Assessing the global motorcycle market

Uli Kaiser – President, Thai-European Business Association (TEBA)

Uli Kaiser• President, Thai-European

Business Association (TEBA)• Members include: Ducati,

Triumph, BMW, Michelin, Continental, Robert Bosch etc.

• Active automotive platform with regular events to support Thai and European automotive companies,

• Check out www.thaieuro.biz for more information

Business Development Manager for the EMAG Group.

• Years of experience in the machine tool industry with a focus on supporting customers to achieve profitable manufacturing of high volume automotive components.

• Focused on the Southeast Asian region.• High-precision equipment for turning, grinding,

milling, gear cutting, laser welding, heat-shrink assembly, induction hardening, electrochemical machining (ECM).

• Check out www.emag.com for more information

Thai AutoBook• A comprehensive guide to

the Thai automotive industry.

• Detailed production and sales statistics for all OEMs.

• Essential market analysis • In-depth company profiles

for all major local and international tier 1 and 2 automotive suppliers.

• Indonesia AutoBook coming soon!

• Check out www.thaiautobook.com for more information.

• Global motorcycle manufacturing industry grew by 3.3% in 2013, to reach a value of $61.5bn, a compound annual growth rate of 5.8% for the period spanning 2009-2013.

• Global motorcycle demand forecast to expand 6% per year over next few years.

• By 2018, 132 million units will be sold each year.

• Annual value in 2018 of $120 billion

Engine and drivetrain parts will remain the largest component product category in dollar terms because they account for the greatest percentage of total parts costs, regardless of the model.

Products in this segment, as well as those included in the structural group, derive the vast majority of their sales from OEM applications. 

Almost all of these parts have low replacement rates, meaning that they are designed to last the useful life of a motorcycle. 

The fastest growth among major motorcycle component categories will be seen by tires, with the replacement market accounting for more than four-fifths of incremental demand from 2012 to 2017.

Sales of electrical and electronic parts will climb the next fastest, aided by growth in the motorcycle stock and rising output of e-bikes and e-cycles, many of which use more expensive batteries than those installed in traditional ICE cycles.

Original equipment manufacturer (OEM) motorcycle parts will continue to account for the majority of the market total in 2017, representing 55% of all sales.

OEM consumption levels are dependent on the number and types of motorcycles produced, while aftermarket demand -- which makes up the remainder -- climbs along with the size of the motorcycle stock.

As a general rule, medium and heavy internal combustion engine (ICE) motorcycles are the most expensive machines to build and maintain.

As a result, the US, which has significant production and a sizable stock of medium and heavy ICE motorcycles, will account for 5% of worldwide component demand in 2017. 

Europe and North America experienced an overall decline in industry value in 2013. The decline in North America was driven by the Mexican industry, which saw a decline in production volume of over 20% in 2013.

Recent economic difficulties have had an impact on motorcycle manufacturers in some parts of the world, particularly Western Europe and some countries in Asia.

However, other areas such as the US and India are an exception to this. India in particular is seeing huge growth in motorcycle manufacturing.

Strong correlation between average income levels and motorcycle and related parts demand.

Good gains in motorcycle component sales are triggered once certain per capita income thresholds have been reached.

In emerging economies motorcycles are an attractive alternative to walking, riding a bicycle, or using mass transit.

The Asia-Pacific region will continue to dominate worldwide demand, representing 84% of all units sold in 2016.

The Asia-Pacific region has both the highest motorcycle production and the most motorcycles in use of all regions

• The region is home to the six largest national motorcycle markets (incl. China, India and Indonesia)

• It will account for more than four-fifths of all new unit sales between 2011 and 2016.

However, it will only be the fourth fastest growing region in percentage terms behind North America, the Africa/Mideast region, and Eastern Europe.

But, these markets are much smaller markets that together account for less than one tenth of global demand.

China will remain by far the largest national market.

However, further gains will be restrained by slowing growth in China because of the large number of motorcycles already in use there.

Market gains will also be dampened due to substitution by consumers of light vehicles for motorcycles in China and other industrializing countries.

India’s continued dynamic economic development has led to strong growth in demand and has seen strong growth in production volumes, with the country becoming increasingly motorized.

