In late 2005 the government decided to eliminate the regulation stipulating each person can own only one motorbike. Right after that, all the localities lifted the temporary stop of the motorbike registration. Thus, the motorbike market is now open. However, according to the Vietnam bike and motorbike Association, the purchasing power in the first six months of 2006 decreased by between 25 per cent and 30 per cent compared with the same period of the last year against the expectation of a 20 per cent rise. Is there no more demand for motorbikes?
The calculated growth of 20 per cent of 2006 seemed to be realistic because even when the regulation on the ban or temporary stop of the motorbike registration was in effect, there had still been an increase in motorbike consumption with a year record rise of up to 25 per cent .It was expected that the market for motorbikes would heat up again when the regulation was eliminated. However, the fact turned out to be different.
According to Mr Le Quoc Tao, head of Vietnam bike and motorbike Association, there are only 10 motorbike companies capable of manufacturing 10,000 motorbikes annually and the remaining companies have an annual capacity of between 3,000 and 5,000 motorbikes. Many companies are going through hardships due to the decreasing consumption. Mr Tran Van Hai, director of Naintranco, says its monthly sales are now only 1,000 units, down 10 per cent against the same period of the last year. The T&T Corporation is facing the same problem of the low consumption .Many enterprises have to carry out sales promotion strategy like giving away vacuum cleaners, irons, cookers. Another sales promotion is to reduce the price by about 15 per cent, suffering from losses so as to sell out the inventories.
Honda Company is an exception with the steady growth in its popular Wave alpha thanks to the development of domestic and overseas markets. The remaining well known motor companies are encountering problems of a monthly sales drop of 50 per cent. According to Mr Dinh Ngo Tuan, marketing manager of Vietnam Yamaha, the first six months of 2006 saw the average sales of only 660,000 motorbikes, down 20 per cent against the same time last year.
Mr Le Quoc Tao says if this trend keeps going on toward the end of this year, the member enterprises of the Association may go bankrupt. Joint venture enterprises will also make efforts to improve the quality, making many newly fashioned motorbikes as well as carrying out sales promotion to increase the demand.
According to many enterprises, the falling purchasing power accounts for the fully satisfied market demands, especially in major cities. In suburban and rural areas, there is no increase in purchasing power due to the fluctuation of the market and the soaring oil price. However, Mr Tuan says the ratio of six people a motorbike shows that the market demand is not yet fully satisfied in comparison with the ratio of two /one in Taiwan, four /one in Thailand. There is a suspicious question whether there is no more demand or motorbike manufacturers create that phenomenon to keep the price high. According to economic experts, when the market generates little demand, the first thing to be considered is the price policy. However, for almost ten years, have the domestic manufacturers, especially joint venture enterprises, actually lowered the price to raise demands?
So far, domestic customers have been used to buying motorbikes twice as expensive as those in the region. In 2002 Thailand Dream motor was sold at US$ 850, however, in Vietnam this motor was sold at US$ 2,200. Three years later, in Vietnam the Thailand Dream motor price went down by one third, but many other motors’ price remained high. All of the reasons may be seen as” in favor of foreign product” psychology of customers; the preferential protection policies over the domestic motor manufacturers; and impact of the Department of price management. This falling purchasing power is the proper result of an unfair game when customers are aware of their disadvantages .Nonetheless, the price is still determined by the market.
T.V
Vietnamese
