HCM City, Vietnam - Many motorbike assembling companies are having to temporarily close down or scale back production after five years of operation. In the January to July period of 2006, state-owned and private motorbike assemblers manufactured nearly 376,000 units, a growth of 6.5% year on year and 1.5 times more than the growth of foreign-invested manufacturers. Looking at the statistics, one may think that the motorbike industry is prospering, but in fact, it is doing the contrary: The industry cannot sell its products. The Vietnam Bicycle and Motorbike Association reported that the sales of motorbikes of its members in the past several years had dropped by over 30% and in some cases 50% compared to early 2006.
Twenty State-owned motorbike producers manufactured nearly 58,000 products in the January to July period, a fall of 34.4% compared to the same period last year. The Vietnamese motorbike industry has 52 companies, including seven foreign-invested and 45 domestic firms. The foreign-invested producers have set up a stable foothold in the market. Meanwhile, only one-third of domestic firms are operating stably. The remaining number run moderately or will have to said Le Anh Tuan, Vice Chairman of the Vietnam Bicycle and Motorbike Association.
With total sales of over 1.5 million motorbikes last year, the Vietnamese motorbike market just isn’t large enough for all 52 motorbike producers. The massive development of motorbike assembly companies in 1998-2002 brought the total capacity to 3.2 million products a year. Oversupply has made competition in the motorbike market very fierce. But consequently, instead of improving quality to bring fame to their brand names, many companies cut quality to cut production costs to attract customers.
The more than ten companies that are still running well are those who have invested in technology and improved product quality and the prestige of their brand names.Besides poor competitiveness, many motorbike assembly firms are having to stop operating because of problems associated with intellectual property. Previously, most motorbike designs used by local producers were copied from the designs of Japanese companies. Since 2005, as the Vietnamese Government began to tighten control of design copyrights, many Vietnamese assemblers have been facing a dilemma.
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