Motorcycles, scooters, and mopeds are synonymous in Vietnam (in Vietnamese: xe máy). The motorcycle industry in Vietnam has been boosted in the 1990s due largely to foreign investment. Currently, Vietnam is considered the center of the motorcycle industry in Asia, with average annual sales of motorcycles in Vietnam reach 3 million units. The key players in the motorcycle industry include foreign brands: Honda, Yamaha, Piaggio, Suzuki, and SYM, and local producers of e-motorbikes: VinFast.
In recent years, the domestic motorcycle industry in Vietnam has faced challenges from the government's intention to reduce the number of motorcycles on the streets, the growing market of environmentally-friendly e-motorbikes, and expanding car ownership. The slowdown trends in the local motorcycle market growth have appeared. Under this trend, many motorcycle manufacturers turn to use Vietnam as a base of motorcycle production for exporting to other countries in and beyond the Asian region. In turn, the export industry has been particularly vulnerable to the COVID-19 induced lockdown and global economic decline.
At the same time, the motorcycle industry in Vietnam has drawn concerns from the public, the authority, and the academia. The most common worry is that motorcycle emission can worsen air quality and accelerate climate change. Studies have also shown that the persisting motorcycle dominance in transport could slow down the upgrading of urban facilities in accommodating four-wheel vehicles. Finally, the motorcycle taxi, one of the many occupations associating with the motorcycle industry, is seen as incompatible with the state's vision of urban modernity.
History While motorcycles were very much present in the roads of Vietnam since colonial times, the current motorcycle dominance on Vietnam's street is a relatively recent phenomenon. The motorcycle industry in Vietnam started to develop only after Vietnam embarked on the market reforms known as doi moi in 1986. Doi moi, therefore, marks a turning point in the development of motorcycle industry in Vietnam.
Pre Doi Moi Up until the 1980s, bicycles remained the dominant form of transport on Vietnam's street. In those days, motorcycles were prohibitively expensive for the average person due to the shipping fee and import tariffs. A majority of these early motorcycles were European products.
1950s During the 1950s, most of the motorcycles in both the Democratic Republic of Vietnam ("North Vietnam") and the Republic of Vietnam ("South Vietnam") were imported from France.
One of the popular motorcycle brands in Vietnam during this period was the French-made Mobylette (also known as Moby) by the French manufacturer Motobecane. It had the highest speed of 64 km/h. Mobylette's cute exterior won many fans that Moby enthusiasts still remember it to this day.
1960s and 1970s The 1960s was called the Italian era, or the era of the European wave, with most of the motorcycles from Europe, particularly Italy. The Italian-made Lambrettas and Vespas ruled the streets of the Republic of Vietnam. These were typically European-style classy and functional designs.
The 1960s also saw the rising of Japan-made motorcycles in the Republic of Vietnam. In this period, the importation of Japan-made Honda motorcycles was subsidized by U.S. dollars to aid in the "nation-building efforts" of the Saigon-led government. Honda 67 and Honda Cubs were the most famous modes. These stylish Japanese motorcycles became popular among civil servants due to its affordability. In Saigon back then, Honda motorcycle was a sign of social status.
1980s After the end of the Second Indochina War and the Socialist Republic of Vietnam's increasing integration into the COMECON Eastern Economic Bloc, motorcycles from Italy and Japan were joined by motorcycles from the USSR (Minsk), GDR (Simson), and Czechoslovakia (Babetta)/JAWA).
Vietnamese who went abroad to the Eastern Bloc as part of the COMECON labour exchange scheme often arranged for the shipment of motorcycles back to Vietnam. For example, after 1977, the Democratic Republic of Vietnam started to dispatched workers to Czechoslovakia under the Vietnam -Czechoslovakia labor exchange scheme. After 3- to 5- year stays in Czechoslovakia, receiving training on industrial skills ranging from heavy industry to Chemical to food productions, these trainees would return to Vietnam as skilled workers. Along with their stays in Czechoslovakia, many of them saved money to buy the Babetta/JAWA mopeds. They shipped it back home since it was one of the best-selling motorcycles on the then Vietnamese market. In the 1980s, one can purchase a house in Vietnam by selling three Czechoslovakia-made Babetta mopeds.
Post Doi Moi
1990s The motorcycle industry in Vietnam started to develop in the early to mid-1990s when the government launched an import substitution policy of motorcycles by erecting trade barriers and providing incentives for foreign direct investment. During the period, both motorcycle production and motor parts production experienced a rise. Foreign companies and joint ventures were the major players at this stage, while local suppliers' participation was limited.
Foreign direct investment from Taiwan and Japan was the major booster behind the motorcycle industry's growth in Vietnam in this period. By the late 1990s, the major motorcycle companies in Vietnam included one Taiwanese transnational corporate (VMEP, a subsidiary of Taiwan's Sanyang Motors) and three Japanese transnational corporates (Suzuki, Honda, and Yamaha). These four brands have remained as the key players in Vietnam's motorcycle industry till today.
