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Market Research Report

South East Asia Two Wheelers Market Outlook 2019-2035: Growth Opportunities | Share-Sales | COVID-19 Impact Analysis

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South East Asia Two Wheelers Market Landscape

South East Asia nTwo wheeler vehicles specially scooters, motorcycles and bicycles are popular mode of transport due to their fuel efficiency and easy to use in huge traffic. The sale and expansion of electric two wheeler are strong in China and India followed by South East Asian countries as compared to the rest of the regions of the world. Adoption of e-bicycles, e-motorcycles and e-scooters will be driven by rapid urbanization trends and increasing rise in disposable income of the middle class population. The trend leads to huge investment in the transportation sector by the individuals and the very need for transportation for daily works of life.  Economic prosperity will result in a greater number of middle and high income level consumers, which will contribute to the growth of the electric two-wheel vehicle market. The growth of the electric two wheeler vehicles market is likely to be strong in the region with high economic growth rates. On the other hand electric two wheeler segment growth has been taken off with the highest sales in South East Asian Countries. Spiked e-scooter and e-bikes market in China is also favored by the government initiatives such as banning conventional fuel two wheelers in major cities and by building up public charging infrastructures in the country. Moreover, South East Asia countries such as Thailand, Vietnam, Indonesia has been witnessing significant growth in two wheelers sale with production in Philippines rose to 31% to 1.04 million units annually to 1.04 million units annually.

The South East Asian Automotive sector has grown in the last 5 years to reach a total  sales of 3.2 m units in 2014. Despite the economic slowdown in the South East Asian Region consumers continue to have high inclination towards purchasing new cars – 68% in Thailand and 63% in Indonesia in the next two years. Overall automotive sales in the ASEAN 7 countries (Indonesia, Malaysia, the Philippines, Thailand, Vietnam, Singapore and Brunei) have fallen by 10%, from 3.5m units in 2013 to 3.2m units in 2014. This decline can be attributed largely to domestic reasons, as well as global economic instability surrounding the Euro zone and rising US interest rates. The two biggest automotive markets in SEA - Thailand and Indonesia, saw vehicle sales decline last year. In Thailand, new vehicle sales dropped by 33.7% to 881,832 units in 2014, marking two consecutive years of decline. According to the ASEAN Automotive Federation, total vehicle sales have climbed 35% over the past year to 133,588 units, due to lower interest rates and inflation, coupled with increasing motorization rates and soaring demand among increasingly affluent consumers. ASEAN economy expanded 4.9% year-on-year in the fourth quarter of 2018, which if confirmed would mark an uprise from Q3’s 4.7% expansion.

Exports and Import Data

Overall exports from Thailand have risen by 2.9% in the first half of this year to 576,073 units, making up for domestic sales which declined by 16.3% to 369,004 units over the same period. The assembly for light vehicles in ASEAN will continue to grow and is projected to reach 3.9m units in 2015. Indonesia continues to challenge Thailand’s position as a production and export hub following significant expansion plans by multiple major car manufacturers, as Thailand’s volatile political environment have threatened its attractiveness for foreign investment. Supporting this shift is Indonesia’s domestic automotive demand, which totaled 1.21m units, overtaking Thailand’s domestic market of 881,832 units in 2014. Auto sector growth in the Philippines is tied closely to its rising domestic demand as is the case in Indonesia, and is currently at an inflection point. Foreign investment continues to drive the economy, along with a growing business process outsourcing (BPO) sector. An increasing base of first-time buyers, many of whom are BPO employees, together with rising affluence and favorable lending rates propel domestic growth of the automotive sector. The recently approved Comprehensive Automotive Resurgence Strategy (CARS) is expected to bring in new parts manufacturing investments, produce at least 600,000 vehicles and generate some 200,000 new jobs with a total economic value of US$ 6.5bn or 1.7% contribution to GDP. While vehicle sales of the major players in Thailand have declined, the Honda, bucked the downward trend. With demand exceeding supply, Honda is still coping with back orders. The Honda model has sold well across SEA generally, as it has the right combination of features. Its sporty design appeals to a wide variety of customers, including younger people, and the fact that it is smaller and thus cheaper than many of its competitors makes it more appealing in times when consumer confidence is not high.

