Vietnam’s Motorcycle Market Poised For Growth Despite Challenges

4-6-2023 (HANOI) Vietnam’s motorcycle market has emerged as one of the world’s fastest-growing markets in recent decades, defying setbacks brought about by the Covid-19 pandemic, according to the Vietnam Association of Motorcycle Manufacturers (VAMM).

With over 70 million registered motorcycles currently in the Southeast Asian country, the market is expected to expand even further in the coming years. In the first four months of 2023 alone, Vietnam produced over 1 million new motorcycles.

Honda, Yamaha, Suzuki, Piaggio, and SYM, the five major manufacturers, dominate over 90% of the market share in Vietnam. These manufacturers also export fully assembled models to international markets.

VAMM believes that Vietnam has the potential to become an attractive destination for motorcycle manufacturers in the Asia-Pacific region.

As supply chain disruptions and trade tensions between the US and China persist, manufacturers are shifting their investments to smaller Asian markets to mitigate risks. For instance, the Japanese government has set aside a $2.2 billion fund to support Japanese businesses relocating from China, while the US government encourages American companies to either return to the US or relocate to other countries.

Against this backdrop, Vietnam has emerged as a promising destination for motorcycle manufacturers. Honda Vietnam operates three factories with an annual production capacity of 2.5 million motorcycles, while Yamaha Motor Vietnam owns and operates two factories. Piaggio Vietnam also operates two factories, producing 250,000-400,000 motorcycles per year.

However, the Vietnamese market faces its own set of challenges.

In recent years, the motorcycle market in Vietnam has shown signs of saturation. While annual motorcycle production continues to rise, demand and purchasing power have struggled to keep up. This has prompted manufacturers to invest more in product diversification, especially in the premium segment, and explore opportunities to boost exports of fully assembled models and spare parts to international markets.

Yamaha Motor Vietnam, for example, has been exporting models to supplement the Indonesian market since 2019. Last year, the company became the first foreign factory to produce and export the NEO’S electric motorcycle to European markets.

In May of this year, Yamaha Motor Vietnam inaugurated its fourth assembly line, dedicated to engine assembly for exports. This move demonstrates the company’s confidence and commitment to Vietnam. The new line will initially produce engines for export to Thailand, with a localization rate of up to 95%. Over the next three years, Yamaha aims to expand its exports to other markets, including the Philippines, Indonesia, and Malaysia, with an estimated export volume of around 200,000 units.

Similarly, Honda Vietnam is actively promoting the export of fully assembled models and spare parts. In 2022, the company exported 207,000 motorcycles, generating over $462 million in revenue—a 25% increase compared to the previous year, as reported by VAMM. Honda Vietnam has set a target to export nearly a quarter of a million models in 2023, representing a 9% increase over 2022.

Industry experts suggest that to sustain growth in the Vietnamese market, companies must invest in the development of new product lines that align with customers’ evolving preferences. Key trends include prioritizing energy-efficient models, compact designs, and user-friendly operation.

According to MotorCycles Data, a specialized website focusing on motorcycles market data and forecasts, Vietnam’s electric bike segment has maintained a steady growth rate of 5.6% in the first quarter of 2023, outperforming the contracted internal combustion segment.