Vietnam sportbike market in desperate need of a push

Over a year ago in March 1^st, 2014, Circular 38 issued by the Ministry of Transport was put into effect, allowing all people aged 18 or older to be able to take driving exams for A2 license (license for sportbike from 175cc upwards).

The circular was gladly received by both companies (as the market gets broader) and customers (as license for sportbike is easier to get). However, things have not changed much since then.

With a population of over 90 million people whose main mean of transportation is still motorcycle, the number of sportbike enthusiasts is quite high and can only get higher, especially in big cities such as Hanoi, Da Nang or HCM city… Sportbike clubs are newly founded one after one. Yet the market of sportbike showed slow development even after being “unleashed”. Many stores specialized in sportbike appeared in Hanoi after the Circular 38 was put in effect, but many of them were forced to be closed later because of low demand.

The case of Nguyen Sinh Thanh, Director of an Import-Export company in Hai Ba Trung district is one clear example. He shared that prior to March 1^st, 2014, his company (located in 318 Hue street, Hanoi) has had 10 years of importing and distributing motorcycles, especially scooters such as Honda Spacy or SH… After the MOT’s Circular 38, his company gradually changed their aim from scooters to sportbikes.

However, the market at that time did not change as his prediction. His sportbike showroom sure had a lot of visitors but nearly zero buyers. After months of slow business and unregainable capital, he had to sold his shop to another businessman as his company could not afford to pay the bank interest, venue rental, staff salaries and other dozens of bills… Now Thanh has to find a less risky business to rebuild his career.

The number of people who are fond of sportbike and wish to own one has increased drastically in recent years, yet the majority of them were unable to buy one due to sportbike’s price in Vietnam. Mr. Le Minh, manager of a sportbike business on Le Van Luong street, Hanoi shared “the market for sportbike is now more open but sportbike is still a luxurious dream for the majority as their price is too high. Due to taxes and duties, sportbike’s price in Vietnam is always 2 to 2,5 times higher than the factory price even when we do not take registration tax and number plate registration fee into account.

Under the provisions of Circular 164/2013/TT-BTC issued on November 15^th, 2013, 100% new 250cc sportbike is under a 75% import tax and another 10% value added tax (under the provisions of Circular 131/2008/TT-BTC) as well as 20% special consumption tax (as defined in Article 7 of the Law on Special Consumption Tax no 27/2008/QH12).

Thus, popular sportbike such as Kawasaki Z1000 or Honda CB whose prices in the US are around 11.000 – 12.000 USD are put at around 28.000 USD in Vietnam. Similarly, Yamaha FZ-S V2.0 has a price of 3.200 USD in Vietnam but is only sold at 1.300 USD in other countries in the region.

Having worked in the motorcycle segment for a long time, Mr. Nguyen Tan Anh, head of Benelli Vietnam’s business division (who are assembling and distributing Benelli and Rebel in Vietnam) also agrees that the price of sportbike in Vietnam is too high and it has been an obstacle that obstructs the development of the market, even when demands are quite high. Theoretically, when legislative barriers are removed and demands remain high, we should have an increasing market, yet now the market is in desperate need of a push for a lower price level.

Also according to Mr. Tan Anh, Rebel’s sales in 2015 is only at 40 units while Benelli’s sales were also a dissappointing one, reaching only 380 Benelli 302 and 32 Benelli 600i. The poor sales reflect the poorly competitive motorcycle market in Vietnam nowadays. As Tan Anh shared, previously sportbike enthusiasts could still buy one if they truely want and license was not a matter to them. What obstructs the market the most for now is sportbike’s price and price only.

Despite the huge volume of the motorcycle market in Vietnam, the amount of customers who can afford one for their own is super, super low. Another factor is that Vietnamese customers tend to prefer fashionable and trending models, so the life cycle of a new sportbike in Vietnam is only around 6 months. After 6 months? We will have an ‘outdated’ model.

This reflect the motorcycle market as a whole. New models tend to sell very well for the first 3 – 6 months then gradually (or even abrubtly) slow down. Even 20, 30 million-VND models are like that, how can we expect hundred-million sportbike to be different? Not to mention that expensive price means customers will be stricter and will prefer the best or newest models. The result is that sportbike models that are not prefered from the start is very likely to stay like that for a long, long time and the one who suffer are none other than motorcycle businesses. Many have had to declare bankruptcy while other had to move to another field for another opportunity… Thus, the sportbike market is still at a beginning stage and the A2 ‘release’ only shorten the distance between customers and sportbike for a bit. The rest of the distance lies in the possible changes in the future.

Major brands continue to set foot on the market

Despite the aforementioned difficulties, major sportbike brands still consider the market to be a very potential ones, such as Benelli, KTM, Ducati, Harley-Davidson, Kawasaki and BMW Motorrad… The latest brand to set foot on the Vietnam market is the South Korea sportbike brand Hyosung who debuted at the Saigon Autotech 2015. The brand’s representative confirms that they will open an office in Vietnam in the 3^rd quarter of 2015 and may consider building a sportbike assembling plant in Dong Nai in the future…

Kawasaki Ninja 300 in Thailand sells at 5.600 USD which is increased to 13.000 – 13.500 USD in Vietnam ‘thanks’ to 47% import duty, 20% special consumption tax, 10% value added tax and shipping and other costs.

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