THERE ARE FEWER Chinese motorcycles on the global market these days.
Domestic and export sales of Chinese-manufactured motorcycles dropped dramatically during the first half of 2012.
The Chinese supply half of the world's motorcycles. Production and sales, however, fell more than 12 percent during the first half of the year, hitting a six-year low: 1.63 million units produced and 1.174 million units sold from January to June. The total number of motorcycles exported by the Chinese during the first half of the year was down 9 percent, or 4.49 million units, from 2011.
According to the China Association of Automobile Manufacturers (CAAM), the crisis is not caused by a change in buyer habits, but how the industry is managed inside the country.
“China does not have an obvious ‘used’ car industry," explains David McMullan, chief foreign editor for China Motor Magazine and China E-Vehicle. "It is very rare to see a forecourt of used cars (I have never seen one) and all the used car transactions that I know of are private affairs. It seems that cars are not replacing motorcycles for the working and agrarian classes; but still the domestic market profits and sales are plummeting season after season.”
Another factor? The ban imposed on gasoline-powered motorcycles by the government and more than 200 cities throughout China, an action undertaken to curb the proliferation of many considered fast, noisy, polluting, gas-powered vehicles in urban areas.
While sales of gas-powered motorcycles are in decline, McMullan says there are now more than 200 million electric bikes and scooters on Chinese roads. These bikes do not require a license to ride. But while electric-powered vehicles can provide localized transportation, they have limited range and power, and riders are frequent victims of overly aggressive car and truck drivers.
CAAM is working with local governments to lift the ban on the use of motorcycles to ease the crisis in the industry.
Mr. Li Bin, Secretary General of CAAM Motorcycle Chapter, told McMullan that it's “the worst time ever for the Chinese motorcycle industry. China is executing the world's strictest standards for motorcycle production, even stricter than those in Europe.” He told McMullan that China is the only country that bans motorcycles from cities, furthering the decline in domestic motorcycle sales.
McMullan explains how reduced domestic and export sales impact the entire industry: “The biggest producer of motorcycles in China is Haojue. Haojue [is] little known as a brand on the world market because they concentrate most of their strengths on domestic trade. If their sales in China drop, then they will not be purchasing the same amount of raw material that they usually do. If they lower the amount of material and parts that they purchase, the price of said material will increase. The material increases will be felt by every motorcycle manufacture in China regardless of their market target -- even affecting giants like Loncin, who [is] the biggest exporter of Chinese motorcycles, forcing them to raise their prices.”
McMullan points out that India, along with other developing countries, have no restrictions on domestic motorcycle usage. India in particular has a relatively strong motorcycle manufacturing base. As production costs fall in these countries, and China's increase, they have the capability to displace more expensive Chinese two-wheelers, and at the same time strengthen their production capabilities, eventually replacing China as the world’s largest motorcycle manufacturer.