Consolidation to wipe out 90pc of motorbike firms

PUBLISHED : Tuesday, 26 November, 2002, 12:00am
UPDATED : Tuesday, 26 November, 2002, 12:00am

Waves of mergers and acquisitions in the next three to five years will wipe out about 90 per cent of the mainland's motorcycle manufacturers as the industry fights for survival.

More than 200 motorcycle makers, who together made 7.92 million units in the first nine months of this year, will be reduced to about 20 as the industry consolidates, according to a mainland vehicle industry association.

Motorcycle manufacturers are facing government restrictions on sales in 104 cities, the Chongqing Chenbao newspaper quoted the association as saying.

Following a boom, the industry has been hurt by fierce competition and slowing growth in the domestic market.

Motorcycle sales grew by 9.12 per cent year on year in the first nine months to September 30.

This was dwarfed by growth in the car and truck markets.

Sales of sedans grew 42.3 per cent year on year to 735,700 and those of trucks rose 36.55 per cent year on year to 939,900.

In the mainland, motorcycles are used largely by individuals and households with average incomes and have played a role as a handy means of transport during the country's rapid economic development in the past two decades.

The popularity of motorcycles has been overtaken by demand for sedans and trucks in recent years as a new breed of private business people have emerged and the middle class has swelled.

Motorcycle makers are now seeking to blaze a new trail in order to survive.

The country's three important motorcycle production bases - Chongqing, Guangzhou and Zhejiang province - have developed speciality models for racing, and for middle-tier and top-end users.

Like the country's car industry, motorcycle manufacturing is characterised by a large number of small and scattered operations.

Most of them are churning out cheap, low-quality products.

Only a few solid and sizeable players have emerged.

The car industry is facing similar problems.

Economists estimate that only 40 of the more than 130 carmakers will survive.

Four or five companies will dominate the market and each will have a joint venture or a co-operating accord with a global player.