Market Dynamics (Market Drivers and Restraints, Consumer Trends)

Growth Drivers and Challenges  – South East Asia region is the largest market for the two wheel vehicles across the globe.On the other hand electric powered bikes and scooters are also growing in huge numbers.Congestion, lack of accessibility, social equity, air pollution, as well as rising CO 2 emissions are some of the key issues urban transport policymakers face. Motorised two-wheelers and their accessibility benefits are often ignored in this discourse or seen as undesirable for reasons of pollution, noise, road safety and driving behaviour. Cycling, on the other hand, is viewed positively, yet faces substantial social and political barriers, and is suitable mainly for shorter trips.  the role electric two-wheel-ers (including pedelecs, e-mopeds and e-scooters) can play in urban vehicle ecosystems, using the sustainable mobility paradigm. Compared to traditional transport planning, this paradigm has a stronger focus on aspects such as accessibility, people, streets as a space, city liveability, as well as environmental impacts. Possible policy instruments to facilitate further deployment of electric two-wheelers are discussed as well. We helps filling a gap in transport, sustainable development and climate change mitigation literature, in which electric two-wheelers have not been well covered to date.

Trends and Opportunities -Southeast Asia’s tendency to develop megacities with high population density, the transport lifestyle that works in less densely populated parts of Europe or the USA just don’t work out here. Everybody can’t own a car in Jakarta, Bangkok, Manila, or Ho Chi Minh without creating snarling traffic and horrendous pollution. The residents of Bangkok, Jakarta and Hanoi waste about an hour or more in traffic everyday. Just searching for parking wastes another 20 minutes or more for most Southeast Asian city dwellers. Thankfully, two technology trends, electric vehicles (EV) and “micromobility”, is emerging to save the day.Micromobility, a term coined by Apple analyst Horace Dedi, refers to travel of less than eight kilometres.

Actually the humble electric scooter that will create the most meaningful impact for Southeast Asia within the next few years.Electric scooters are inexpensive and can be easily charged at any electrical socket, or with cheap removable batteries. Falling battery costs and improved charging efficiency means that soon there won’t be any excuse why we can’t replace most gasoline motorcycles with EV, and even replace many of our car trips with an EV 2-wheeler alternative. Micromobility solutions are magnitudes more efficient than their larger or gas-powered counterparts. Analysis by Wired found that one-kilowatt hour of energy can only get a traditional gas automobile 1.3 kilometres while electric automobiles can achieve a better 6.6 kilometres. E-scooters, however, can travel 133 kilometres on the same amount of energy – approximately 20x more efficient than electric cars and 102x better than traditional gas-powered cars. They also reduce traffic congestion due to their smaller form factor.

Countries in Asia are experiencing similar adoption trends. Shared bikes are now the third most popular mode of public transportation in China, while other countries in Asia like Taiwan, Singapore, and South Korea have also seen strong traction, according to CB Insights.

Southeast Asia won’t be excluded from the global EV micromobility trend. We met with Southeast Asia’s EV 2-wheeler market is indeed on the cusp of a massive expansion thanks to the factors outlined above. The company expects Southeast Asia’s EV 2-wheeler market size to expand by over 400% from 2017 to US$2.5 billion of annual revenue in 2022.EV 2-wheelers thus represent a multi-billion dollar new market for Southeast Asian tech companies, and interestingly it’s a unicorn-sized near term revenue opportunity that does not yet have any established players. (As compared to China, Southeast Asian consumers need higher speed and range, plus the ability for their vehicle to manage hot climates). Hence EV micromobility not only represents a solution to Southeast Asia’s traffic congestion and air pollution but also represents a multi-billion dollar revenue opportunity for innovative new companies. In addition to Chinese companies, regional players such as Vinfast in Vietnam, Viar in Indonesia, and Scorpio Electric in Singapore (who we work closely with as an advisor) are all moving full speed to capture this massive revenue opportunity.

Geographical Market (Dominate Market, Target Opportunities, etc)

 Dominating Markets-Honda dominates the market with a share of 60 percent. In 1998, Honda Vietnam has opened its first manufacturing facility in Phuc Thang, in Vinh Phuc province, about 30 kilometers from the capital Hanoi. With a workforce of 3,560 employees, the plant has a production capacity of one million units per year. In 2008, Honda Vietnam has opened a second plant in the same area. With a workforce of 1,375 people, the plant specializes in the production of scooters and engines. At the end of 2014, Honda opened a third plant in the province of Ha Nam, about 60 kilometers from Hanoi, with a production capacity of 500,000 motorcycles a year.

Yamaha Motor Vietnam established its first plant in 1998. With its subsidiary Yamaha Motor Parts Manufacturing, which since 2006 is responsible for the production of components for the engines, its 100,000 square meter plant located in the industrial area of ​​Thang Long Hanoi has more than 6,000 workers.

