Thailand Motorcycles Market in the 2019 will decline moderately. Indeed in the first eleven months of the year sales have been 1.605.560, down 2.8%, with November figures at 135.532 (-6.9%). In the next months the market could be dramatically changed for the premium brands, with Harley-Davidson, Ducati and KTM heavily penalized by the introduction of a new tax structure.
Thai economy expanded at the weakest pace in nearly five years in the second quarter as a strong baht weighed on tourism and exports, while an uncertain global economic outlook likely dampened domestic investment plans. Moreover, a prolonged severe drought has been negatively affecting agricultural output. Despite decelerating, private consumption growth was relatively strong as households benefited from low-interest rates and subdued inflation.
That said, if the drought persists it could reduce farmers’ income. Available data for Q3 suggests that growth is recovering, with exports rebounding in July and imports posting the first expansion in six months
Economic growth is seen losing pace this year owing to significantly softer domestic demand, a more challenging external environment and a stronger currency dragging on exports and tourism. While higher government expenditure should cushion the slowdown somewhat, burdensome household debt clouds the outlook.
Market Trend 2019
According to data released by the Thai Minister of Transportation, the domestic motorcycles market in Thailand is moderately declining in the 2019. Indeed in the first eleven months of the year sales have been 1.605.560, down 2.8%, with November figures at 135.532 (-6.9%).
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 declining in double-digit (-10.6%) while just few players are gaining, like Piaggio (+19.2%) and Harley Davidson (+147%).
The most of the competitors are performing really below expectations, including BMW reporting a -19.1%, Stallions -50.7%, Ducati -41.2%, KTM -77.7%.
In the next months the market could be dramatically changed for the premium brands, with Harley-Davidson, Ducati and KTM heavily penalized by the introduction of a new tax structure. Indeed, Thailand’s Excise Department is working at the plan to adjust tax for new “Big Bike” motorcycles, based on CO2 emissions. The new rate could be increased to almost 100,000 baht for a high-powered motorcycles.
The current tax rate calculation is based on engine sizes, which represent 2.5-9 percent of the purchase value. The new rate if imposed will be increased to 3-18 per cent. With the new rate, if a big bike motorcycles costs one million baht, an additional 90,000 baht tax could be applied. Depending on its CO2 emission.
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. Following a negative cycle between 2012 and 2015, when the market declined to just over 1.6 million units, a new positive pathway started in the 2016 pulling up the market which in the 2017 hit the all time record at 1.8 million.
During the 2018 sales were almost steady ending the year at 1.78 million units, down 1.2%.
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.