The Chinese Motorcycle Manufacturing Industry

[dy245000]

I have some motorcycle product numbers to share.

(Original in Chinese) July 8, 2011: in the Chinese Automobile Industries Manufacturing Committee's monthly meeting report, there were numbers from Motorcycle Manufacturing Industry as well. According to the reporter, the numbers for domestic motorcycle sales is in steady decline while exports of motorcycles has created to an all time high for June, 2011.
Sales of motorcycle domestically was 2,320,800 units in June, a decline of 1.25% from May, 2011. A decline of 13.95% from the same period last year. Sales of two wheeled motorcycles were 2,114,600 units and the rest were three wheeled motorcycles.
First half of 2011 sees a sales of 11,959,600 units of two wheeled motorcycles, a decline of 9.98%( comparing to last half of 2010, I assume). Sales of three wheeled motorcycles were 1,167,700 units, an increase of 10.39%.
Other than a decline of sales, all the major indecators were in decline as well.
Of the 104 Chinese Motorcycle manufacturers, they produced RMB500,140,000,000 worth of motorcycles from Jan.-May, 2011. a decline of 0.86% (did not say comparing to what period). Sales was RMB505,720,000,000, and increase of 0.49% (again, did not say comparing to what period). Profits were RMB12,280,000,000, a decrease of 32.58% (again, did not say comparing to what period or my Chinese is not good enough to understand-同比下降32.58%).
Under the soft domestic market for motorcycles, the motorcycle manufacturers were all increasing their export business. There were 4,921,800 units exported during the first 6 months of 2011, an increase of 26.57%, with an all time high of 995,500 units in June, 2011, an increase of 8.77%. The last all time high was in August, 2008.
I am pretty bad with the big numbers, I donot deal with them too much. The Western World use 1K as base unit while the Chinese uses 10K. Therefore, I may be off by a factor of 10. I did go through these numbers more than twice.
Am I reading this right, the "bike free guys" in China are winning while the reset of the world is moving from cars to motorcycles?
I know that some bike manufacturings are not investing to get a C3 certfication for their dirt bikes. It is not worth their while, they only sold a few when it was C2.
This is a bad trend, we all need to go out and buy new bikes to support the bike manufacturing industry and domistic sales. I've done my part, I order a new Shineray250 with C3 certification. It should be here in two weeks or so.

http://www.flickr.com/photos/10364858@N00/6238187470/

[euphonius]

I have some motorcycle product numbers to share.

...
Sales of motorcycle domestically was 2,320,800 units in June, a decline of 1.25% from May, 2011. A decline of 13.95% from the same period last year. Sales of two wheeled motorcycles were 2,114,600 units and the rest were three wheeled motorcycles.
First half of 2011 sees a sales of 11,959,600 units of two wheeled motorcycles, a decline of 9.98%( comparing to last half of 2010, I assume). Sales of three wheeled motorcycles were 1,167,700 units, an increase of 10.39%.

Dear David,

Thanks for posting. These numbers, though seemingly in decline, are staggering! Jialing's website claims a production capacity of 2 million bikes a year, though surely a good portion of those are exported. Though Jialing's news site in English is filled with tantalizing tidbits, it's not filled with hard facts.

But that number above noting that 2.1 million of the 2.3 million bikes sold in June were two-wheelers surely reveals an amazing statistic for Jialing, since the remaining bikes sold that month are described as three-wheelers and, to my knowledge, only Jialing makes a modern production sidecar bike, the JH600B. If there is no competitor, that means that Jialing sold 206,200 600B models in that one month alone! Again, this report does not differentiate between domestic and export sales, but that's quite a number regardless!

Incidentally, I notice Jialing's site now allows you to read it in Spanish, French and even Arabic in addition to English and Chinese!

Damn, I wish they'd spend as much effort on domestic marketing as they do in global marketing, which one of their news items describes as a "counter-offensive war".

I wish they'd declare war on stupid and discriminatory government policy at home in China!

By the way, can you post a link to the Chinese version of the news item you've posted above? Thanks!

