Thailand. May Motorcycles sales down 39% and the outlook is negative

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Thailand Motorcycles Market hit by the reduced internal consumption as Thailand economy struggles due to the international crisis. The country is a global hub for automotive and the lost of demand for export hit the economy and is reflected in lower demand for motorcycles and cars. The year is projected at 1.4 million, down 19%.

2020 Motorcycles Market trend & 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 people response to the new coronavirus (Covid-19) was almost successful and the contageus was contained and internal demand for motorcycles fell down within acceptable level.

Sales of Motorcycles declined in March by 12.5% ending the first quarter with a volume of 431.004, down 6.8%. In April consumer demand was cold as restrictions limited individual movements and sales declined 34.5%, with year to date April sales at 508.209 units, down 12.8%.

In May sales have been 97.439 (-39.5%) and the effects on the economy related to the covid19 are clear. Thailand is an hub for the automotive industry with million cars and motorcycles produced any year and the block of global demand for these industry is creating troubles to the economy, reflected in lower level of consumptions.

In addition, shortage for parts and components have reduced the production capacity while the tourism sector, the second economic pilar on the country is penalized by international travels block.

The Thai car industry is struggling more than the two-wheeler.

Taking all these factors under consideration, we have developed a scenario for the next months and the full year 2020 sales will be 1.4 million units, down 19.8%.

harley-davidson 750 street

In 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 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.  Honda rushed in December to close the year flat and protecting the outstanding 77.4% market share, 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.