Vietnam's motorbike retailers throw up hands as manufacturers knuckle down

Thanh Nien News

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Men work on the assembly line at a Piaggio scooter and motorcycle factory in Vinh Phuc Province, outside Hanoi. Photo credit: Reuters Men work on the assembly line at a Piaggio scooter and motorcycle factory in Vinh Phuc Province, outside Hanoi. Photo credit: Reuters
While motorbike producers in Vietnam are raising production and introducing new models, retailers say they've lost patience and want out.
A man from the northern province of Hung Yen just sold his Honda showroom in Hanoi to a new owner, one year after he took it over and spent VND7 billion (US$331,400) upgrading it, news website VietNamNet reported.
Another shop in the capital’s Thanh Xuan District changed hands three times, while many bike dealerships have failed to find investors and feel stuck with high overhead and few customers.
Insiders said getting a Honda retail license used to be their dream. Now they dream someone will just take it off their hands.
A retailer in Ha Dong District said rent and staff wages cost nearly VND150 million ($7,100) a month, to say nothing of his utility bills, taxes and mounting interest payments.
The dealer said a dealership ideally sells at least 200 motorbikes (at sticker price) a month to cover expenses and profits by selling accessories and offering maintenance services.
But the sales haven't exceeded 150 motorbikes a month for a long time and many bikes are sold at discounts, he said.
Opening the shop every day to almost no customers and an idle staff drives him crazy, he said.
Several retailers have narrowed their business and laid off staff.
Retail figures show that retails sold around one million motorbikes so far this year, down more than 10 percent from the same period last year.
They hope the start of the school year, in August, will pick up sales. But many are bracing for another bleak year.
And yet manufacturers remain more hopeful than ever.
Kiyokazu Sasabe, deputy general director of Honda Vietnam, said the motorbike market will break out of the turmoil and thrive again, just like the automobile market.
He said motorbike demand in rural areas is still high while people in urban areas are going to switch to more luxury, high-end models.
Honda’s production this year dropped 10 percent year-on-year to 700,000, but the leading motorbike brand has opened its third Vietnam factory in Ha Nam Province, outside Hanoi.
The company plans to push sales to rural areas and export to 22 countries from Vietnam.
Costantino Sambuy, general director of Piaggio Vietnam, said the market for self-start motorbikes in Vietnam has been expanding 8 percent a year.
He said Vietnamese people’s income is expected to rise, and so will the demand for self-start motorbikes.
He said he is confident in the potential of the market.
Wang Chinh Tung, general director of SYM Vietnam, also said the depression is just a temporary phase.
When the economy bounces back next year, the motorbike market will surely follow, Wang said.

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