Oh, and tell us more about this C3-compliant Shineray 250. Have you seen actual certification that it meets China3 emissions requirements? And didn't you have some other bike previously? A Galaxy? What happened with that?

cheers

[dy245000]

These numbers, though seemingly in decline, are staggering! Jialing's website claims a production capacity of 2 million bikes a year, though surely a good portion of those are exported. Though Jialing's news site in English[/URL] is filled with tantalizing tidbits, it's not filled with hard facts.
But that number above noting that 2.1 million of the 2.3 million bikes sold in June were two-wheelers surely reveals an amazing statistic for Jialing, since the remaining bikes sold that month are described as three-wheelers and, to my knowledge, only Jialing makes a modern production sidecar bike, the JH600B. If there is no competitor, that means that Jialing sold 206,200 600B models in that one month alone! Again, this report does not differentiate between domestic and export sales, but that's quite a number regardless!
Damn, I wish they'd spend as much effort on domestic marketing as they do in global marketing, which one of their news items describes as a "counter-offensive war"[/URL].
I wish they'd declare war on stupid and discriminatory government policy at home in China!
By the way, can you post a link to the Chinese version of the news item you've posted above? Thanks!
Oh, and tell us more about this C3-compliant Shineray 250. Have you seen actual certification that it meets China3 emissions requirements? And didn't you have some other bike previously? A Galaxy? What happened with that?
cheers

Yes, I don't think MCM members know how big the Chinese bike market is. I sure the hell didn't.
Remember, Jialing's only one of the 104. It's a big one, but still.......
The three wheeled motorcycles I was referening to were those with two wheels in the back and one in the front, not the side cart type, although I have seen and rode in some very nice custom made side carts in Philipines attaching to two cycle 125cc motorcycles.
Seems like the Chinese use the three wheeled motorcycles for everything, from moving cargos in whole sale markets, to pasenger transportation on remote islands and everything else in between. They are not legal here, but that don't stop them from using them. They are legal in some other places. I rode in one with 5 other people a few weeks ago and I am fat, by US standard. They even put a backup level in them, very handy. Shineray has up to 350 water-cooled engines for them and other manufacturer have even bigger ones. I saw, more than once, three wheeled trucks. Yes, you heard it right, full size, 5 ton trucks and overload. I'll see if I can find a picture for you.
Like everybody else, they go where the money is. That's the way of life.
Since it is a one party government, I would not be very supprised to see bikes back in bike free cities like GuangZhou in the future. They can give it back as easy as they can take it away, but may not be in our life time.
I'll try to find the Chinese post again and send it to you. I copied it for easy translation, I'm running multiple screens.
No, I have not actually seen this C3-compliant Shineray 250 yet nor seen the C3 certificate. I just ordered it with the other Chinese bikers, safety in numbers, at least there will be 39 other fools with me.
The Galaxy SUV250? I am riding it with the others, but I am still waiting for your advice.
David

[dy245000]

Hi, MJH, greetings.
I think I got the June 2011 figures from the same source, although yours are more detailed. I didn't understand the two figures format, so I just post one and the corresponding percentage.
David

[Lao Jia Hou]

Great thread, thanks David

I'd offer a couple of comments on the numbers. One of my "retirement jobs" is managing an investment fund and, for personal interest reasons, I've been looking at the motorcycle industry in China. I've had a couple of researchers looking into a few things that you touch upon.

One of the many reasons why domestic sales have been recently declining is the maturity of a purchase-incentive-program the government had for rural residents (i.e., farmers). This rebate program created a significant bump in sales during 2010, but it has largely run its course (hence, the statistical decline in sales). The majority of domestic sales is in rural China, for small, inexpensive two-wheeled motorcycles (Jialing's bread & butter).

Another reason, which city dwellers certainly notice, is the love affair with the automobile. But urban residents have always been a small proportion of overall domestic motorcycle sales. The impact of the automobile on urban motorcycle sales is actually quite negligible. Where the auto may show up is in the "upgrade" phenomenon. Motorcycle manufacturers have historically relied on entry-bikes leading to the subsequent purchase of an upgraded model (and one which is more profitable). In China, however, it is likely that the farmer-bikes may be upgraded to QQ-style autos.

Drilling down into the rural-urban split, however, one sees that larger displacement motorcycles (quite profitable) are overwhelming purchased by urban residents. Small displacement bikes have tiny margins and a manufacturer/dealer needs huge volumes. Unfortunately, subsequent to the rebate program, volume is down and there is a significant adjustment in the Chinese dealer network going on, with many smaller shops selling smaller bikes simply closing their doors. The pie is getting smaller, and a few of the larger shops are consuming larger portions of it. The pie is also changing its filling - profitability is now coming from larger, recreational motorcycles.

I recall reading an article that looked at the ratio between what customers spend on a new bike purchase, and what the customers spend on all of the aftermarket goodies. For small displacement bikes, the ratio was tiny. For large bikes (e.g., Harleys & BMWs), it was staggering. Harley, better than anyone, understands this perfectly. Get someone on a Sportster, and watch that customer's weekly salary be spent on customizing it. Then in a year, or two, upgrade the Sporty to a Dyna, and start the process over again. And, of course, also offer a full clothing line!

