Vanida Paipong, a 33-year-old noodle factory worker in Ubon Ratchathani, Thailand, will pay installments of 5,000 baht (about ¥13,600) a month on her 100cc Honda CZ-i motorcycle.
She bought the bike in February after her last Honda motorbike lasted 10 years, hauling friends and family over dirt roads, without needing much maintenance, she said.
“That motorcycle was worth every baht,” said Paipong, who said the sticker price on the CZ-i was 38,000 baht (a little more than ¥100,000). “I was willing to pay a premium to buy a Honda.”
Surging unemployment in the United States and Japan, Honda’s two largest markets, has smothered demand for Accord sedans and Pilot sport utility vehicles.
Incoming President Takanobu Ito, who commutes to work on a ¥546,000 Honda XR250 Baja motorbike, will have to rely on new motorcycle models in Southeast Asia to avoid the losses plaguing Toyota Motor Corp. and Nissan Motor Co. — neither of which make two-wheelers.
“Motorcycles are more resilient against a recession than cars because these products are used in Asia as the people’s main mode of transport,” said Makoto Haga, president of Tokyo-based hedge fund Wing Asset Management Co. “Motorcycles give Honda an advantage over its rivals.”
Honda, the world’s largest motorcycle maker, is expected to post a profit of ¥18 billion next fiscal year, according to the median of 19 analyst estimates. Toyota may post a ¥121 billion loss and Nissan may bleed ¥290 billion, according to analyst estimates.
“The company’s earnings will teeter on the edge of a profit or loss,” said Yasuhiro Matsumoto, a credit analyst at Shinsei Securities Co. “Motorcycle sales could help the company eke out a profit.”
Current Honda President Takeo Fukui expects profit from the motorcycle segment, which will account for half of Honda’s earnings this fiscal year, to “rise significantly.”
The introduction of the new Wave 110i small motorcycle in Southeast Asia may add to this year’s 10 percent sales growth for the segment. As Honda expands in emerging markets, it is shutting down a motorcycle plant in Ohio, its first overseas facility, by June. The move effectively ends Honda’s production of motorcycles in the U.S., where demand for large leisure models has dwindled.
Thailand’s motorcycle market grew 6.5 percent last year, with Honda grabbing 68 percent of it, according to the company. With a 400,000-unit annual sales target for the new 34,000-baht Wave 110i, Honda aims to increase its share to 90 percent. The company, which started selling the model in Thailand in January, has not given targets yet for sales in Indonesia and Vietnam, where it will be introduced later this year.
“You see four people piled onto a motorcycle in those countries,” said Yuuki Sakurai, general manager of financial and investment planning at Fukoku Mutual Life Insurance Co.
“With road infrastructure having a long way to go in countries like India, motorcycles make more sense than cars.”
Anugra Akbar, a 26-year-old information technology worker in Jakarta, bought his CS1 in January. He rides the bike 20 km to his job in West Jakarta.
A motorbike “is more efficient with the bad traffic in the city,” he said, adding that he chose the CS1 for its “futuristic style,” engine and good handling. The bike’s price was 17 million rupiah (about ¥137,000).
For the year ending in March, Honda, which started as a motorcycle maker in 1949, forecasts profit will plunge 87 percent to ¥80 billion. Even with the drop in car sales, Honda’s profit estimate beats the ¥450 billion operating loss forecast by Toyota and ¥265 billion deficit at Nissan.
All the carmakers are suffering because U.S. auto sales may plunge to a 27-year low of 10.5 million units this year, according to General Motors Corp. The drop in demand in the U.S. has forced GM and Chrysler LLC to turn to the U.S. government for more than $17.4 billion in aid.
“The four-wheel business looks very grim,” Honda President Fukui said in an interview last month. “But motorcycle demand in emerging markets is resilient.”