Honda looks to luxury to enhance motorbike profits

Honda looks to luxury to enhance motorbike profits

Japan’s Honda Vietnam is reportedly mulling importing completely built unit (CBU) motorbikes to Vietnam through the second half of this year to boost profits.

Accordingly, the company, which has a 68 per cent market share in Vietnam, would import 4,000 CBU bikes through the end of the year. The bikes would be higher-end products priced at around $3,000 per unit (not including tax).

The company’s (HVN) executives are also considering promoting higher-power motorbikes in the Vietnamese market to boost profits as sales of traditional models have reached a saturation point and other well-known high-capacity motorbikes such as Ducati, KTM and Benelli have already made forays into the country.

After achieving a record 2.03 million motorbike sales in Vietnam in 2012, HVN has since seen dwindling sales with only 1.95 million units sold in 2013 and an estimated 1.85 million to be sold this year.

However, on a global scale Honda’s figures are robust and growing, from 15.494 million units in 2013 to an estimated 17.021 million units this year.

Sales in Asia are expected to rise by 1.5 million units this year, up 11.5 per cent on-year, and with India and Indonesia as the company’s two best-selling markets.

Despite market difficulties, HVN has still set a target of selling two million motorbikes in Vietnam for the 2015 fiscal year.

HVN CEO Minoru Kato recently told VIR that “HNV is not pessimistic about the future development of Vietnam’s motorbike market as consumer perception develops beyond bikes as just a simple transport method to upgrading old motorbikes to newer, trendier, more powerful models.”

In fact, rising motorbike consumption in the country has been affected by a combination of factors.

Sales in rural areas have been modest due to continuing economic vulnerabilities, whereas in urban areas car usage has become increasingly popular.

According to an official from the National Traffic Safety Committee, Vietnam is currently home to 37 million motorbikes, and this figure consistently rises each year, triggering the need to limit the growth of this means of transport.

In fact, costly and luxury motorbike models are reportedly the key drive of HVN’s profits, and not low-cost models serving people in rural and remote areas.

This was the catalyst behind HVN leaders looking at more luxury models to maintain market share while further bolstering the company’s earnings.

vir