Taiwan July. Yamaha falls down, before launching the EC-5, in a recovering market

Yamaha EC-05

Taiwan Motorcycles Market in July 2019 was reported up 2% partially reducing the year to date lost. While Kymco, PGO and Yamaha are losing, SYM shines with sales up 16%. Sustained by a robust government incentive scheme, electric scooter segment is booming and Gogoro already sold 50.000 units.

 

Economic Environment

Taiwanese economic growth growth hit a one-year high in the second quarter, supported by accelerating household spending and export growth. In addition, fixed investment remained strong despite concerns over the U.S.-China trade war, partly due to some Taiwanese companies returning activities from the mainland. That said, the positive reading is expected to be a one-off. Early data for the third quarter is mixed, while subdued electronics demand amid the escalating U.S.-China trade war continues to eat into growth.

Growth will likely slow this year due to trade uncertainty and lower tech demand. The possible imposition of U.S. tariffs on Chinese tech imports is a key downside risk as Taiwan is heavily involved in the Chinese electronics supply chain. Nevertheless, public infrastructure investment, coupled with low unemployment and inflation, should support domestic dynamics. 

 

2019 Market Trend 

Following the already negative score reported in the 2018, the domestic Taiwanese two-wheeler market fall continue in the 2019, with the industry hit by the sharp reduction of internal consumption and by the reduction of global international affairs created by the commercial war in place between US and China.

According to data released by the Taiwanese Minister of Transportation & Logistic, the market dropped significantly in the first quarter losing 18.1% while in the second recovered moderately, ending the first half of the 2019 with 425.382 sales, down 8.0%.

In July sales have been 73.135 (+2.9%) partially reducing the annual lost with Year to Date figures at 498.517 (-6.5%).

Of course, this trend has a direct impact on the two market leaders, Kymco and Sym, financial performance. However, while Kymco is losing year to date 5%, SYM gained an impressive 16%.

The other top players are losing heavily, with Yamaha down 26.1% and PGO down 14.3%.. 

While traditional combustion engines segment is falling, electric vehicles (100% scooter) supported by a robust government incentive scheme are booming with the local brand, Gogoro, jumped in fourth place with over 50.000 sales (+30%).

The first model fruit of the partnership between Gogoro and Yamaha was recently presented and is the Yamaha EC-5, was available for booking since August 1st, with deliveries in September. The model was developed by Yamaha, with the electric motor by Gogoro and will be produced in the Taiwanese Gogoro plant. 

 

Market Heritage

Taiwan is the home-base for well-known global motorcycles companies, like Kymco and Sym and is one of the major motorcycles and scooter producer in the World. However, the domestic market is even one of the Top 10 largest worldwide and the motorcycles are a key device for individual mobility.

The development of the market started already in the ’80 of last century, but the key factor for the industry development was the joining of WTO agreement in the 2002, which pushed the industry to improve standards to match requirements of European and American markets and to allow at the local producer to defend their domestic positions against the arriving importers.

Indeed, an almost favorable legislation has limited the distribution of large size motorcycles and so far the market is dominated by local producers, with Yamaha and Suzuki producing in the country.

Interesting to note as the global leader, Honda, is not producing locally limiting their activity to the distribution of large motorcycles. Indeed, Honda had begun local production of small-sized motorcycles in 1961, mainly 125 cc-class models, in the form of a technology licensing agreement with a local company (under a technical collaboration agreement) and continued until 2003, when has closed operations.

 

Recent Market Trend

The domestic Taiwanese motorcycles industry is one of the healthiest in the World. The first time the industry hit the half a million units milestone in a calendar year was in the 2014, but keeping to grow the domestic market reached the all time record in the 2017 with sales not far from the 1 million units milestone.

According to data released by the Taiwanese Manufacturers Association, in the 2018 the market pushed the brakes and sales declined at 756.170 units, which is the second highest level ever. 

Two Taiwanese brands, Kymco and SYM are among the top global producers of scooter exporting all over and – of course – they play the rule of leaders in the home-base country. However, while SYM is the biggest in terms of export, Kymco is the local leader, with 2018 sales at 302.306 units.

The new brand Gogoro, producing advanced e-scooter, is booming, with a 2018 record of 71.800 sales (+138%).

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