Motorcycle makers face roadblock

PUBLISHED : Monday, 28 September, 2009, 12:00am
UPDATED : Monday, 28 September, 2009, 12:00am

Motorcycles have been banned or restricted in more than 160 mainland cities as Beijing pushes car ownership and blames the two-wheeled vehicles for everything, from drive-by robberies and pollution to traffic accidents.

That is bad news for people like Gong Bin, the president of motorcycle maker China Jialing Industrial, whose sales have already been hit by an export slump and which is now competing against cheap locally made cars.

Motorcycles, once the prized possession of mainlanders wealthy enough to trade in their bicycles, are now out of favour as the government subsidises car ownership across the nation. Industry players such as Jialing are concerned Beijing's one-sided support for cars is hurting an industry that still provides mobility for millions of rural poor.

The consumption tax on motorcycles is 3 per cent, against 1 per cent for some small cars. The tax on small cars with a one-litre engine or smaller has been cut from 3 per cent as the central government encourages people to buy low-emission vehicles. Cars also enjoy an export tax rebate of 17 per cent, compared with 15 per cent for motorcycles.

'The government should reduce consumption taxes on motorcycle' to boost the industry, Gong said.

At least 168 mainland cities, including Tianjin and the capitals of 25 provinces, have banned or restricted the use of motorcycles since the end of 2006. Shenzhen followed suit recently by announcing a prohibition on battery-powered bicycles on the city's roads by the end of next year. Official reasons for the ban include easing traffic jams and minimising accidents and drive-by robberies.

Most local governments do not allow motorcycles to run in city centres or on highways. Chongqing, which is directly managed by the central government, is the only city that issues licences to motorcycle owners without limitations. Chongqing is the largest motorcycle manufacturer, with 10 million units produced last year.

Even in the villages, motorcycle ownership is restricted.

'Villagers can't get an official licence to own a motorcycle,' said Gong at the sidelines of the Chongqing Motor Show. 'Meanwhile, exports of motorcycles fell 55 per cent in the first eight months of the year because of the global financial crisis.'

Last year, China sold 27.5 million motorcycles, up 7.24 per cent from 2007.

Jialing, one of the motorcycle subsidiaries of Chongqing's car giant China South Industries Group Corp, makes domestic-brand motorcycles. China South also partners Japan's Honda Motor and Suzuki Motor and France's Peugeot Citroen to make motorcycles.

Excluding the 10.29 million units exported last year, 80 per cent of the motorcycles were sold to villagers.

'The mainland's motorcycle industry is the world's No1 and has recorded robust sales for 16 years,' said Du Fangci, an assistant general secretary of the China Association of Automobile Manufacturers.

Du also said motorcycles were still an important means of transport but were not benefiting from government support measures.

To survive during hard times, motorcycle makers must upgrade their products with lower emissions so that they can sell them overseas at a higher price.

Yao Jingyuan, the chief economist of the National Bureau of Statistics, said the mainland aimed to be fully middle class by 2020 and a growing car ownership was a sign the nation was moving towards that goal.

Motorcycle usage has also become an environmental issue. Ministry of environmental Protection researcher Yuan Ying said motorcycles had much higher emissions than a small car.

Yuan said 25 per cent of the carbon monoxide in the air was released by motorcycles, and the emission growth rate from motorcycles was much faster than cars.

Mainland motorcycle makers last year missed targets to meet the national III emission standard, the equivalent of the better-known Euro III standard. They will finally comply with the standard by 2011.

Liu Xin, a director of Tianjin's motorcycle technology centre, suggested a two-pronged strategy to sustain the industry. He said motorcycle makers should adapt to making high-end products for mature markets such as the United States and Europe and educate villagers to use motorcycles for leisure.

However, there is a long way to go before Chinese motorcycles become as prized as a 300,000 yuan (HK$340,500) Harley Davidson.

'The Harley Davidson is many men's dream, but the dream is curbed in many cities,' said Li Bin, the secretary-general of the China Association of Automobile Manufacturers' motorcycle section.