Peru August. Motorcycles market is recovering despite economic environment is worsening

Peruvian Motorcycles

Peruvian Motorcycles Market in the Q3 2019 is recovering after a shy start of the year and despite the political, social and economic environment are worsening. Year to date August sales were 216.067 (-3.9%). Honda is market leader despite losing 20%, followed by the local brand Wanxim and the Indian Bajaj Auto

 

Economic Environment

President Martín Vizcarra unexpectedly dissolved Congress and called for snap parliamentary elections, dramatically escalating the level of political uncertainty. After a short-lived challenge to his leadership faded, the president hastily replaced his cabinet on 3 October, although the new appointments should not affect the direction of policymaking. The volatile political environment will likely continue to hamper confidence and delay reforms until a working relationship is restored between the executive and legislative branches. Meanwhile, although economic activity picked up in July, following a subdued H1, cooling credit growth and souring consumer and business confidence in July-August spell trouble for private sector activity.

The economy is set to slow this year, as investment activity is constrained by political uncertainty and amid a challenging external sector. Next year, the economy should regain some lost pace, thanks to faster growth in infrastructure spending and a pick-up in exports. That said, prolonged global trade tensions and political uncertainty darken the outlook. 

 

Market Trend

According to data released by the Minister of Transportation & Infrastructures, the Peruvian motorcycles industry in the 2019 is reflecting the not positive economic environment, losing terrain month after month.

Indeed, in the first quarter sales declined at 69.916 (-3.1%) before negative trend improved in the following quarter, ending the first half of the year with 144.598 sales (-6.6%). The Q3 looks better as sales lost only 1.4% in July before to recover 14% in August sales declined respectively with year to date August figures at 216.067 (-3.8%)

The two-wheeler mix on total improved at 59% (up 1 point from full year 2018) compared to the tricycles (which are mainly used for commercial purposes).

This performance follows the positive end of the 2018, when the market was reported at 284.308 units, up 2.5%, with the third annual growth in a row, despite of the introduction, in May 2018, of the Impuesto Selectivo al Consumo (ISC) a new tax for all new vehicles sold for private use, with a 10% due for petrol vehicles and a 20% for diesel.

Actually the industry is concentrated in the Top 10 brands, despite there are over 200 brands selling motorcycles in the country.

Honda is on top with 36.262 sales year to date, down 20.2% and with 18.2% of market share.

In second place Wanxim, a local brand based on CKD production for models imported from China, with 29.169 sales (+1.8%) having outpaced the Indian Bajaj Auto , actually third with 26.344 sales (-20.2%), the leadership in the trimotors segment.

In fourth place the Chinese Zongshen with 19.286 units (-5.7%) ahead of the local brand Ronco with 11.891 (+10.0%) and the Mexican Italika with 7.914 (-36.9%), struggling after years of success.

In the country near the half of two-wheeler sold are street motorbike in the range of 125-150 cc.

 

Peruvian motorcycles industry heritage

The motorcycles industry is a relevant sector within the Peruvian industrial production with a wide group of manufacturers active with local plant, arrived here from Japan, China, India. There is also a group of local manufacturers while all the top European brands plus Harley Davidson are represented by local distributors.

The market is one f the most relevant in South America with an annual volume stable above the 250k. This market ranks as the fifth largest in Latin America after Brazil, Mexico, Argentina and Colombia, while at Global level in the 2018 the market was 19th, just ahead of the largest European country, France.

The 2018 sales level was the highest in this decade.

 

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