Japanese experts from JICA (Japan International Cooperation Agency) believe that with the high localization ratio of over 90 percent and a large market, ranking the fifth in the world, Vietnam has advantages to become the leading motorbike production base in Asia, which not only can satisfy the domestic demand, but can export in big quantities as well.
Italian Piaggio Group on March 1, 2012 inaugurated an engine manufacturing factory which would provide engines to the production of Piaggio brand scooters in Vietnam.
At the inauguration ceremony, Roberto Colaninno, President and Managing Director of the group, announced the business plan of the Italian group in Asia Pacific, under which, Vietnam would become its production base in Asia. In order to implement the plan, Piaggio would pour tens of millions of dollars more to the production base, and consider setting up a research and development center.
When the engine production plan becomes operational, slated for April 2012, the new investments are completed, and the research and development center takes shape, the total production capacity of Piaggio would reach 300,000 products per annum and the locally made content ratio would reach 90 percent.
By that time, Vietnam would be both the research and development center and the big production base of Piaggio in Asia.
Present in Vietnam since 2009, to date, Piaggio churns out 100,000 products per annum, while the localization ratio has reached 70 percent.
Despite the warnings about the oversupply in Vietnam, Costantino Sambuy, General Director of Piaggio Vietnam still keeps optimistic about its business performance in the country. He believes that the market has not become saturated yet, while the demand for high grade scooters remains very high.
Currently, 30 percent of the total 100,000 products churned out every year are exported to ASEAN countries. Meanwhile, Piaggio plans to export to other markets as well, including India and Taiwan.
Other motorbike manufacturers, after a long period of exploiting the domestic market, have also been trying to export products to Asia.
Honda Vietnam is considered the biggest exporter. In 2011, the manufacturer sold 2.1 million products, including the 300,000 products exported to the Philippines, Laos, Cambodia and Afghanistan.
By the end of 2012, the new factory of Honda Vietnam, located in Ha Nam province, would become operational, raising the total capacity to 2.5 million products per annum.
Meanwhile, Yamaha Vietnam expects to increase its capacity to 1.5 million products.
It is estimated that the total capacity would reach 5 million products per annum by 2013. Meanwhile, the domestic market would need only 3 million products a year.
The high localization ratio of products, the high quality and the low production costs in Vietnam all have made Japanese experts believe that Vietnam has big advantages in exporting motorbikes. Vietnam may export up to 500,000 products a year in the near future, while the figure would be even higher if it can reach out to Latin America and Africa, where the demand is very high.
According to the Ministry of Industry and Trade, the total motorbike output in the world is 43 million products a year, 42 percent of which comes from China, 15 percent from India and 22 percent from South East Asia.
Asia is the biggest market which consumes 80 percent of the total output. China consumes 10 million products a year, India 5 million, Indonesia 5 million, Thailand 2 million, Vietnam 3 million, while Japan and Taiwan 10 million.
The world motorbike market has been growing steadily by 5-6 percent per annum.