Taiwan’s Motorcycle Industry Cutting edge tech reaches out to the world market                                                      By Polly Yang  2007.06.12 Characteristics of the Industry Taiwan’s motorcycle makers have reached a self-manufacturing rate exceeding 98%. Meanwhile, with a consolidated supply chain linking everything from motorcycle parts to complete motorcycles, production volume of Taiwan’s motorcycle industry not only meets demand for domestic market but also plays a vital role in supplying the international market. Over the past three years, annual production value of Taiwan’s motorcycle industry has exceeded more than NT$40 billion, while production value of Taiwan’s motorcycle parts industry grew even more significantly, jumping from NT$28.6 billion in 2003 to NT$40.5 billion in 2004 with an increase of 42%. The total production value of motorcycles and parts in 2004 reached as high as NT$82.7 billion. Even though star Hi-tech industries have overshadowed the traditional industries in Taiwan, there are still industries striving to upgrade their production quality and marketing competitiveness.  Motorcycle industry is one of the best examples and it has become one of Taiwan’s most competitive industries. In 2006 production value of Taiwan’s motorcycle industry and parts industry came to NT$41.5 billion and NT$37.6 billion respectively, with a total production value of NT$79.1 billion.   Production Value of Taiwan’s Motorcycle Industry Unit: NT$100 million       year  industry 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 motorcycle 465 411 369 367 303 307 406 422 440 415 growth rate 0.87% -11.61% -10.22% -0.54% -17.44% 1.06% 32.25% 3.94% 4.27% -5.68% Motorcycle Parts 410 325 308 259 205 243 286 405 406 376 growth rate 12.64% -20.73% -5.23% -15.91% -20.85% 18.91% 17.70% 41.61% 0.25% -7.39% total 875 736 677 626 508 550 692 827 846 791 Growth rate 13.51% -15.89% -8.02% -7.53% -18.85% 8.27% 25.82% 19.51% 2.3% -6.50% Source: Taiwan Transportation Vehicle Manufacturers Association   Domestic and International Markets In 2006, the total sales volume of Taiwan’s complete motorcycle (CBU) was 1,235,210 of which 746,504 went to the domestic market and 488,706 went to the international market. The opening of more convenient public transportation system and changing consumer tastes had led to an oversupply on the domestic market with sales volume in Taiwan gradually declining from 1.19 million sets in 1994 to 746 thousand sets in 2006.   But this adversity has inspired manufacturers of motorcycles and parts to focus more upon developing new products and expanding the export market. Taiwan’s exports to Europe have become increasingly competitive with its status as a WTO members and the appreciation of Euro. This can be seen in 2004 when export value of complete motorcycles soared to record highs, with much growth attributed to the rebound of the global economy, booming international trade and the increasing demand for the ATV parts.   As we can see from the statistics over the past 3 years, in 2004, exports volume for motorcycles (CBU plus KD) was 840 thousand sets, accounting for 52.10% of total sales while in 2005, with export volume was 650 thousand sets, accounting for only 45.16% and in 2006, 680 thousand sets, accounting for 47.53%.   Exports grew from a ratio of 34.12% in 1998 to 47.53% in 2006, as indicated in the chart below. As a result it can be said that Taiwan’s motorcycle industry has moved from its domestic-sales-oriented stage to largely become an export industry.   