China’s Economic operation of China’ motorcycle industry in the first half of 2021

1. The production, sales and export of fuel and electric motorcycles have continued to grow rapidly

According to the data of China Chamber of Commerce for Motorcycle, from January to June this year, the cumulative production of the entire motorcycle industry was 9,925,200 units, and the sales totaled 9,928,400 units, with year-on-year growth of 31.24% and 29.91% respectively. Among them, the production of fuel motorcycles was 7,989,900 units and the sales were 8,082,000 units (including inventory), up 36.14% and 35.02% respectively. The production of electric motorcycles was 1,935,400 units and the sales were 1,900,100 units, up 14.26% and 12% respectively. In the first half of this year, the export value of fuel motorcycle reached USD3.315 billion, up 68.30% year on year, and the export quantity was 5,788,300 units, up 53.88% year on year.

Figure 1: Monthly export of fuel motorcycles in the first half of 2021

2. Both the import and export of motorcycle parts increased by more than 50%

In the first half of this year, China’s cumulative export value of motorcycle parts was USD2.423 billion, a year-on-year increase of 64.72%, a month-on-month increase of 69.44%: imports amounted to USD66.1107 million, up 71.89% year-on-year and 84.46% month-on-month.

Figure 2: Monthly export of motorcycle parts in the first half of 021

3. The export unit price of complete motorcycles and parts has increased steadily, relieving the price pressure of rising raw material costs

In the first half of this year, the average unit price of Chinese fuel motorcycles was USD572.76, up 9.37% year-on-year and 6.74% month-on-month. Among them, 100cc-125cc motorcycles generated the largest export value, with an average unit price of USD518.38, up 9.37% year on year. Motorcycle parts were exported at USD5.11/kg, with year-on-year growth of 16.93%. Although the production cost of enterprises increased, some enterprises have established close ties with the upstream raw material enterprises to ensure the stability of supply chain and reasonable control of supply, so as to stabilize the procurement costs. Many leading enterprises have strong bargaining power, and reasonably transfer the cost pressure to the terminal products, thus temporarily relieving the pressure by raising the prices.

4. Mexico, Togo and the Philippines are the top three export destinations of Chinese motorcycles

From January to June, China exported 5,788,300 motorcycles, up 53.88% year on year, with the export value reaching USD3.315 billion, up 68.30% year on year. The added value and technical content of complete motorcycles were further improved, and the average unit price of export was close to USD572.76, up 9.37% year on year, which was the highest value in the past three years. Exports in February doubled to USD483 million, up 187.39% year on year. In the first half of this year, China exported 579,900 units to Mexico, 393,300 units to Togo and 390,200 units to the Philippines, up 52.03%, 86.94% and 83.56% year-on-year, respectively. Exports to Latin America, North America and Oceania countries increased significantly, with export value rising by 113.97%, 129.82% and 119.59% year-on-year respectively. The exports to Algeria declined a lot recently, with 2,271 units exported, down 90.52% year on year.

From January to June, China’s export of motorcycle parts was USD2.423 billion, with a year-on-year increase of 64.72%, which was the highest export growth rate in the past three years. Among the parts export destinations, the top three were Vietnam, India and Indonesia. The export to Vietnam were USD172 million, with a year-on-year growth of 66.56%. The export to India was USD172 million, up 58.09% year on year. The export to Indonesia reached USD157 million, up 75.62% year on year. In addition, among the top ten destination countries and regions, the export to the Philippines and Thailand increased by more than 100%. China’s export of motorcycle parts to Asian countries accounts for a large amount and a relatively high proportion. If we make good use of the RCEP policies in the future, China’s export to ASEAN, Japan, Australia, New Zealand and other countries will have broader space for growth.

