Since early 2009, the domestic motorcycle market has experienced a continued contraction amid numerous challenges, particularly the economic recession, plunges in farm produce prices and domestic political problems. However, the decline is slowing, thus the 1H09 sales turnover for motorcycles has been better than expected, contracting only 14.2 percent. In 2H09, the motorcycle market is expected to receive a boost from the stabilizing economy coupled with an easing credit market and ongoing marketing activities. As a result, the 2H09 domestic motorcycle market will likely record a smaller shrinkage than in 1H09. Nonetheless, the market may remain pressured by volatile farm prices and a high base effect, especially in 3Q08.
KASIKORN RESEARCH CENTER (KResearch) forecasts that domestic motorcycle sales in 2H09 may shrink 10-14 percent to total around 716,000-746,000 units. Even though this sales turnover would be a smaller contraction than the 14.2-percent contraction in 1H09, it would still be lower than the 748,497 units sold in 1H09. This may come in part from the sluggish market during rainy season and the high base effect of 1H09 as a result of higher purchasing power boosted by government stimulus programs, especially the cheque handouts to low income earners, as well as active sales promotion campaigns by motorcycle manufacturers and dealers. The full-year sales turnover for motorcycles is thus expected to contract 12-14 percent to 1,465,000-1,495,000 units, compared to the 1,703,376 units in 2008. This is better than our earlier projection which showed that the market might contract as much as 17-21 percent, to total 1,350,000-1,410,000 units.
Over the remainder of this year, sales promotional activities of the private sector will be important to market performance. Focus may be on pricing strategies, i.e., discounts or financing interest rate cuts in order to spur greater sales amid this difficult economic environment. For the government, emphasis should be placed on accelerated budgetary disbursements to promote investment and employment, as well as on the farm produce subsidy programs to assist farmers, boosting the confidence and purchasing power of low-income consumers as the main target group for the motorcycle market.
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