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Sales sputtering for bike makers

A Taipei motorcycle shop owner dusts off bikes at his Pateh Road store. The nation's top three motorcycle makers have been axing staff as domestic and international demand tapers off due to the global economic slowdown. PHOTO: CHEN CHENG-CHANG, TAIPEI TIMES

The nation's top three motorcycle producers -- Kwang Yang Motor Co (光陽), Sanyang Industrial Co (三陽) and Yamaha Motor Taiwan Co (山葉) -- have cut hours and personnel in reaction to economic slowdowns in key markets, most notably Europe and Central and South America.

Kwang Yang, maker of the KYMCO brand, has been running its Kaohsiung factory 12 to 15 days a month since July, and plans to continue the reduced working schedule through the end of this month.

Sanyang, maker of the SYM brand, has managed to keep its factory open five days a week, though has not brought workers in on alternate Saturdays as it had previously. In August, the company also extended its annual summer vacation from nine to 14 days.

Yamaha Taiwan has also reportedly cut days in order to deal with the harsh business climate.

Sanyang, which produces both automobiles and motorcycles, has also decreased its workforce by about 1,000 workers over the last several years to 2,300 today. Company officials said the reductions have largely taken place through attrition.

Weaker euro hurting sales

As for the present crunch, many in the motorcycle industry identify Europe as a key factor. Europe is the local industry's largest export market and had been consistently growing during recent years.

Yet through July, Europe's largest markets all saw severe drops.

According to the Taiwan Transportation Vehicle Manufacturers' Association, the number of bikes sold to Italy fell 53 percent to 41,000, German sales were down 41 percent to 14,000 units and Spain saw 5,600 fewer unit sales, a 7 percent drop.

"The weak euro has given an advantage to Europe's local manufacturers, and they've been bringing down prices," said Victor Tsai (蔡百誠), an overseas sales manager at Kwang Yang.

Tsai further noted that other key export markets like Central and South America have also been lackluster, reflecting a global trend stemming from a downturn in the US economy.

Through July of this year, domestic cycle sales totaled 483,000 bikes, or 62 percent of total sales. Domestic sales have traditionally accounted for two-thirds or more of all sales, though makers are working to shift their focus towards exports.

Through July, Taiwan's worldwide sales of motorcycles came to only 770,000 units -- a 12.5 percent decrease from the 881,000 units sold during the same period a year earlier. Kwang Yang led the industry in sales with 279,000 units, followed by Sanyang with 202,000 and Yamaha Taiwan with 178,000. Kwang Yang also led in exports with 123,000 units.

Road ahead doesn't look good

Looking ahead, makers are not optimistic about their prospects for the rest of this year.

"The big season for orders is between December and June. That gets motorcycles to showrooms by summertime. After June, nobody wants to order until they see the new models come out in the fall shows," Tsai said.

Over the last five years, Taiwan's domestic demand for motorcycles has consistently weakened, forcing makers to seek out new markets. First half sales this year were down 20 percent, and the present malaise in Europe is getting manufacturers to search east instead of west.

Officials at San Yang now describe their three major export focuses as "Vietnam, China and everywhere else." Of the three, they identify Vietnam as the most profitable.

Though Kwangyang still says that China is "rough going," the company will produce 130,000 motorcycles at its factories there this year.

Sept. 11 had no effect

One factor that most in the industry say has not had much effect on business is the terrorist attacks on the US. Since Sept. 11, no companies say they've experienced decreases or cancellations of orders that could be attributed to growing world tensions.

"Some distributors have told us that consumer sentiment has become more conservative, but that's about it," Tsai said.

Contrary to expectations, Tsai even identifies the US as a market that can expect growth next year. "We'll sell about 4,000 units there this year, and we project 8,000 motorcycles and 3,000 all-terrain vehicles for next year. The scooter market in the US is still relatively untapped, so there's a lot of room for growth," he said.

Neither San Yang nor Yamaha Taiwan export to the US.
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