Thailand June. Harley Davidson booming while market is declining

Thailand Motorcycles Market has lost 16.2% in June, the sixth declining month in a row, with first half 2019 declining 4.3%. Honda, market leader, was stable, while Harley Davidson is doubling volumes. Following the record established last year, BMW is struggling, while down better than Ducati and KTM.

 

Economic Environment

A more challenging external environment, owing to lingering trade tensions, likely continued to hamstring the economy in the second quarter. Exports, a key driver of the manufacturing sector, contracted at an accelerated pace in April–May compared to the first quarter. Moreover, manufacturing output also continued to falter in the same period. More positively, private consumption remained robust through May amid still-weak inflation.

The installment of the new cabinet should prove to be good news for government consumption, which should buttress the wider economy; however, growth is seen easing nonetheless amid weaker domestic demand, and a challenging external environment and stronger currency dragging on exports and tourism. High household debt further clouds the outlook. 

 

Market Trend – 2019

According to data released by the Thai Minister of Transportation, the start of 2019 was moderately negative with first quarter sales figures at 462.205 (-0.6%). In the second quarter the trend unchanged with April sales at 120.457 (-1.0%), May at 161.045 (-4.4%) and June at 150.441, down an harsh 16.2%, with first half 2019 figures at 894.148 units (-4.3%).

Looking at the single brand performance, huge difference are in place. Indeed, while after the first six months of the year, the market leader, Honda is stable, with 705.175 sales (-3.2%) while just few players are gaining, like Piaggio (+25.6%) and Harley Davidson (+207%).

The most of the competitors are performing really below expectations, including BMW reporting a -15%, Stallion -52.7%, Ducati -26.4%, KTM -69.7%.

 

Global Production Hub

Thailand is a major motorcycle manufacturing base ranking in 5th place as regard to the production capacity (2 million), after China (23 million units), India (20 million), Indonesia (8 million) and Vietnam (3 million).

Thailand started the 1st motorcycle manufacturing in 1967 under the CKD system. 

At the beginning decade of 1990, Thailand promoted the investment of four-stroke engine motorcycle instead of the two-stroke one to reduce emission problem and the production boosted reaching a capacity of 1.75 million annual units. The sales of motorcycles followed the development of the country representing the first device of personal mobility.

In the following years, while introducing Free Trade Agreements (FTA) which caused the cancellation of industrial protection measure, the industry started to export and to evolve in line with the global demand, learning new technologies and adopting state of the art rules for safety and emissions.

Nowadays, there are 7 motorcycle manufacturers in Thailand with total capacity of production at 3 million units per year. They are Honda, Yamaha, Suzuki, Kawasaki, BMW, Triumph and Ducati. Most of them are located in the Central and East regions because they are clusters of manufacturer as well as near to the seaport for export those CBUs.

 

Recent Market Trend

Thai two-wheeler domestic market boomed since mid 90′ and kept growing fast until the 2012 when sales hit the still actual All Time Record with 2.1 million units sold. In the following years market declined to just over 1.6 million units (2015) before to record at 1.8 million.

Indeed, according to data released by the local Thai Minister of Transportation, in the 2018 the demand was flat with final sales at 1.78 million units, down 1.2% from the previous year.

Thus, the market has lost one place in the Global ranking, overtaken by Pakistan, and is actually the 7th  ahead of Brazil and Taiwan.

The seven manufacturer having local production have a clear advantage in the domestic market, but they have to fight against an aggressive group of local brands.

Looking at the full year 2018 figures, the leader was the Japanese Honda with a huge market share of 78% (the second highest in the World, after the Brazilian case), having sold near 1.4 million units last year, down 1.6% from the previous..

In second place Yamaha, with 269.489 (+0.5%) ahead of GPX with 29.666 (-4.2%), Suzuki with 19.165 (-10.6%) and Piaggio with 17.758 (+21.6%).

The Premium brands segment is growing and several new manufacturers entered the market in recent years, but while BMW (+17.2%) shined, hitting in the 2018 their record, others are struggling, Ducati overall, down 16.1% last year, third lost in a row, selling less than one/third of 2015, despite the local plant.

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