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Market Research Report

Latin America Two Wheeler Market Outlook 2019-2035: Growth Opportunities | Size-Share | COVID-19 Impact Analysis

Published Date :

2021-03-01

Report Pages :

512

Format :

PDF

Region Covered :

Latin America

Market Landscape/Overview 2019-2035

Growing population in Latin America is one of the major factors propelling demand for two-wheelers in the region. Growing urbanization, rising penetration of internet coupled with surging number of smartphone users has augmented the growth of two wheelers market in the Latin America region. Technological advancements, rising preference amongst the people for ride sharing services which would reduce traffic congestion, and supportive government policies would further fuel the market demand over the coming years. 
Economic Environment

Latin American GDP will grow 0.7% in 2019, less than expected three months ago and below the rate observed in the previous two years. In addition to the less favorable global context the higher uncertainty on both the political environment and economic policies in most countries of the region will affect economic activity. Growth will start to rebound moderately in 2020, but will remain below world growth.
Growth will slow down this year in all the economies of the region, with the exception of Colombia where GDP expansion will converge to 3% from 2.8% in 2018. The recession will be more intense than expected in Argentina and GDP will grow less than 1% in Mexico, Brazil and Uruguay. Despite the expected moderation and downward revisions, Peru and Chile show some resilience; in both growth will reach 2.5% in 2019. In 2020 we expect a recovery of growth in practically all the countries of the region, but this rebound will be smaller than expected three months ago.After a weak 2019, regional growth is expected to regain steam next year. The acceleration will be driven chiefly by a pick-up in Brazil’s economy, thanks to monetary easing and reviving confidence. Growth is also seen accelerating in Chile, Mexico and Peru. However, Argentina is expected to remain in recession amid high inflation and policy uncertainty.

Market Dynamics ( Consumer Trends, Growth Drivers & Market Restraints) 

Factors contributing to the rise in motorcycle use in Latin America include: (i)increased per capita incomes, ii) low cost of motorcycles, iii) inferior service of other transport modes (fares, coverage, reliability, traffic congestion), motorcycle transport as an important source of employment and reliable mobility, v) motorcycles as a means of achieving social status, vi) transport of family, vii) driver education as a factor affecting road safety, and finally vii) motorcycle culture. However, factors challenging the rise in two wheelers are Congestion, air pollution, road accidents, noise pollution, Climate change and fossil fuel consumption.

Trends and Opportunities

We have noticed considerable amount of trend in the two wheelers market are restriction of the fuel consumed two wheelers, onset of electric two wheelers, two wheelers lane, setting up of emission standards and more over onset of fuel economy standards. 
Large metro areas are already at or above maximum capacity during peak hours, making owning and commuting with a car more of a hassle than a luxury. As a result, many commuters across Latin America are putting less importance on owning a vehicle and opting to use alternative modes of transportation and on-demand services instead.
Beyond the rising demand for alternative transportation options, it’s also worth noting that Latin America is the world’s second-fastest-growing mobile market. In a region of approximately 640 million people, there are more than 200 million smartphone users. By 2020, predictions say that 63% of Latin America’s population will have access to the mobile Internet. Latin American smartphone users have quickly adopted global apps, such as Uber and Facebook. 

Restraints

In order to keep up with the growing demand, several automakers have started investing heavily in various segments of the industry over the last few months. The industry has also attracted foreign direct investment during the period April 2000 to September 2016.
Geographical Markets (Dominate Market/Target Opportunities)
Brazil is basically dominated by Japanese companies having a share of 90% and Indian companies are interesting in setting up their business in Brazil. The other important markets in Latin America are Chile and Columbia.
Brazil is Latin America’s largest market, and the fourth-largest globally, for two-wheelers with annual volumes of around two-million units, while Mexico sells more than half-a-million units a year. These are two key markets for Hero’s global ambitions since it parted ways with former joint venture partner Honda more than six years ago. Hero, the world’s top two-wheeler maker by volume, targets to be present in 50 countries by 2020.The company has expanded its footprint to 35 countries, including Argentina, Peru etc. Motorcycles dominate two-wheeler sales in the Latin American country.

The economic difficulties actually emerged in several countries are deeply hitting the motorcycles industry in the Latin America. The fact that top markets, like Brazil and Colombia are growing in double-digit, minimize the regional negative outlook. 

The company should focus on premium highly profitable segments: • Scooters: Vespa, MP3, high wheel, GT • Bikes: MotoGuzzi and Aprilia (entry Moto GP) • Reinvent marketing and communication approach and strengthen dealer network • Enlarge addressable customer base (mid-sized bikes in Latin America and e-bikes) • Pursue product cost competitiveness (productivity, buy back)

Players Specific Data (Product Launch, International and Domestic Players , Sales Distribution)

Product Launch:

There are significant expansion in Central and Latin America , India’s largest two wheeler maker Hero Moto Corp has plans to set up its manufacturing units in Brazil and Argentina and also expects to bring up a plant in Columbia. The leadership team believes that Colombia would be a good hub for supply to other markets for the company in Central and Latin America. Hero Moto Corp has launched six of its best-selling bikes with a sales figures of 1.2 million unit from the global business. The two-wheelers rolled out include the 100 cc bikes - Splendor iSmart, Eco Deluxe, and Passion-Pro; the 125 cc Glamour; the 150 cc Hunk and the 225 cc Karizma ZMR. The bikes will be sold in 120 outlets spread across the country. The company has started its construction and manufacturing plant in Colombia. The project entails investment of $70 million in capital expenditure as well as working capital over a three-year period. By 2020, the company aims to be in over 50 countries with 20 plus assembly facilities globally.
Hero MotoCorp, happens to be the country’s largest two wheeler manufacturer has entered the Argentina market with the launch of the new bike names as Glamour motorbike, its first product outside India. Besides being an Ignitor in Latin American countries it has also launched Dash Scooter, Hunk and Hunk Sport motorbikes. The company is going global with its presence in the international borders. The first global launch of a new motorcycle in Argentina reflects the importance of Argentina and Latin America for the company. The company had also set an aim to achieve 10 per cent of its sales from export markets by 2017.

