Vietnam. The 2020 fast start (+11%) will be broken by economic growth decline

Vietnam Motorcycles Market has started the 2020 with a double-digit growth with Year to Date February sales up 11% at 476.000 units. However, in projection the national economy will be indirectly hit by the global recession and despite the Covid19 seems under control, the new vehicles demand will decline in the next months, with full year sales foreseen at 2.6million, down 6%.

 

2020 Motorcycles Market Outlook

Following the moderate decline reported in the previous year, the Vietnamese motorcycles industry started the 2020 with a positive tone, ending the February year to date sales at 476.978, up 11.0%, with February up 23%.

Unfortunately this trend will deteriorate under the effects of Covid-19.

Indeed, the country has been able to defend itself from the virus. As of March 23, Vietnam’s Ministry of Health confirmed a total of 116 cases of COVID-19. The latest cases were all linked to international flights. 19 cases were announced on March 22 itself – the biggest single day total. Vietnam has suspended the entry of all foreigners from March 22 to limit the spread of COVID-19. The measure will not apply to diplomats and officials as per Prime Minister Nguyen Xuan Phuc. The Prime Minister also ordered the suspension of all international flights, though it’s unclear exactly when this will take effect.

On the base of actual figures, we can assume the direct effect of the virus in the country will be contained. However, the economy will be indirectly hit by the recession that is now burning global consumptions. The effect on the motorcycles industry will be contained, but enough to revert the current trend in negative.

In our most likely scenario the full year 2020 sales will be 2.65 million units, down 6.2%

 

Honda at new record sales in a 2019 market down 3.7%

Vietnamese two-wheeler industry is the fourth largest in the World, dominated by the five main local producers, Honda, Yamaha, Suzuki, SYM and Piaggio, which hold over 97% of the total market (our figures include both local produced and imported vehicles).

Following the stable growth reported in the last four years, the market started the 2019 in low tone and is keeping the negative shape.

Indeed, according to data reported by the MInister of Transportations, the start of the year was negative, with Q1 757.140 sales, down 6.2%. In the Q2 the trend improved marginally and the first half ended with 1.491.332 sales, down 5.3%. The mood unchanged in the second half and the full year ended with a moderate lost.

Indeed, total two-wheeler sales in the 2019 have been 3.271.000 units, down 3.7% from the previous year.

Despite a weak first half, the market leader Honda has been able to slam a new all time sales record with 2.57 million sales (+0.2%) improving the gap over all others.

Meantime, the top challenger Yamaha, has lost 19.7% despite launched two new models aiming to recover.

In third place there is SYM, with sales up 5.2% followed by Piaggio (down 0.2%) and Suzuki (-1.1%). 

Among imported brands, Benelli shines, while the new brand, Vinfast, an e-vehicles local maker, launched the first scooter, the Klara, with huge interest and early success, already selling thousand units.

Vietnam Motorcycles
Vinfast Klara

Market Heritage

In no other economic and industrial sector Vietnam has achieved the relevance actually owned in the 2-Wheeler global industry.

Indeed, while the country is fast growing in several industries and gaining steps within the ASEAN region, in the motorcycles sector the market represents the 4th bigger market in the World, with over 3 million vehicles sold each year and manufacturer cluster involving Top Manufacturers, like the Japanese Honda, Suzuki and Yamaha, the Taiwanese SYM and the Italian Piaggio. They produce over 3 million units per year, mainly for the domestic market.

In the 2018 the market hit the best sales level in the last 8 years, while the all time record, hit in the 2011 at 4.4 million units stands untouchable.

In the 2018 the market scored the 4th increase a row, with 3.38 million sales (including both local producers and import) and was behind just to India, China and Indonesia, with a gap of near 1.4 million toward the first follower, The Philippines.

 

Pollution

In Vietnam, motorbikes are the main means of transportation of big cities. Motorcycles are currently responsible for about 80% of travel needs in the city. Previously, two big cities, Hanoi and Ho Chi Minh City, proposed a scheme to ban motorbikes from the inner city to reduce traffic congestion.

In August 2017, Hanoi City issued Decision No. 5953 / QD-UBND approving the scheme “Strengthening the management of road transport means to reduce traffic congestion and environmental pollution in Thanh Hoa. Hanoi city, the period of 2017 – 2020 vision 2030 “. According to the approved project, Hanoi may limit and proceed to stop operating motorcycles in the districts in 2030.

Following Hanoi, in August 2018, Ho Chi Minh City also issued the project “Strengthening public transport in combination with controlling motor vehicles in Ho Chi Minh City”. Under this project, Ho Chi Minh City can restrict motorbikes in some central districts and proceed to ban motorbikes by 2030.

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