Truong Hai: Which door to the two-wheeler market?


In mid-March, through collecting shareholders’ opinions in writing, Truong Hai Auto Company (THAco) added a new business line. That is the sale, maintenance, repair of motors and motorcycles.

In addition, the Company will also sell spare parts and accessories for motorbikes and motorbikes and rent motor vehicles. This means Truong Hai will enter the motorcycle market.

The market has split

According to the Vietnam Association of Motorcycle Manufacturers (VAMM), the motorcycle market in recent years has reached saturation point. During the three years (2013-2015), no year has ever reached the sales of the whole motorcycle market reaching 3 million units, although it has surpassed this number 2 years ago. However, in 2017, car sales were 3.27 million units, an increase of 4.8%. This is a very encouraging number.

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Currently, the Vietnamese motorcycle market is the playground of five names including Honda, Yamaha, Piaggio, SYM and Suzuki. According to VAMM, these are all businesses with large market share. These five firms account for 99% of the market share and are supplying the market with more than 50 models. In which, Honda holds the top position, accounting for an overwhelming market share of 70%. Next is Yamaha with about 25% market share. Piaggio, SYM and Suzuki share the remaining market share.

The Japanese car monopoly has been going on for many years. For example, in 2016, Honda and Yamaha together accounted for 95.9% of total market sales. The car manufacturers are always aware that Vietnam is one of the four largest motorcycle consuming countries in the world, so they make an effort to invest and find ways to keep a place in the Vietnamese market. For example, understanding the mentality that Vietnamese people like to “dress firmly”, Japanese carmakers often launch high-durability, low-damage, fuel-saving cars to the market …

This makes Vietnamese consumers love Japanese motorcycles more. In some places, motorbikes are also called Honda. From here, Japanese carmakers have grasped the entire Vietnamese motorcycle market. The following carmakers such as Kymco, Peugeot … are very hard at trying to enter this market.

Japanese carmakers also proved sharp when attacking the Vietnamese market on many product segments, from popular cars, scooters to hand-held cars and high-end scooters. In any segment, Honda, Yamaha, Suzuki … also fully exploit. These firms almost do not leave any space for latecomers.

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The scooter segment is currently a delicious piece of cake for car manufacturers, accounting for 45% of the total number of cars sold in the market. In this segment, in 2017, Honda (with leading brands such as Lead, Air Blade, Honda SH, SH Mode) continued to storm when it sold 1.35 million units, up 13% over the same period. Yamaha tries hard to chase Honda. As for SYM, Suzuki stomped on, while Piaggio’s scooter sales did not prosper.

In the hand-held segment, the market witnessed the main race of the Yamaha Exciter and Honda Winner models. Hand-held vehicles in Vietnam are mainly in the 150-cubic centimeter segment, with sporty and personality models that match the tastes of young people. However, a Yamaha representative said that in 2018, in addition to the strategy of expanding the northern market, Yamaha will give priority to the scooter segment.

The scooter segment is currently a delicious piece of cake for car manufacturers, accounting for 45% of the total number of cars sold in the market.

In fact, along with the increased income, consumers are increasingly able to spend 60-80 million VND / unit to own scooter models with many utilities, eye-catching designs, show style. This shifting trend, from digital cars to scooters and motorcycles, is also a development trend of markets such as Thailand, Indonesia, India, and China.

Which door for Truong Hai?

Truong Hai did not share any additional information about his move into the motorcycle market. However, if Truong Hai participates in this market as the Company did in the auto market, it is likely that the Company will participate in the form of assembly or distribution to some famous car manufacturer.

For private label vehicle assembly, Truong Hai is easy to encounter a story like Kymco ever encountered. Kymco is a famous motorcycle company in Taiwan that entered Vietnam quite early (2004). The company also invested $ 20 million to establish a factory with a capacity of 40,000 units / year. But until now, after more than 13 years of presence, Kymco is still struggling to find customers. Mr. Hsu Shih Chung, General Director of Kymco Vietnam, once admitted: “Although we are very successful in Taiwan, but in Vietnam, our market share is still limited. The reason is that we have not won the confidence of Vietnamese consumers ”. Recently, Kymco turned its focus to 50 cubic centimeters car products for students, students, housewives, and those without a driver’s license. With this new strategy, Kymco hopes that the business situation will be improved.

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Peugeot, from France, was once a motorcycle legend in Vietnam 50 years ago, but this time back, Peugeot was not well received. The segment that this company attacks is a high-end scooter. Peugeot’s models like Django are considered luxurious and beautiful, but Peugeot has not made a significant mark in the Vietnamese market.

Obviously, in a divided market and consumers who are very loyal in choosing Japanese models, Kymco, Peugeot or Truong Hai will not easily find a foothold.

In the case that Truong Hai chooses to shake hands and become a distributor for other car manufacturers, the road is also very difficult. Because the world’s famous motorcycle manufacturers such as Honda, Yamaha, and Suzuki have been present in Vietnam. However, Truong Hai can look for opportunities if they can shake hands with famous names that have not appeared in Vietnam, such as Ducati (Italy), Harley – Davidson, Kawasaki … These are all tissue brands. world famous bowl, with powerful engine, high speed. But the story of the following units must be conquering the hearts of consumers. That heart is held by Japanese carmakers.

Truong Hai can jump into maintenance, repair, and sale of motorcycle parts. The preliminary survey shows that Vietnam does not have many professional and reliable chain of repair, maintenance and sale of motorcycle parts. Meanwhile, according to statistics, on average in Vietnam, 1 out of every 2 people owns a motorbike. That means Vietnam is circulating about 50 million vehicles. With that number of “huge” motorcycles, motorbike repair and maintenance services will be very potential.

Truong Hai’s core business has been in the auto business for a long time. The company has also expanded into real estate and, more recently, manufacturing agricultural equipment (tractors). In these areas, Truong Hai has detailed plans. For example, Truong Hai opened a factory and combined technology with LS Mtron, a Korean partner in the production of agricultural equipment. Truong Hai’s goal in the agricultural equipment segment is to reach 7% market share of Vietnam’s tractors in 2018 and reach 40% market share by 2026.

For motorbikes, Truong Hai just stopped at the job registration. Investors still need more information to better understand Truong Hai’s strategy in this new field.

Ngoc Thuy
* Source: Investment bridge

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