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International and Domestic Players Dominance:

Hero has a significant position in Latin America and Bajaj on the other hand is present in Latin American countries is selling it products like Chinese brands. Hero will sell products under its own brand name with its assembly plant in Argentina while the Chinese manufacturers sell their products under different names. Royal Enfield already has strong presence in Colombia, another important two-wheeler market in Latin America. The Argentine market for two-wheelers fell from seven lakh units to five lakh units last year. Around 30 per cent of the overall market comes from the step-through segment and the rest from commuter motorcycles ranging between 100cc and 150cc, where Hero is strong. The company could help in shaping up the industry with newer products and latest technology. For instance, Argentina does not have too many regulations for two-wheelers in terms of homologation or emission norms, and Hero would have an advantage in fuel economy, as well as environment-friendly products whenever new regulations come in, he added.
Sales Distribution:

Recovery in markets Latin America has helped two-wheeler manufacturers crank up their exports from India. Leading the two-wheeler export bandwagon is Bajaj Auto, which shipped a total of 14,50,766 units in the April-January period, a jump of 24.87 per cent. TVS Motor Co's exports also zoomed by 29.18 per cent to 5,04,799 units during the period. Honda Motorcycle and Scooter also posted a 10.3 per cent increase in its two-wheeler exports to 3,25,759 units during the period. Yamaha Motor posted a 2.39 per cent increase in its exports to 2,09,352 units, while Hero MotoCorp's shipments stood at 1,63,480 units, up 5.74 per cent. There was an upward trend in 2018 when the import of Motorcycles recorded nearly value of $ 504.70 Million in 2018 where 6,18,316 Units have been exported to Latin America and the Caribbean
Latin America and the Caribbean (LAC) region has imported Motorcycles at a recorded value of $ 477.43 Million. Colombia, Argentina, Mexico, Guatemala and Peru are topmost five Countries in the region who import motorcycles from India. There was an upward trend again in 2018 when the import of Motorcycle recorded nearly value of $ 504.70 Million in 2018 where 6,18,316 Units have been exported to Latin America and the Caribbean. Motorcycle import and export market can easily be identified by its engine power which is called “Cubic Centimetre” (CC) and Motorcycle type like Sports, Cruisers, Motocross, Scooters and etc depending on the country’s infrastructure, especially the roads.

Latin America motorcycles market in the first nine months of the 2019 was almost negative with sales at 2.27 million, down 6.8% from the correspondent period last year, despite the two largest markets, Brazil and Colombia grew up in double-digit. Several markets are rally collapsing, including Argentina, Chile and Ecuador.
The economic difficulties actually emerged in several countries are deeply hitting the motorcycles industry in the Latin America. The fact that top markets, like Brazil and Colombia are growing in double-digit, minimize the regional negative outlook. However, when reading data, country-by-country the fall is really impressive. In the first nine months of the year the new motorcycles sold in the region (Mexico is not included) have been 2.27 million, down 6.8% from the correspondent period last year.

As said, the largest market in the regions is Brazil representing near 28.2% of total regional sales and in the 2019 is fast growing with a double-digit trend, like the second country, Colombia which overtook Argentina which is losing near 50% of 2018 sales volume.
Indeed, a part Brazil and Colombia, all the others 14 markets in region in the 2019 are losing terrain with some, like Chile, Ecuador and the already mentioned Argentina, which are really collapsing and others, like Peru and Guatemala that are losing moderately.

In the first nine months of the year the new motorcycles sold in the region (Mexico is not included) have been 2.27 million, down 6.8% from the correspondent period last year. The largest market in the regions is Brazil representing near 28.2% of total regional sales and in the 2019 is fast growing with a double-digit trend, like the second country, Colombia which overtook Argentina which is losing near 50% of 2018 sales volume. Brazil and Colombia, all the others 14 markets in region in the 2019 are losing terrain with some, like Chile, Ecuador and the already mentioned Argentina, which are really collapsing and others, like Peru and Guatemala that are losing moderately.

Royal Enfield has sold over 60,142 units in both domestic and international markets in the month of April, thereby registering a growth of 25 per cent on a year-on-year basis. The company has sold 58,684 bikes in the country as opposed to 47,037 units in April last year. The growth in the domestic market now stands at 25 per cent.
The sales numbers in the export market, the bikes has sold 1,578 units, an increase of 418 units over last year’s figures which pegs the growth in export markets at about 35 per cent.

Competitive Landscape

The electric scooter and motorcycle market is highly fragmented. New product launches and joint ventures have been the key strategies of the major players to expand their presence in the international market. Hero Moto Corp. Ltd. is the major player in the market. The company operates in around 50 countries, the most among all the players. The company has also been making acquisitions to bolster its product portfolio and expanding its facilities to meet the rising demand for the electric two-wheelers, both in China and abroad.
 




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Latin America Two Wheeler Market Outlook 2019-2035: Growth Opportunities | Size-Share | COVID-19 Impact Analysis

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