The motorcycle industry is witnessing nothing less than a boom. Atlas Honda’s growth in bottom-line of 31 percent in the first half of its year ending March 2018 is testament (25% in April-Mar2017). This growth comes without any substantial price hikes. In just three months since FY18 kicked off, the country manufactured nearly 450,000 two-wheelers; against a little over 300,000 this period last year. In Completely Built Unit (CBU) form, imports grew from $0.5 million to $2.47 million in the Jul-Sep period of this year and last—that’s a growth of nearly 400 percent! The disruption is real.
Whereas these import numbers include a major share of CBU imports from existing players like Suzuki, and Honda; they also include Chinese motorcycles that are high in demand, even if low in quality. Heavy motorbikes are being imported not just for commercial sales but also for the use of government institutions like the Police whereas Punjab government just launched the Punjab Emergency Service program that employs motorcycles as ambulances in the province.
Motorcycle leasing and financing, as with car financing has also become cheaper for consumers. Suzuki for instance offers its motorcycles on easy installments with and without mark ups. Meanwhile, local bike makers have kept prices low. Ride sharing apps like Careem have understood that motorcycles will remain a prominent mode of transportation and decided to venture in this space. The company introduced a motorbike option for customers a month ago in Karachi. Another handful of apps specifically for ride by motorbikes are coming up, though their success so far has been nominal as they reach the market.
Absence of mass transit, urbanization, higher youth and employable population and affordability have all propelled demand and this is the time when existing players are trying to capture a greater share. Honda has been expanding its manufacturing facilities in Sheikhupura from 0.6 million to 1.35 million motorcycles and achieved significant localization. Both Chinese United Auto and Road Prince have managed to grab greater market shares since they entered a few years ago.
It was hoped that greater demand and higher competition would boost the quality of motorcycles we see on the roads but aside from Japanese make variants, most motorcycles use cheap parts that are unsafe and fuel inefficient. There is no motorbike policy and the Auto Development Policy 2016 while includes duty rationalization for imports; there are no safety standards and quality control in line with global practices that bike manufacturers and importers must comply with. Without that, there is little hope the quality of much of the Chinese manufacturers will improve.
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