I came across some stats about the 3-wheeled vehicles, and discovered what you said is very true - the overwhelming majority of the 3-wheel sales are for tricycle-type vehicles/trucks. The sales number for sidecar motorcycles was microscopic. I forget the exact number, and it is not easily at hand, but it was something like less than a few thousand for all of 2010. Sidecars are a tiny, tiny, tiny market.

From what I have been reading about the North American market, the motorcycle industry is in very serious trouble. Sales throughout 2009, 2010 and again in 2011 have been plummeting. Unlike the craziness of the 80s and 90s, where having a Harley dealership ensured instant riches, many Harley dealers are now being forced to close their doors. Sales for 2010 in North America are less than half the sales of 2007. Preliminary reporting suggests 2011 will continue this downward trend.

What appears to be picking up overseas is the sales of fuel efficient scooters & small displacement commuters. Only BMW is bucking the trend with its large displacement bikes.

Almost all of the investment-based articles relating to the motorcycle industry that come across my desk focus on two things:

1) changing customer profiles;
2) disbelief & guffaws by the manufacturers.

Like the American auto industry in the 1970s, there is an arrogance with many motorcycle manufacturers & its dealer networks. They are refusing to recognize the reality that today's customers are interested in a different type of motorcycle. It is no longer a case of "they will buy whatever we produce." For example, again, as was experienced by Harley during the 80s and 90s in the USA.

All said, I still maintain a positive outlook for the Chinese motorcycle industry. The Chinese have proven, time and again, an immense ability to adapt. If you place a 1990s Chinese motorcycle against a 2010 Chinese motorcycle, the changes are mind-boggling. I am confident that the Chinese motorcycle in 10 years will be light years away from the current offerings.

On a personal note, having owned both the CJ750 (in various forms) and the JH600B, I can see the incredible differences. It reminds me of the difference between an AMC Gremlin/Pacer and a Honda Civic/Accord. The "B" ain't perfect, yet, but at least its parts stay attached to the bike.

[MJH]

Motorcycle export (cumulative) as of July 2011, Total exports: 5,978,140 (+29% over same period 2010)

1) Chongqing Loncin Motorcycle Co., Ltd. 542 274 (+15%)
2) Lifan Industry (Group) Co., Ltd. 529 904 (+95%)
3)Zongshen Industrial Group Co., Ltd. 402 082 (+83%)
4)Motorcycle Co., Ltd. Guangzhou Jin Hao 353 499 (+33%)
5)Chongqing Yinxiang Motorcycle 326 037 (+21%)
6)Jincheng Group Co., Ltd. 249 100 (+22%)
7)Motorcycle Co., Ltd. 247 858 (+37%)
Guangzhou Grand Canal
8)Grand River Group Co., Ltd. Jiangmen 233 938 (+37%)
9)Chongqing Bashan Motorcycle 189 199 (+22%)
Manufacturing Co., aerospace
10)Sundiro Honda Motorcycle Co., Ltd. 156 625 (+50%)
11)Qianjiang Group Co., Ltd. 154 374 (+61%)
12)Chongqing Jianshe Motorcycle Co., Ltd. 153 533 (+4%)
13)Guangzhou Tianma Group 150 407 (+1%)
Tianma Motorcycle Co., Ltd.
14)China Jialing Industrial Co., Ltd. (Group) 123 972 (-14%)
15)Chongqing Motorcycle Co., Ltd. Xinyuan119 610 (+12%)
16)Hao Jian Guangzhou Panyu 118 722 (+20%)
Motorcycle Industry Co., Ltd.
17)Group Co., Ltd. 110 075 (+24%)
Guangdong Yinhe Motorcycle
18)Heshan National Motorcycle 99916 (+4%)
Industry Co., Ltd. Winsor machine
19)Luoyang Northern Ek Chor 98530 (+71%)
Motorcycle Co., Ltd.
20)Daye Motorcycle Technology Co., 98353 (+66%)
Ltd. of Guangdong

Top 20 Exporters

[MJH]

Total production:
As of July 2011
15,340,212 (change from same period 2010) (-8.8%)