Besides foreign direct investment in motorcycle production, motor parts production in Vietnam was boosted in the 1990s by the influx of investments from Taiwan and Japan. These parts manufacturers followed the motorcycle companies to invest in Vietnam, producing parts including tires, batteries, electric parts, brakes, and plastic parts. There were 13 Taiwanese suppliers initially following Sanyang's entry to the Vietnamese market, while the number of Japanese parts suppliers was smaller.
In contrast, local suppliers' participation at this time was rather limited. Although there were numerous local companies producing replacement parts, they were outside the procurement networks of foreign motorcycle companies for two reasons. First, the foreign motorcycle companies were not compelled to increase the local content ratio at this stage. Second, the parts produced by local companies did not meet the quality standards of transnational corporates. Except for a limited number of state-owned machinery companies that started to produce parts for Honda Vietnam in the late 1990s, no local parts suppliers participated in the transnational corporates' procurement network. Throughout the 1990s, Japanese motorcycle companies in Vietnam depended primarily on parts produced in-house and imported from outside Vietnam, especially Thailand. As a result, the hoped-for promotion of local industrialization largely failed to materialize.
2000s Into the 2000s, the motorcycle industry in Vietnam experienced a big jump in both production and market scale. Honda was the leading brand in this trend and it still enjoys the largest market share in Vietnam today.
This sudden surge of motorcycles in Vietnam was the result of rapid economic expansion that happened in the country after Doi Moi. According to the National Traffic Safety Committee, the number of motor vehicles in Vietnam grew from half a million in the 1990s to almost 14 million at the end of 2004. Motorcycles played an essential role in Vietnamese daily life due to its mobility to transfer people and goods. People drove motorcycles to travel around the city from door to door.
In this period, Honda motorcycles could be found in every street of Vietnam. Three typical Honda modes of from this period were Honda Spacy, Honda Win, and Honda Dream. The Honda Dream was a reproduction and upgrade of the Honda Cub that was popular in the South during the 1960s. The Honda Win was sturdier and more durable that it was a popular choice for riding up the mountainous region in the North. However, its market was challenged by the Chinese-made imitations in a lower price. The Honda Spacy was particularly popular among young females because it had storage space for a handbag. It was the only motorcycle at that time which had this function. Thus, Honda Spacy was considered to provide mobility to women who otherwise would be confined to domestic affairs.
Domestic industry Vietnam is regarded as the centre of the motorcycle industry in Asia. Since 2010, the average annual sales of motorcycles in Vietnam have reached 3 million units. Although motorcycle sales have remained a significant part of the market, a trend of slowdown has already emerged. The leader in this segment, the local brand VinFast, is now the third-largest player in the market, with annual sales exceeding 100,000 units.
Notably, while they have struggled to gain a foothold in the emerging e-scooter market, Japanese motorcycle manufacturers still dominate the landscape.
At least three factors contribute to this new dynamic in the motorcycle industry in Vietnam: 1) the government's intention to reduce the number of motorcycles on the streets; 2) the growing market for environmentally friendly e-motorbikes; and 3) the increasing rates of car ownership in the country.
Government's intention to reduce motorcycles on streets
One reason for the drop in motorcycle sales is the government's attempt to clear motorcycles on the streets. This is because the numerous motorcycles, resulting in traffic congestion, air pollution, fatal accidents, and other significant consequences.
Following the line, in 2017, Hanoi city authority approved a plan to ban the motorcycles that swarm its streets by 2030 in an attempt to reduce traffic jams and pollution. Ho Chi Minh city authority, though decided not to ban motorcycles, approved a project "Strengthening public transport in combination with controlling motor vehicles in Ho Chi Minh City" in 2018 to restrict motorcycles from entering the central districts of the city.
Government's preference for e-motorbikes Besides, the government presents a preference towards the environmental-friendly e-motorbikes. However, no serious efforts have been enabled toward this end before the arrival of the COVID-19 pandemic.
Nevertheless, the sales of e-motorbikes perform relatively well in recent years.
VinFast is the champion in the local e-motorbike market. It is a sub-corporate of VinGroup, which was founded in 2017. The company produces only electric vehicles in the two and four-wheelers. With only two-year existence, VinFast has doubled its sales from 2019 to 2020 and is building a new plant.
Impacts of the COVID-19 pandemic Furthermore, in 2020, the pandemic has hit the motorcycle industry. The lockdown and the consequent economic decline have impacted motorcycles' sales.
Expanding car ownership In recent years, the growing car ownership in Vietnam is also viewed to have post challenges on the motorcycle industry. Studies have concluded that the increasing car market results from economic development and the weakened role of motorcycles as a sign of social distinction.