      Operation characteristics of China’s motorcycle industry in the 1^st half of the year

1. Independent brands develop products based on consumption attributes and trends

At the 2021 Beijing International Motorcycle Exhibition, Qianjiang continued to promote the “Guochao” products featuring Chinese fashion elements: Chinese red +Chinese characters; CFMOTO 800MT with Tank 300 SUV was jointly released a collaboration product to enhance the popularity of the new product via joint marketing. In the first half of this year, YADEA launched a new high-end lithium battery brand, VFLY. The motorcycle industry has made continuous progress and started to step out of the homogeneous and low-cost competition. The improvement of product quality and the diversification of consumer demands catalyze the consumption upgrading of the whole industry. With fast response and more accurate market understanding and positioning, Chinese independent brands constantly adjust product concept and design, create new products, and improve business efficiency.

2. Independently-developed product lines enriched; Chinese super-large displacement market attracted overseas attention

With the continuous breakthrough of technology, the full displacement matrix is gradually formed. Among the five new products presented by Qianjiang at the Beijing International Motorcycle Exhibition, three models are bigger than 650cc, and the new products launched by CFMOTO are all larger than 650cc. More large displacement products are launched to compete with the imported products. Foreign brands have paid more attention to the Chinese market. Many international famous brands appeared at the motorcycle show in May, but their focus was on large displacement products and those with a unit price of more than RMB100,000.

3. Multiple factors drive the rapid development of electric motorcycles

The power battery industries of European countries have been determined to develop lithium batteries, and the process of electrification accelerated. Many Southeast Asian countries have deployed carbon emission plans, and the trend of switching from fuel to electricity will boom. Electric motorcycles are expected to see rapid growth. China’s domestic consumer groups generally accept electric motorcycles. In addition, product replacement will drive the growth of production and sales. At present, China’s electric motorcycle industry chain is relatively mature, and we can reasonably explore overseas channels, transform competitiveness with the advantages of industry chain and open the new domains.

     Operation of the upstream and downstream industries

1. Raw material prices rose sharply

COVID-19 greatly impacted and partly changed the structure of the global industrial chain. Motorcycle downstream industries are concentrated in China, which are likely to be affected when the raw material suppliers are suspended in production and circulation, which means rising price of raw materials. The prices of some industrial goods reached record highs in the first half of the year, with the biggest price increase in metals. Soaring iron ore and copper prices caused much pressure on motorcycle enterprises. While the companies have tried to negotiate prices with customers, the latest export data showed that the rise in unit prices could not match that in raw material prices. Starting in June, the FOMC signaled adjustment of global commodity prices. In addition, the National Food and Strategic Reserves Administration released the raw material reserves to cool down the rapidly rising metal prices, and the prices are expected to remain low in the short term.

2. Worsened sea transport increases the pressure of the industry

Since last year, the shipping cost has been rising repeatedly, and there were additional charges recently, which worsened the shipping situation. The major ports in the world were seriously congested, the shipping schedule was further delayed, the overall delivery time was greatly extended, the transport capacity was seriously reduced, and the warehouses were in serious short supply. With the popular market demand, freight charge rocketed. Plus other factors such as exchange rate, Chinese motorcycle enterprises were under greater pressure.

3. The purchasing managers’ index fell slightly and export expansion slowed

Since the second quarter, the purchasing managers’ index has been falling month by month, but the expansion rate slowed. The production index was 51.9% in June, down 0.8 percentage points from the previous month, and the new export orders index was 48.1%, down 0.2 percentage points from the previous month, indicating a decline in overseas orders of the manufacturing industry. As the gap between supply and demand has narrowed, the export growth of Chinese motorcycles may gradually cool down.

    4.Operation trend forecast for the 2^nd half of 2021

In view of the above factors, it is expected that the annual production of motorcycles will basically level or increase slightly. Chinese motorcycle enterprises will pay more attention to product innovation and changing management and operation ideas. The industry will enter a period of high-quality development. In addition, the implementation of RCEP policies and the promotion of emission peak and carbon neutrality are expected to drive the electrification of motorcycles in the long term.