1) Grand River Group Co., Ltd. Jiangmen (-30%) Production of 1,351,618
2)Chongqing Loncin Motorcycle Co., Ltd. (+1%)
3)Lifan Industry (Group) Co., Ltd. (-4%)
4)Luoyang Northern Enterprises Group Co., Ltd. (-13%)
5)Zongshen Industrial Group Co., Ltd. (+3%)
6)Chongqing Jianshe Motorcycle Co., Ltd. (-20%)
7)Luoyang Northern Ek Chor Motorcycle Co., Ltd. (-13%)
8)Motorcycle Co., Ltd. Guangzhou Grand Canal (-5%)
9)Chongqing Yinxiang Motorcycle (+21%) “” 565,966
10)China Jialing Industrial Co., Ltd. (Group) (-17%)
11)Qianjiang Group Co., Ltd. (-14%)
12)Wuyang - Honda Motors (-3%)
13)Sundiro Honda Motorcycle Co., Ltd. (-13%)
14)Motorcycle Co., Ltd. Guangzhou Jin Hao (+22%)
15)Jincheng Group Co., Ltd. (+16%)
16)Guangzhou Motors Group Company (-49%)
17)Long Motorcycle Industrial Co., Ltd. Jinan (+8%)
18)Chongqing Bashan Motorcycle (+30%)
19)Guangzhou Tianma Group (+3%)
Tianma Motorcycle Co., Ltd.
20)International Heavy Industry Co., Ltd. LOVOL (-2%)
*
*
*
26)Jinan Qingqi Motorcycle Co., Ltd. (-28%)
*
*
*
31)Group Co., Ltd. Guangdong Yinhe Motorcycle (+24%) production of 116,075


Sources; China Association of Automobile Manufacturers

(I left off most of the actual production numbers…you can pretty much guess the production numbers based on rankings)

[dy245000]

One of the many reasons why domestic sales have been recently declining is the maturity of a purchase-incentive-program the government had for rural residents (i.e., farmers). This rebate program created a significant bump in sales during 2010, but it has largely run its course (hence, the statistical decline in sales). The majority of domestic sales is in rural China, for small, inexpensive two-wheeled motorcycles (Jialing's bread & butter).

Another reason, which city dwellers certainly notice, is the love affair with the automobile. But urban residents have always been a small proportion of overall domestic motorcycle sales. The impact of the automobile on urban motorcycle sales is actually quite negligible. Where the auto may show up is in the "upgrade" phenomenon. Motorcycle manufacturers have historically relied on entry-bikes leading to the subsequent purchase of an upgraded model (and one which is more profitable). In China, however, it is likely that the farmer-bikes may be upgraded to QQ-style autos.

Drilling down into the rural-urban split, however, one sees that larger displacement motorcycles (quite profitable) are overwhelming purchased by urban residents. Small displacement bikes have tiny margins and a manufacturer/dealer needs huge volumes. Unfortunately, subsequent to the rebate program, volume is down and there is a significant adjustment in the Chinese dealer network going on, with many smaller shops selling smaller bikes simply closing their doors. The pie is getting smaller, and a few of the larger shops are consuming larger portions of it. The pie is also changing its filling - profitability is now coming from larger, recreational motorcycles.

I recall reading an article that looked at the ratio between what customers spend on a new bike purchase, and what the customers spend on all of the aftermarket goodies. For small displacement bikes, the ratio was tiny. For large bikes (e.g., Harleys & BMWs), it was staggering. Harley, better than anyone, understands this perfectly. Get someone on a Sportster, and watch that customer's weekly salary be spent on customizing it. Then in a year, or two, upgrade the Sporty to a Dyna, and start the process over again. And, of course, also offer a full clothing line!

I came across some stats about the 3-wheeled vehicles, and discovered what you said is very true - the overwhelming majority of the 3-wheel sales are for tricycle-type vehicles/trucks. The sales number for sidecar motorcycles was microscopic. I forget the exact number, and it is not easily at hand, but it was something like less than a few thousand for all of 2010. Sidecars are a tiny, tiny, tiny market.

From what I have been reading about the North American market, the motorcycle industry is in very serious trouble. Sales throughout 2009, 2010 and again in 2011 have been plummeting. Unlike the craziness of the 80s and 90s, where having a Harley dealership ensured instant riches, many Harley dealers are now being forced to close their doors. Sales for 2010 in North America are less than half the sales of 2007. Preliminary reporting suggests 2011 will continue this downward trend.

What appears to be picking up overseas is the sales of fuel efficient scooters & small displacement commuters. Only BMW is bucking the trend with its large displacement bikes.

Almost all of the investment-based articles relating to the motorcycle industry that come across my desk focus on two things:

1) changing customer profiles;
2) disbelief & guffaws by the manufacturers.

