Thailand. In the 2019 Harley-Davidson+171% in a two-wheeler market down 3%

Thailand Motorcycles Market in the 2019 lost 3% with 1.72 million units. Under the dominion of Honda, Piaggio shines while Harley-Davidson boomed +171% , while other premium brands, like KTM, BMW and Ducati have heavily lost, even penalized by the introduction of a new tax structure.

 

Economic Environment

Thai economy grew at a marginally stronger pace in Q3, although remained weak nonetheless. A pick-up in public consumption and fixed investment growth led the slight acceleration, while private consumption growth softened and exports contracted for the third quarter in a row as the downturn in the manufacturing sector intensified. Turning to Q4, growth likely remained soft. Private consumption growth rebounded in October, although manufacturing output fell more sharply in the same month, while the manufacturing PMI fell into contractionary territory in November.

Economic growth should gain momentum next year owing to fiscal stimulus, low-interest rates and a recovering external sector. However, the balance of risks is tilted to the downside as external headwinds linger in the form of trade tensions and a strong currency, weighing on tourism and exports.

 

Market Trend 2019

According to data released by the Thai Minister of Transportation, the domestic motorcycles market in Thailand is moderately declined in the 2019 with final figures at 1.729.755 (-3.3%).

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 rushed in December to close the year flat on the previous with the outstanding share of 77.4%, while just few players are gaining, like Piaggio (+32.2%) and Harley Davidson (+171%).

The most of the competitors are performing really below expectations, including BMW reporting a -12.6%, Stallions -44.7%, Ducati -38.2%, KTM -71%.

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%.

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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