More recent is the entrance of the Italy’s Piaggio, which opened its first factory in 2009 in Vinh Phuc province. In 2012, Piaggio Vietnam has opened a second plant for the production of engines for scooters, completing the industrial factory that also includes a Center for Research and Development. Piaggio Vietnam has over 800 employees and this makes it the third largest production site of the company, after the Italian and Indian ones. The production capacity is 300,000 vehicles per year. In 2014, Piaggio Vietnam has been awarded as best employer in the Anphabe & Nielsen rank. In the same year, the local government has assigned to the Piaggio Vietnam a “Certificate of Merit awarded to FDI” for its contribution to social and economic development of the Country. In April 2015, Piaggio Vietnam celebrated the production of the 500,000th scooter.

Opportunistic Markets- Despite the large demand within the country, an investment in Vietnam’s motorcycle industry is not without its challenges. On the one hand, the fact that almost half of the Vietnamese people already has a two wheels vehicle causes a risks of market saturation. In fact, it doesn’t seem a coincidence that, although the market continues to grow, sales of motorcycles are slowing. In addition to the saturation of the market, investors should also consider that the progressive increase of the income of a growing middle class is pushing many Vietnamese to invest their earnings in the purchase of cars. While absolute numbers of car sales are much lower compared to motorcycles, Vietnam has become the fastest growing market in South-East Asia.

On the other hand, there is also a clear intention by the government to reduce the number of motorcycles and discourage purchases. In March 2013, the Prime Minister presented an amendment to the plan of development of road transportation, which states as its objective the reduction of scooters to a total number of about 36 million by 2020. This is due to the chronic lack of transport infrastructure of Vietnam, especially in large cities, resulting in a large traffic congestion with important consequences also for peoples’ health. To this end, Hanoi’s local government has ordered an increase on the cost of registration of motorcycles.

As mentioned above, one of the strategies adopted by motorcycles’ manufacturers in order to keep shares of the Vietnamese domestic market (as well as obtain new ones) is represented by continuous product innovation. In 2014, the five largest foreign producers of motorbikes in Vietnam have presented at least twenty new versions of their models to stimulate a replacement demand.

The second strategy is to use Vietnam as a base to produce motorcycles for export and sell in other Asian economies. Indeed, this is not really a new strategy. For example, opening factories in Vietnam, the Italian Piaggio has enabled has entered into new markets such as Taiwan and, in the case of ASEAN, in countries like Indonesia, Thailand, Malaysia, the Philippines and Cambodia. This new situation is forcing manufacturers to take the opportunity to sell their “made in Vietnam” motorcycles into other economies. For example, Honda is turning its production in Vietnam as a base for exporting to Thailand, Laos, Cambodia, Malaysia, Philippines and Pakistan – but also in Italy and Japan. The inauguration of the third plant in the province of Ha Nam taking place in 2013 (when the slowdown in growth of the Vietnamese motorcycle market had already appeared) confirms Honda’s intentions to focus on exports.

According to some surveys, in 2014 Vietnam’s motorcycle exports reached a value of US $342.4 million. Globally, in the ranking of the largest exporter countries of motorcycles, Vietnam stands in the thirteenth position. At the regional level, Vietnam is sixth, preceded by China, Japan, India, Thailand and Taiwan. In addition, Vietnam is the first country in the world in terms of faster growth of exports of motorcycles: compared to 2010, exports from Vietnam to foreign markets increased by 471.4 percent.

Foreign producers therefore continue to increase their investments in Vietnam. Vietnam, in fact, is very attractive for foreign investment in the field of motorcycles. To produce motorcycles in Vietnam is not only beneficial in terms of low labor costs thanks to low workers’ wages. Investing in Vietnam, in fact, foreign investors can take advantage of the presence of a network of local suppliers strong and well-established. Favorable exchange rates and a favorable tax legislation (compared to other Asian economies) paint a positive picture for investment prospects in Vietnam’s motorcycle industry.