Like the American auto industry in the 1970s, there is an arrogance with many motorcycle manufacturers & its dealer networks. They are refusing to recognize the reality that today's customers are interested in a different type of motorcycle. It is no longer a case of "they will buy whatever we produce." For example, again, as was experienced by Harley during the 80s and 90s in the USA.

All said, I still maintain a positive outlook for the Chinese motorcycle industry. The Chinese have proven, time and again, an immense ability to adapt. If you place a 1990s Chinese motorcycle against a 2010 Chinese motorcycle, the changes are mind-boggling. I am confident that the Chinese motorcycle in 10 years will be light years away from the current offerings.

On a personal note, having owned both the CJ750 (in various forms) and the JH600B, I can see the incredible differences. It reminds me of the difference between an AMC Gremlin/Pacer and a Honda Civic/Accord. The "B" ain't perfect, yet, but at least its parts stay attached to the bike.

Hi, Lao Jia Hou,

Thanks for the informative reply. I'm a great fan of yours. I love your posts. You are one of the ones that I want to know better.
I didn't know about the rebate program on motorcycles. I guess it was like the rebate on old TVs where you can trade in your old TV and get a RMB400 credit towards the new one, yes?
Yes, the city dwelling Chinese love their automobiles, a lot like the people in LA, 'you are what you drive'. I have a fishing buddy that was driving a Honda CRV a few years back. He drove up with a new Mercedes 320 the other day. He is looking at a Rolls-Royce next (he is very rich and love toys). I don't know many rurul Chinese, so I can't command on them.
Yes, I was one of those suckers that bought a Harley Sportster first, and end up with a Fatboy when I left the States. I have been to Stugis once, what a party.
From what I heard, everything is down in the States. It is probably going to stay that way for a few more years.
Seems like China is export a lot of bikes to the Middle East and Africa. I see a lot of Africans in the QuangZhou Bike Part Wholesale Market. And they have a lot of shops with Arabic writing on their signs.
From what you said, they are exporting mostly fuel efficient scooters & small displacement commuters from China?
I am not sure about "I still maintain a positive outlook for the Chinese motorcycle industry. If you place a 1990s Chinese motorcycle against a 2010 Chinese motorcycle, the changes are mind-boggling. I am confident that the Chinese motorcycle in 10 years will be light years away from the current offerings." I have a 2002 Chinese 125cc cruiser(太子), and it is not that far behind the newer bikes of today. As a matter of facts, I am looking into buying a newer licensed cruiser(太子) and upgrading it to a 250. I do see a huge difference between the 80s Japanese dirt bikes and the newer Chinese dirt bikes, but the Japanese bikes has come a long ways too.
I am too old for the bigger bikes. I had one of those rare 1998 licenced Honda Steed 400. I rode around on it for a few years, until it got too heavy for me. Now I'm into the lighter dirt bikes.
David

[MJH]

Consider YinXiang
9th largest producer;Chongqing Yinxiang Motorcycle (+21%) total production over 2010 with 565,966
5th largest exporter: Chongqing Yinxiang Motorcycle 326 037 (+21%) exported over same persod YTD 2010

239,000 units in domestic sales YTD July 2011, that’s about 42% of total production

I am just to lazy to go back into the data tables, but the site does have each year and the top 50 in each category for those subsequent years.

From memory XinXiang moved up in both and that would make sense because in a field of losses and or marginal gains the manufacturer that gains in both gains in ranking.

http://www.yinxianggroup.com/index.php

[MJH]

There really is no other explanation if one company gains and another looses, its management. Its not one functional level or another that makes a difference, its actually the interaction and its effectiveness across all of the functional levels as in the total operation.

But what really matters is the operating ratio, that being what the net sales are as a percentage of the total operating expense.

I would say the industry in part is weak on tracking net sales, to me IMO that is actual registered vehicles in the market. Its not really sold until it is road off by a consumer, they in general are detached from that in most cases handing off the sales to wholesalers and then distributors and eventually dealers. The product sitting is not going to bring about a reorder, inventory has to move as in rotate.

In general much of the Chinese exports are actually new consumers or may even be first time buyers? They may not have bought new or at all if the lower cost offering was not available? The only way to know that would be market research. We know they are not doing that are they, any one get a questioner after they bought their bike?

They are so busy playing dodge the regulations and related liability they miss the correct way to operate is to keep track and stay in communication. But that must be with a very good product that has good initial quality as well as some respectable durability over time.

Jeez every vehicle gets a VIN, they all should be in data tables and the net sale is or demonstrated with a real persons name and address, hello its a base for working the market, repeat customers and after market sales.