that the figure would be much higher in 2011.
In principle, high demand means big opportunity for domestic motorbike manufacturers to develop. However, contrary to all predictions, the number of domestic manufacturers has been decreasing dramatically.
The domestic market once witnessed the presence of 56 motorbike manufacturing enterprises, which provided 85 percent of the total number of motorbikes consumed in the “golden age”. However, the number of manufacturers has dropped to 30, which means a 50 percent reduction, while the market share held by domestic manufacturers has dropped to two percent.
Dau tu has cited the report by the Ministry of Industry as saying that 1.629 million motorbikes were manufactured in 2000, of which, 1.268 million products were made by domestic enterprises. The highest peak in production came in 2001, while domestic manufacturers churned out 1.869 million motorbikes out of the 2.169 million products in the market.
However, the great achievements could not be retained. In 2003, the output made by domestic manufacturers, only accounted for 61 percent of the total output, while the figure has been decreasing continuously in the next years. In 2010, the number dropped to 47,000 products out of the 3.141 million motorbikes registered in the year.
At present, most of the motorbikes now in circulation, come from foreign invested enterprises’ (FIEs) factories. A big change has occurred in the motorbike market: FIEs have become dominated on the market, while domestic manufacturers have become inferior. While only 47,000 motorbikes with domestic brands were consumed on the domestic market in 2010, FIEs sold 2.5 million products.
The rapid decline of domestic manufacturers could be unimaginable to many people, who once witnessed the boom of the industry 10 years ago. At that time, the presence of domestic products with low prices forced famous manufacturers in the world, including Honda, Yamaha, Suzuki and SYM, to scale down.
The slogan “Vietnamese buy Vietnamese goods” proves to be unfamiliar in the motorbikes market. The patriotism alone cannot persuade Vietnamese people to use domestic motorbikes. They refuse to use the products manufactured by domestic enterprises because the products are much worse than the products of FIEs.
While domestic enterprises have to shut down their factories, and their names have disappeared on the market, FIEs have been expanding their production in Vietnam after they got big achievements in the first phase of operation. Honda Vietnam, for example, has kicked off the construction of its third factory in Vietnam, which allows to raise the total capacity to 2.5 million products by 2012.
Of the 3.14 million motorbikes launched into the market in the last year, 1.7 million products, or 54 percent, came from Honda Vietnam.
In fact, the withdrawal of domestic manufacturers from the lucrative market is foreseeable. The dissolution of domestic enterprises was anticipated six years ago.
Undiversified in designs, having no famous brands, having low quality and being uncompetitive in prices are the main reasons which have been cited to explain the lack of success of domestic manufacturers.
Motorbike dealers say consumers nowadays tend to choose the products with well known brands, because they have high quality, while the prices are reasonable. Honda brand, for example, includes the popular models priced at 13-14 million dong only. Meanwhile, SYM is offering the models priced at VND11 million (USD533.6).