Stories from the motorcycle manufacturers

 Now, developing the supporting industries is one of the top priorities in the policies of Vietnam to promote the industrial development and help accelerate the industrialization and modernization of the country. A group of the supporting industries in motorcycle manufacturing and assembly has achieved success in this area.
Motorcycles account for 90% of the means of transport in Vietnam. It is predicted that the number of motorcycles in the country will reach 31 million units by 2015 and 33 million by 2020. The motorcycle manufacturing and assembly sector has attracted the participation of nearly 60 enterprises, including large corporations from Japan, Italy and Taiwan. According to the Ministry of Industry and Trade, the total motorcycle production capacity in Vietnam will reach five million units this year.

The major motorcycle manufacturers operating in Vietnam, such as Yamaha, Honda and Piaggio have continued investment to expand their production scale. Piaggio has built its second plant in Vinh Phuc Province to increase its capacity from 100,000 to 300,000 motorcycles per year. Yamaha has invested over 26 million dollars to increase its assembly capacity by 50% to raise the output to 1.5 million motorcycles/year. Recently, Honda has invested over 120 million dollars to build its third plant in Ha Nam to increase the assembly capacity to 2.5 million motorcycles/ year.

Thus, from next year, these three manufacturers alone will assemble over 4.3 million motorcycles/year, nearly reaching the total number of 5 million units set by the Ministry of Trade and Industry.
 

We visited the plant of Piaggio Vietnam Company in Vinh Phuc Province. The bustling atmosphere of the production lines and nearly 1,000 workers showed that the demand for motorcycles on the market is very great. We still remembered the comment of Roberto Colaninno, President and Executive Director of Piaggio Group about the motorcycle market in Vietnam during the inauguration ceremony of the engine factory in Vinh Phuc held at the beginning of this year. He said: “The success that Piaggio Vietnam has achieved since its establishment in 2009 has created a firm foundation for a new step in the expansion strategy of the group in the Asia-Pacific region. The business results of the group in 2011 showed our global growth strategy, in which Asia is considered a focal point in the group’s development in the coming years.” Of the total investment of nearly 400 million euros of Piaggio Group, investment of Piaggio Vietnam in the period of 2012-2014 accounts for about 70 million euros.

«...            According to a survey of Reed Tradex Company (Thailand), the supporting industry of Vietnam has developed strongly and has an important role in the supply chain. Large foreign corporations and groups have established many manufacturing and assembly plants in Vietnam. This shows that they expect to cut transport costs and risks, creating great opportunities for the local spare parts suppliers to develop production.

As a big global brand, in the Vietnamese market, Piaggio always takes the lead in the luxurious motorcycle category with well-known scooters, such as Beverly, Liberty, Fly and ZIP. They are modern, stylish and environmentally friendly and consume less fuel.

With a global business strategy focusing on the Asian market, Piaggio Vietnam is expected not only to become a hub to explore a potential market, but also help the group further penetrate into other new important markets in the region, especially Indonesia, Thailand, Taiwan and Malaysia.

So, it is understandable that Piaggio Group considers the Vietnamese market in particular and the Asian region in general as a key market in its global development strategy. However, like other manufacturers, in the current situation of economic difficulties, Piaggio is trying to find ways to cut production costs to increase its competitiveness. According to the experts, to do this, the best solution is to increase the percentage of locally-made products. Many manufacturers have successfully applied this solution. The most typical example is Honda which has cut about 50% of the product price by increasing the percentage of locally-made products to 93%.

Participation of the motorcycle spare parts manufacturers

In view of the above forecasts and calculations, many motorcycle manufacturers in Vietnam have taken adjustment steps in their production strategy. A typical example is Manh Quang Engineering Company, a well-known manufacturer of motorcycle spare parts in Vietnam.

Engineer Ha Si Thanh who has been attached to Manh Quang Engineering Company for nearly 30 years, said the company was established when the number of companies manufacturing motorcycle spare parts was finger counted. Due to timely grasping the market demands, the company has become a leading unit in this area in Vietnam.

With the motto “Vietnamese workers can be confident to manufacture prestigious motorcycle spare parts of good quality”, the company has invested in building two more plants and buying hundreds of modern specialized machines to increase its production capacity. Every year, it provides the market with nearly eight million motorcycle spare parts of all kinds, accounting for nearly 20% of the market share in Vietnam. It has become a big partner supplying motorcycle components for large companies, such as Honda, SYM, SuFat, Detech and Lifan.

Deputy Prime Minister Hoang Trung Hai (right) sees the miniature model of the supporting industrial project. Sodick CNC wire cutting machine at the moulding workshop of Manh Quang Engineering Company. CNC moulding machines of Manh Quang Engineering Company. Testing the quality of the depth of Carbon absorbing layer using a system of analysers of Japan and Germany. Motorcycle spare parts are produced using modern technology in Manh Quang Engineering Company. Motorcycle pinion production line of Manh Quang Engineering Company. A workshop of CNC lathes and milling machines of Manh Quang Engineering Company.

Workers and engineers of Manh Quang Engineering Company discuss about a new spare parts sample.

Workers in Manh Quang Engineering Company check the quality of products

Some products of Manh Quang Engineering Company. Photo: File of Manh Quang Engineering Company

We visited Manh Quang Motorcycle Spare Parts Plant in Thanh Tri, Hanoi at the time the plant was operating at full capacity to fill the large orders of the partners. The plant has four workshops with modern equipment from Japan, Germany, Switzerland and Taiwan, such as CNC (Computer numerical control) machines, CNC lathes, CNC drilling machines, 150-tonne high speed stamping-machines, frequency furnaces, 320-tonne and 400-tonne Fine Blanking stamping-machines which are the most modern in Southeast Asia, and coodinate measuring machine with an error of only 1 micron (1 millionth of a metre) of Carl Zeiss Company. The plant also applies the ISO 9001-2008 management system meeting five industry standards of Japan, including Seiri-Sorting, Seiton-Setting in order, Seiso-Shining, Seiketsu-Standardizing and Shitsuke-Sustaining, and towards the method of total quality management. With these, the plant can manufacture many types of motorcycle parts of high quality and accuracy to meet the requirements of the customers.

«...          Motorcycles account for 90% of the means of transport in Vietnam. It is predicted that the number of motorcycles in the country will reach 31 million units by 2015.

Now the plant’s revenue from the sale of spare parts is about 250 billion dongs a year, including 30% from the motorcycle assembly companies, 50% from the system of agents, 10% from the sub-contractors and the remaining 5% from retail. The products of Manh Quang Motocycle Spare Parts Plant are very diverse such as pinions, disks, chains (65%), bearings (12%), axles (9%), gears (9%) and others (6%). Manh Quang motorcycle spare parts were certified as the best Vietnamese products in 2010 and have been recognized as Vietnamese high quality products for 12 consecutive years.

Manh Quang’s story shows that the supporting industry in the motorcycle sector in Vietnam has great potential. Investment for the development of this sector will help the motorcycle manufacturers and assemblers in Vietnam solve the most difficult problem which is reducing costs to lower the product price to enhance competitiveness, especially in the current economic crisis of the world.