Domestic sales of motorcycles in 1Q11 exhibited steady growth of 11.7 percent YoY, equivalent to 520,991 units, beating the 11 percent YoY pace in 4Q10. That sale figure represents the strongest quarterly growth in over five years. Although the domestic motorcycle market in 1Q11 was supported by many positive factors, e.g., rising farm produce prices, it is expected that downside risks may inhibit sales in the coming quarters. These risks include continual increases in oil prices, which should place a long-term burden on consumers. In addition, the disposable income of prospective buyers, especially workers in the manufacturing and travel industries, may be weighed down by internal risks, including natural disasters, plus external risks such as the recent triple disaster in Japan. Rising interest rates stemming from surging inflation may also affect buying decisions for new motorcycles as most buyers pay in installments. Moreover, a high base in 2010 will cause motorcycle sales in 2011 to look flatter.
Meanwhile, parts shortages in the domestic motorcycle industry may not be as problematic as in the car industry because technologies used to produce motorcycle parts are relatively conventional; some assemblers here have low production costs per unit due to economies of scale, thus helping create networks of sub-component manufacturing facilities (owned by Thai, Japanese companies or subsidiaries of those assemblers) in Thailand, so they do not depend on imports from Japan so much as car assemblers do. However, those who have not yet done this will be more affected by such shortages, especially in the assembly of newer models, though that would depend on the volume of imports required from Japan and their ability to find alternatives from other sources. While some assemblers have been forced to delay the production of certain models, this will be an opportunity for unaffected assemblers to grab greater market shares amid a supply vacuum.
Given this, KResearch expects that domestic sales of motorcycles in 2011 will probably grow in a range of 3-8 percent YoY, which would be considerably lower than the 20.2 percent rate in 2010. That projection would be equivalent to about 1.9-2.0 million units, rising over the 1,845,997 units in 2010. Since domestic sales of motorcycles have reached a plateau, manufacturers are advised to focus on product differentiation by introducing new models to capture niche markets and expand their customer bases, such as with more stylish motorbikes to tempt young riders, or bigger, more powerful bikes for affluent customers.
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