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Honda, Ducati lead shift to big motorbikes in Thailand

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  • Honda, Ducati lead shift to big motorbikes in Thailand

    https://asia.nikkei.com/Features/FT-...es-in-Thailand


    High-end brands cash in on local, foreign demand: FT Confidential Research

    In less than a decade, Thailand has gone from a marginal producer of "big bikes" -- loosely defined as motorcycles over 400cc or 500cc -- to a leading exporter, mirroring the country's success as an auto manufacturing hub. Nearly all major brands now assemble in the country. Even Harley-Davidson, which has long touted its "Made in America" image, announced plans earlier this year to open a plant in Thailand. We estimate that worldwide sales of big bikes total at least $10 billion a year. Entry-level models generally cost under $6,000 before tax, several times the price of an average scooter, while high-end sports bikes and cruisers can exceed $30,000. Worldwide, about 1 million motorcycles over 500cc were sold last year. Approximately 115,000 motorbikes 400cc and larger were assembled in Thailand in 2016, and roughly 90,000 were exported. This year, production is on track to reach 176,000 and exports 133,000 (see chart).


    Thailand now accounts for about 15% of global big bike manufacturing, according to our research -- output worth well over $1 billion. Triumph was the first manufacturer to make Thailand a key export base, launching full assembly in 2007. It produced more than 40,000 bikes in the country last year, about 80% of its global sales volume. Honda has relocated assembly for most of its under-700cc motorbikes from Japan to Thailand, where it produces 16 models for global export. Ducati's latest plant expansion doubled capacity to 20,000 units a year.

    Major brands continue to introduce new Thailand-produced models. In November Ducati said its new flagship bike, the Panigale V4 "superbike," would be assembled in Rayong for delivery to Asian markets. Incentives and tariffs are critical The rush of manufacturers into Thailand can be attributed to three complementary factors: investment incentives, market access and the country's strength as a vehicle production base. In 2012, Thailand's Board of Investment issued a package of incentives for the manufacture of motorbikes of at least 500cc, and expanded this to bikes over 250cc in 2013. The benefits include tax-free import of machinery, unrestricted foreign ownership and corporate tax holidays for engine manufacturing. The BOI also negotiated directly with Triumph and Ducati to win their pre-2012 investments.

    The government has recently signaled continued support for motorbikes and cars with a 3.7 billion baht ($111.8 million) vehicle R&D testing center and proving ground currently under construction. The second reason manufacturers are expanding in Thailand is to avoid import tariffs and gain competitive access to both the domestic market and others linked to the country by free trade agreements, including the rest of ASEAN. Vehicle import duties in ASEAN are extremely high: Thailand has a 60% tariff on imported motorbikes, and rates can exceed 100% in other countries. This makes bikes from Europe and the U.S., which have no relevant trade agreement with ASEAN, extremely uncompetitive.




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