Merger & Acquisition Activities

Global marketing information services company JD Power is closing down its business in South-East Asia including India due to unknown reasons, according to the sources familiar with the matter.The America-based firm is best known for conducting customer-centric research for industries ranging from cars to marketing and advertising firms.For automotive sector, in particular, the firm has conducted multiple annual surveys in the U.S. as well as in other countries which includes Vehicle Dependability Study (VDS) and Initial Quality Study (IQS).While VDS is a measure of problems experienced after three years of ownership, IQS is a measure of problems experienced within the first 90 days of ownership. Other surveys include the APEAL survey, reflecting consumer's attitudes towards a vehicle's attributes, dealership service surveys, and customer purchasing experience surveys.Founded by James David Power III, the firm made its debut into the auto market in 1969 with its first client Toyota Motor Company and after more than a decade it launched its first US Automotive Customer Satisfaction Study.During his stint with the Ford Motor Company, where he worked for customer research, Power felt customer satisfaction data was too often overlooked. He then decided to establish a research company that entirely focuses on consumer responses for a variety of surveys and then awards car models rankings based on those surveys.In the year 1988, the firm established a joint venture in Japan that later becomes a wholly owned subsidiary responsible for business in Asia Pacific. Seeing the rise, an office in Singapore was opened to broaden J.D. Power Asia Pacific's activities in the region.Back in 2006, it further expanded into China and rest of Asia by acquiring Automotive Resources Asia, an auto-industry consultancy based in Beijing that specialises in providing information and analysis about two of the world's fastest growing car markets, China and Southeast Asia.Subaru became the first automaker to advertise its J.D. Power rankings by running a commercial during the Super Bowl XVIII in 1984 . Since then, the company claims that more than 200,000 television commercials and more than 2 billion print ad impressions refer to J.D. Power awards annually.

Players Specific Data (Product Launch, international or domestic players dominance, Sales Distribution, etc)

  • Suzuki first established a presence in Vietnam in 1995 and began producing motorcycles in the following year. The first plant of Vietnam Suzuki was realized in Bien Hoa, in the Long Binh Techno Park, about forty kilometers far from Ho Chi Minh City. Vietnam Suzuki’s plant, which also produces cars, can product almost 100,000 motorcycles a year.
  • Taiwan’s Sanyang Motor, which produces motorcycles using the SYM brand, has opened its own subsidiary in Vietnam in 1993, called Vietnam Manufacturing & Export Processing (VMEP). As Vietnam Suzuki, also VMEP established its plant in southern Vietnam, in Bien Hoa area. Into the plant are employed a little less than 1,800 workers
  • Competitive Landscape
  • There are over 200 motorcycles brands on sales in the region, but the level of concentration is among the highest world-wide. Producing locally in any country, Honda was able to deliver a record of 9.4 million units in the 2018 and is projected near the 10 million milestone in the 2019, considering the +3.9% scored in the first half. The only real competitor is Yamaha, with 3.0 million sales in 2018, and with a 2019 pace at +4.8%.
  • In third place Kawasaki with 226.426 sales last year and actually growing in double-digit, while in fourth there is Suzuki, having lost in the first half 2019 in double-digit.
  • In recent years several brands approached the market coming from Europe, US and India but actually no one reported a real success, having failed the approach with the local customers. Ducati, Triumph and BMW are producing in Thailand, while KTM, the fastest growing premium brand was the last to land in the region, opening facilities in the Philippines, while it is already planning a second plant, in Indonesia.
  • Indeed the market is here and wherever you came, you should bear in mind that this region is not an emerging low-developed market, but is the current frontier of the industry, with the most evolved customers and a huge, modern, technologic product offer made by Japanese brands after near 50 years of local experience.

COVID-19 impact on "South East Asia Two Wheelers Market"

The report analyses and includes complete detailed chapter of 50-70 pages about the short term & long terms impact of COVID-19 outbreak on each segment of "South East Asia Two Wheelers Market" along with government measures to support the sector. It also showcases the current market landscape during COVID, impact of the virus on leading companies, expected demand schedule and supply chain in the industry and other various major factors. This will help you identify those companies that may benefit from this pandemic as well as those that will lose out.

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Key questions answered in this research report

  • What is the total market size by 2035 and what would be the expected growth rate of sales?
  • What are the total sales in 2018-19 and what would be the expected demand over the forecast period?
  • What are the recent developments and business strategy of companies?
  • What are the market opportunities for the existing and entry level players?
  • What are the key market trends?
  • What are the factors which are driving this market?
  • What are the major barriers to market growth?
  • Who are the key vendors in this market space?

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  • South East Asia Two Wheelers Market Facilitate decision-making based on strong historic and forecast data for
  • Develop strategies based on the latest regulatory framework
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South East Asia Two Wheelers Market Outlook 2019-2035: Growth Opportunities | Share-Sales | COVID-19 Impact Analysis

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