Rising costs to drive up prices of motorcycles

Rising oil prices are likely to drive up the price of motorcycles by next year, a manufacturer said yesterday.

"Motorcycles are made of about 40-per-cent steel, 30-per-cent aluminium and 30-per-cent plastic. All these raw material prices are on the rise," said Praphan Phornthanavarsit, chief operating officer of Thai Yamaha Motor.

"We already have requests coming from our suppliers that they would like to lift prices. A stronger impact is to be seen in the third and fourth quarters of this year," he said.

The problem of escalating production costs was true for all manufacturers and since motorbikes are among the products on the government's price-control list, talks are likely to be held with authorities to reconsider the price, he said.

While the overall motorcycle market has grown by 4 per cent in the first four months of this year, Yamaha posted 16-per-cent growth, selling 142,341 units, as opposed to 122,718 units in the same period last year.

Market leader Honda saw only 2.5-per-cent improvement while Suzuki suffered an 18.5-per-cent drop in sales. The total motorcycle market for the period reached 553,619 units from 527,396 units last year.

"The Fino has been the main reason for our growth. While this retro-styled model sold 6,000-7,000 units per month at its launch in 2006, now it does 20,000 units per month. It appeals to the young generation as our marketing is focused on personalising the vehicle," Praphan said.

While the two-wheel and four-wheel vehicle industry has been facing a downward trend for two years, this is the first year to see a return to growth.

Yamaha said it needed a little time to adjust to the reviving demand. Higher input prices means that people upcountry who sell rice and other commodities are cashed up, which has led to a boost in sales outside Bangkok.

"At the beginning of the year we expected total motorcycles sales to reach 1.6 million units. But with the way the market is going now, we might even see 1.7 million units," Praphan said.

The stronger baht has also crimped the profitability of the company. Yamaha Thailand exports about Bt7.5 billion worth of parts to the Asean market.

Yamaha has upped its expected sales for this year to 440,000 units from the previous 420,000 units. About 20 per cent of these sales are expected in greater Bangkok.