Production & Sales Volume of Taiwan’s Motorcycle Industry year 1998 1999 2000 2001 2002 2003 2004 2005 2006 domestic sales vehicle number 872,168 796,919 759,170 628,776 633,078 781,033 772, 814 793,918 746,504 market share（CBU） 65.88% 67.06% 67.49% 73.87% 72.19% 71.01% 60.92% 62.28% 60.44% market share（including KD） 65.88% 67.06% 67.49% 62.23% 56.49% 58.21% 47.90% 54.84% 52.47% growth rate -14.34% -8.63% -4.74% -17.18% 0.68% 23.37% -1.05% 2.73% -5.97% exports CBU 451,754 391,507 365,775 222,440 243,900 317,519 495,776 480,768 488,706 market share 34.12% 32.94% 32.51% 26.13% 27.81% 28.90% 39.08% 37.72% 39.56% growth rate -10.80% -13.34% -6.51% -39.19% 9.65% 30.18% 56.14% -3.22% 1.65% KD -- -- -- 159,217 243,619 243,192 344,633 173,024 187,581 Sub-total 451,754 391,507 365,775 381,657 487,519 560,711 840,409 653,792 676,287 market share 34.12% 32.94% 32.51% 37.77% 43.51% 41.79% 52.10% 45.16% 47.53% growth rate -10.80% -13.34% -6.51% 4.34% 27.74% 15.01% 49.88% -22.21% 3.44% total CBU 1,323,922 1,188,426 1,124,945 851,216 876,978 1,098,552 1,268,590 1,274,686 1,235,210 growth rate -13.16% -10.24% -5.34% -24.33% 3.03% 25.27% 15.48% 0.48% -3.10% KD -- -- -- 159,217 243,619 243,192 344,633 173,024 187,581 total 1,323,922 1,188,426 1,124,945 1,010,433 1,112,597 1,341,744 1,613,223 1,447,710 1,422,791 growth rate -13.16% -10.24% -5.34% -10.18% 10.90% 20.60% 30.77% -10.26% -1.72% Vehicle number 1,309,958 1,181,796 1,121,310 994,794 1,123,061 1,341,089 1,603,275 1,449,458 1,412,953 Growth rate -14.09% -9.78% -5.12% -11.28% 12.89% 19.41% 19.55% -9.59% -2.52%  Source: Taiwan Transportation Vehicle Manufacturers Association   Imports and Exports of Complete Motorcycles With the appreciation of Euro, Taiwan’s motorcycle exports to Europe are more and more competitive, making Europe the biggest export market of Taiwan’s motorcycles. In 2006, Taiwan’s complete motorcycles exports to Europe reached 186,359 sets. Among the European countries, market share in Italy ranked number 1 with export value at NT$ 1.6 billion, following by Spain with NT$ 1.5 billion.  Owing to the booming Asian market, Taiwan’s complete motorcycles exports to Asia in 2006 amounted to 181,320 sets, with Japan, Hong Kong, and South Korea leading the market shares.   Export value of Taiwan’s complete motorcycles was NT$ 16 billion in 2006, decreasing from 2005 with NT$ 16.3 billion. The decrease was due to the appreciation of NT$ against US$ that weakened the competitive price of Taiwan’s motorcycles on the international market and increased investment cases that shifted production lines offshore and had them directly exported from offshore bases. The top ten export destinations of Taiwan’s complete motorcycles in 2006 were Japan, Italy, USA, Spain, Belgium, Germany, Canada, Hong Kong, South Korea, and Australia. Main exporters were Kwang Yang Motor Co., Yamaha Taiwan, Sanyang Industry Co., Tailing Motor Co., Motolift Corp., Yeong Fan Ind., CPI Motor, and Her Chee Ind. Co.. In regard to imports in 2006, Taiwan imported NT$ 1.3 billion worth of motorcycles mainly from top ten supplying countries including Japan (NT$ 0.9 billion), Germany (NT$ 0.21 billion), Italy (NT$ 0.07 billion), USA (NT$ 0.06 billion), UK (NT$ 0.03billion), China (NT$ 0.01 billion), Thailand, Australia, Spain, and Vietnam.   Riding rights have since August 2007 been granted to expressways for the heavy-duty motorcycles with displacement over 550 c.c. Only test rides over expressways were permitted before that change. And since then there has been renewed interest in purchasing big-capacity motorcycles. The average demand for big-capacity motorcycles in Taiwan is around 8,000 to 10,000 sets. In 2006 as example, 6,000 new number plates were issued for big-capacity motorcycles, and with the expressway prohibition lifted, consumer choice for vehicles is expected to become more diverse.   