Honda rakes in $3 billion in motorbike-dominated Vietnam

By Bach Duong   August 10, 2016 | 06:00 am GMT+7
Honda rakes in $3 billion in motorbike-dominated Vietnam
Hanoi traffic during rush hour. Photo by VnExpress/Ngoc Thanh

The motorbike market, however, has reached a saturation point.

In 2015 Honda Vietnam earned VND68 trillion (US$3 billion) in revenues and VND9 trillion ($400 million) in net profit, a vast majority of which came from selling about two million motorbikes.

Honda has sold roughly 20 million motorbikes in Vietnam over the past 20 years, emerging as the dominant player with 71 percent of the market share. Motorbike sales have contributed 95 percent of Honda’s revenue in the Vietnamese market, Dau Tu (Investment) newspaper quoted a Honda executive as saying.

As the largest motorbike maker by output in the Southeast Asian country, Honda has set up three factories with a total annual capacity of 2.5 million units.

Motorbikes are the most popular means of transportation in Vietnam, which has a population of 90 million people and 45 million registered motorbikes, according to the Ministry of Transport.

On the other hand, Vietnam’s motorbike market has reached its saturation point as motorbike sales have declined by about 18 percent from the peak of 3.3 million units per year in 2011, according to the Vietnam Auto, Motorcycle and Bicycle Association (VAMM).

But still, with motorbike sales currently estimated at 2.7 million units per year, Vietnam remains among the largest motorbike markets by sales in the world, after China, India and Indonesia. Many multinational motorbike makers such as Honda, Yamaha, Suzuki and Piaggio have chosen Vietnam as their manufacturing base.

Although it would be impossible for Vietnam’s motorbike sales to experience any significant growth in the future, Honda has always introduced new models and launched new sales promotion campaigns in Vietnam to remain the market leader, said Minoru Kato, the company’s general director.

In 2005, Honda invested $65 million in an automobile factory in Vietnam with the capacity of 10,000 units per year.

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