Weak Motorcycle Market? Not in Vietnam

Bikes bikes bikes

The weak economy apparently hasn’t dampened the buying power of the Vietnamese, at least not when it comes to their purchases of a popular mode of travel there – motorcycles. Honda announced last week that surging demand in the southeast Asian nation is leading the manufacturer to increase production by half a million units per year. That will bump up the overall Vietnamese production capacity to 2 million bikes annually.

Through a joint venture, Honda has a motorcycle plant in Vietnam and the bump in production will come from a $70 million investment in that facility. The capacity upgrade is expected to come online sometime in late 2011. About 2.26 million bikes were sold in Vietnam last year, making it the fourth largest motorcycle market in the world behind China, Indonesia and India. It is also one of the most popular nations for automatic transmission bikes, with about three quarters of a million of those sold in 2009. Honda holds 63 percent of the Vietnamese motorcycle market share and its sales have increased every year since the joint venture’s 1996 establishment.

For some perspective on the motorcycle market’s growth in Vietnam, consider that Honda’s global sales actually fell slightly last year. In North America, they fell by nearly half.

Honda unveils aggressive incentives sale

Giving you some of the best deals around

Honda is normally not a big spender when it comes to incentive programs.  That changed when it started its “The Really Big Thing Sales Event,” which will run until May 3rd.  The deals are quite good: no money down and no security deposit required on all Honda car and truck leases.  Certain vehicles will also have either 0.9 or 1.9 percent APR financing options.

Honda’s goal is to provide consumers “a favorable money factor” while making a profitable cost reduction payout.  Spokesman Jon Fizsimmons stated that the automaker already has high residual values, so they are not financing the residual values of their cars.

The company is spending an estimated $204 million on the incentive program.  This is lower than their Japanese competitor, Toyota, who is spending about $395 million in April.  Both companies’ programs cost significantly less than American companies Ford and GM.

While it seems like Honda is recklessly spending when compared to their record, the cost is actually less than it seems.  The lowering cost of money and a used car market that is better than previous years make the actual money spent up from significantly lower for the company.  The program could have ill effects though, as reducing the price of a new Honda below the level of a used Honda could drive their current value down.