Export Value of Taiwan’s Motorcycles by Country 2004~2006 Unit: NT$1,000 Ranking Country 2006 2005 2004 1 Japan 4,081,158 3,229,759 3,637,379 2 Italy 1,572,169 2,014,331 1,423,146 3 USA 1,564,767 1,729,535 1,919,091 4 Spain 1,528,099 1,657,139 957,146 5 Belgium 880,428 911,226 686,680 6 Germany 731,599 751,752 887,205 7 Canada 629,600 396,512 - 8 HK 515,914 540,827 557,312 9 South Korea 432,226 205,542 - 10 Australia 357,580 256,275 156,598 11 Israel 354,338 272,567 201,829 12 Denmark 328,485 319,359 285,680 13 Greece 286,621 342,598 348,469 14 France 257,998 197,530 260,136 15 Turkey 242,963 316,919 - 16 Malaysia 240,449 730,895 1,005,112 17 UK 184,226 235,116 321,792 18 Holland 153,344 189,251 224,388 19 Macau 134,558 - - 20 Sweden 132,119 - - Others 1,436,491 1,977,823 2,777,401 Total 16,045,132 16,274,956 15,649,364 Source: 1. R.O.C. Customs Statistics 2. Taiwan Transportation Vehicle Manufacturers Association   Imports and Exports of Motorcycle Parts With a global emergence of tastes for sporty trends and casual living, the ATV has become the core item of Taiwan motorcycle manufacturers. These new trends have permitted the fledgling ATV industry to increase imports of motorcycle parts.  As a result Taiwan imports of motorcycle parts in 2006 amounted toNT$5.7 billion mainly from China, Japan, Italy, USA, Malaysia, Vietnam, Singapore, Thailand, France, and Switzerland. It’s worth mentioning that since 2006, China substituted for Japan as Taiwan’s number one source for motorcycle parts.   Exports of Taiwan’s motorcycle parts in 2006 reached NT$38.7 billion with the top ten destinations being the USA, Germany, Italy, china, Holland, Japan, Vietnam, Hong Kong, UK, and Canada. For parts, the main export products include motorcycle tires, gears, and engines.  Given that some manufacturers recently expanded overseas investment in combination with complete motorcycles, an increase in the export of motorcycle parts is projected.   Top 10 imports and exports countries of Taiwan’s motorcycle parts in 2006 Unit: NT$1,000 Exports USA Germany Italy China Holland Japan Vietnam HK UK Canada Value 8,641,364 2,921,228 2,876,426 2,239,486 2,142,907 2,018,144 1,536,792 1,426,564 1,263,665 1,095,212 Imports China Japan Italy USA Malaysia Vietnam Singapore Thailand France Switzerland Value 2,181,767 2,054,751 300,174 298,299 204,622 181,725 150,158 60,669 59,406 53,135   Ending Summary Taiwan’s motorcycle industry dates back more than 40 years and creates around NT$80 billion production value annually.  However, in the face of saturated domestic market and the competitive international market, continued research and innovation are believed to be the key ways to keep up with the market trends and to continue research and innovation. Currently, motorcycles made by Taiwan with displacement of less than 250 c.c. have comparable quality compared with those produced in Japan and is highly praised by foreign customers. In recent years, Taiwan manufacturers have dedicated themselves to the development of motorcycles with displacements from 250 c.c. to 500 c.c., which are more suited for the European and the US markets. The Taiwanese have tactfully sidestepped price wars potential rivals in China by choosing to focus upon high value-added product development. With the aim to expand market share in emerging markets across South East Asia, China, Latin America, and Africa, Taiwanese companies are using the strategy of offering products with reasonable price and practicability.   Over the past years, Taiwan’s motorcycle manufacturers have expanded their offshore production to India, Indonesia, Vietnam, and China. Through long-term investment experience, they fully understand the characteristics of those markets; therefore, Taiwanese companies are the best partners for international companies that are interested in entering the above-mentioned countries. As a result “Via-Taiwan Service” - Taiwan offers the perfect gateway for overseas companies interested in the Asian market.