Thailand. The global recession will hit the market in 2020 with a projected lost of 20%

Thailand Motorcycles Market started the 2020 with a -3% after two months, keeping the moderate decline in place. The environment will deteriorate during the year as the export activities, crucial in the country, will be hit by global recession and domestic demand will fall down. The motorcycles market will be hit and is projected to lose 20%


2020 Motorcycles Market Outlook

Following the moderate decline reported in the previous two years, the Thai motorcycles industry started the 2020 with a low tone, with Year to Date February sales at 284.148, down 3.0%.

While being on the right track, the government’s latest response to the new coronavirus (Covid-19) by closing schools and entertainment venues, as well as putting off the Songkran break, is likely to prove too little, too late, once again. As other countries have shown, the sooner firm and hard measures are put in place, the better and likelier efforts to contain and remedy Covid-19 will be successful. An early global lesson from the fast-spreading virus is to be pre-emptive and pro-active, “front-loading” the pain of social adjustments and economic damages rather than playing catch-up and ultimately paying a higher price.

Back when Covid-19 began its global assault, Thailand was the first country outside China to report a case. It was on Jan 13, when a woman arrived in Bangkok from Wuhan. At the moment action taken have effective with still a low case of infected. However, the effects on the economy will be hard, as export will drop and domestic consumption will decline, hitting the motorcycles industry severely.

In our most likely scenario the full year 2020 sales will be 1.4 million units, down 20.3%.


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

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.


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