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Exports on the Wane, Chinese Motorcycle Industry Seeks Transformation
"The Chinese motorcycle industry has entered a dead end as the sales competition on overseas markets are fierce and Chinese cities ban the use of motorcycles," said Mr. An Zineng, the Secretary General of China Industrial Product Brand Promotion Committee, at the Chongqing 2012 China Motorcycle Innovation Summit.
The overseas motorcycle market has become the last straw for mitigating Chinese motorcycles sales decline since the motorcycle sales plunge in China in 2010. However, export data of quarter one 2012 showed that Chinese motorcycle exports encountered a decline after many years' of increase. According to insiders, the situation will not improve in the latter half of 2012.
According to the statistics of China Association of Automobile Manufacturers, the output and sales of the Chinese motorcycle industry in Q1 2012 were 5.5412 million units and 5.6299 million unitsrespectively, down 8.81% and 8.82% .                    
Overseas Market Encounters a Turning Point
According to the statistics of China Association of Automobile Manufacturers, Chinese motorcycle exports in Quarter 1 2012 were reduced to 2.0073 million units from 2.2301 million units of last year, down 4.8% year-on-year. Chinese motorcycle exports were increased by 14.36% in 2011 from 2010. Many participating representatives were pessimistic about Chinese motorcycle exports in latter 2012.
Overseas markets play a vital role for Chinese motorcycle sales as motorcycle sales in China keep declining. Chinese motorcycle exports reached 10.74 million units last year, accounting for 40% of the total motorcycle sales.
Usual Chinese motorcycle export destinations include countries in Africa, South America and Southeast Asia. However, the price advantage of Chinese motorcycle products is disappearing along with the rise of production costs and the appreciation of RMB. "Chinese motorcycle products have encountered apparent impacts from local products in Vietnam and other countries," said Mr. An Zineng.
Mr. An Zineng held that it is an inevitable consequence of the Chinese motorcycle industry which has only focused on low end products. "The development way of Chinese motorcycle industry is always to transfer to low-end markets. Motorcycle sales have been transferred from urban areas to rural areas and then to developing countries. Small engine displacement motorcycles are key products of the Chinese motorcycle industry."
Motorcycles with engine displacement less than 150ml take up the majority of Chinese motorcycle exports. "Small displacement, low additional value, and limited markets, Chinese motorcycle export has reached an end," said Mr. An Zineng.
Small displacement motorcycles have been losing their price advantage in China with the ban on the use of motorcycles in cities, the implementation of National III emission standards and the increasing population of electric vehicles. "The age of giving away TVs, fridges have gone, now we give away BMWs for the purchase of motorcycles," Mr. Chen Yinlin from Wuyang-Honda said at the summit.
Chinese Motorcycle Industry Faces Many Troubles during Transformation
The future of small displacement motorcycle is dim whereas the future of imported large displacement motorcycle is bright in China. Harley-Davidson saw sales double last year and Ducati's sales last year was 8 times that of 2010 in China.
So, making large displacement motorcycle has become a common sense in the Chinese motorcycle industry. Many Chinese motorcycle manufacturers including Dachangjiang, Lifan, Loncin, Zongshen, and CF Moto released large displacement (over 250ml) motorcycles last year, including 600ml and 650ml super large displacement motorcycles.
However, technical bottleneck is the key restraining the upgrade of the Chinese motorcycle industry. Chinese large displacement motorcycles still need overseas technologies. The CF Moto 650TR which was praised as the innovative product at the summit uses Italian technology. Zongshen's representative reported to our reporter that their 450ml and 650ml large displacement motorcycles which are under development will adopt Korean engines.
The ban on the use of motorcycles has left small displacement motorcycles with no market in China's urban areas, and also affected the transformation of the Chinese motorcycle industry to make large displacement motorcycles.
Even though there are no definite laws and regulations banning the use of motorcycles in cities, there are more than 200 Chinese cities ban the use of motorcycles with some of the cities placing the ban for over 10 years.
Mr. An Zineng expressed that large displacement motorcycle has a bright future in China. But the transformation of the Chinese motorcycle industry will be restrained as long as the ban on the use of motorcycles in Chinese cities exists. "On one hand, large displacement motorcycles are liked by China's urban consumers; on the other hand big Chinese cities ban the use of motorcycles. How can this contradiction be solved?" Mr. An asked himself.
Harley-Davidson, BMW and other motorcycle exporters revealed in their company reports that the ban on the use of motorcycles in big Chinese cities has greatly hindered their business expansion in China.
Mr. An Zineng thought that the number of Chinese motorcycle manufacturers will be reduced and integrated to about 10 in three or five years from the current number of more than 200 seeing that the Chinese motorcycle industry is facing internal and external troubles.