Around 13% of motorcycles manufactured in India are exported, with the overwhelming majority accounting for domestic demand.

Harley Davidson, which has experienced pressure in its domestic US market, is looking to expand production in India in order to take advantage of the dramatic surge in motorcycle sales within the country.

The Southeast Asian market is the world's third-largest after China and India

For first eight months in 2014, the motorcycle market in Southeast Asia reached 7,365,481 units.

However, total sales decreased slightly at 0.9%, compared with sales in the period January-August 2013, which recorded sales of 7,432,383 units. 

According to data from the ASEAN Automotive Federation (AAF), Indonesia dominates the Southeast Asian motorcycle market with a market share of 72.89%, or 5,368,858 units of Southeast Asia’s total motorcycle sales in the period of January to August 2014. 

• Thailand came in second place with sales of 1,181,786 units and has a market share of 16.04%.

• The third to fifth positions are occupied by the Philippines, with sales of 507,594 units; Malaysia (301,717 units); and Singapore (5,526 units). 

The Thai motorcycle manufacturing industry had total revenues of $3,265.7 m in 2013, representing a compound annual growth rate (CAGR) of 9.6% between 2009 and 2013.

Industry production volumes increased with a CAGR of 7.9% between 2009 and 2013, to reach a total of 2,218.6 thousand motorcycles in 2013.

Performance of the Thai industry is forecast to decline, with an anticipated CARC of -6.2% for the five-year period 2013-2018, which is expected to drive the industry to a value of $2,365.8m by the end of 2018.

However, there are structural changes going on in the region. In Malaysia and Vietnam, for example, motorbikes with bigger engine capacities are now outselling smaller versions.

In Malaysia, sales of bikes with capacities of 250cc and above surged 49% in 2013, while the overall market was almost flat.

In Indonesia bikes with similarly bigger capacities comprised 13% of total sales in 2013, up from 11% in 2012.

"We also see that not only bigger and heavier bikes will have a better volume, but also cross-touring motorcycles like BMW and Triumph will have a better opportunity here," Tony Tardjo, head of consumer lending of Indonesia's Bank CIMB Niaga.

• In Vietnam, GNI per capita is approaching the key $2,000 level, data from the World Bank shows.

• Crossing that threshold marks the first phase of a shift in a population's spending from subsistence to moderate consumption

Indonesia and the Philippines both breached the $3,000 level in 2012, while in Malaysia and Thailand, GNI per capita stood at $10,400 and $5,370, respectively, in 2013.

Market research firm Nielsen estimates that middle class earners in Southeast Asia, or those with disposal incomes of as much as $3,000 a month, will more than double to 400 million by 2020.

Ducati, Kawasaki and KTM are among motorbike makers looking to build new growth in this market of 600 million people as orders for larger bikes in industrialised countries slow.

• KTM, Europe's second-largest motorcycle maker, recently opened its first assembly plant outside Austria in the northern Malaysian state of Kedah.

• That came two years after Ducati set up a factory in Thailand.

"We notice in Southeast Asia a clear demand for bigger engine capacities. Even premium high-end models like our 1290 Super Duke R show potential. But clearly the main business is done with products between 200 and 400cc," Thomas Kuttruf, PR manager at KTM Sportmotorcycle GmbH.

These companies are chasing two types of customers:– Those upgrading from smaller bikes– Those who already have a saloon car and

are also interested in a large-engined motorcycle.

• Harley-Davidson plans to roll out a new entry-level motorcycle, the Street 750, in Southeast Asia this year.

• Its cousin, the 749cc model was a big hit in India.

• Sales of this model accounted for 60% of the company's local revenue just two months after its launch in February.

"We are optimistic about the Southeast Asian premium leisure motorcycle market," Marc McAllister, vice president and managing director of Harley-Davidson Asia-Pacific

In review:• Global growth to continue

at a satisfactory rate for the next few years.

• Asia-Pacific region to dominate both in sales and manufacturing.

• China will continue to dominate but growth will be slower than in the past

In review:

• Indian growth to continue• Significant growth in

Southeast Asian region expected.

• Increased interest in big bikes

Thank You

Any Questions?