OEMs should focus on the growing segments of 100cc and 125cc with prices positioned between Japanese and Chinese brands

Scope & Limitations

Robust per capita income growth of MC* sees local motorcycle market shift to higher engine capacity; 100cc and 125cc share increasing

Lower oil prices, robust middle class consumption drove motorcycle sales to 2 Mn* units in FY2016 over FY2011’s 1.5 Mn; 12% growth in FY2016

Production of motorcycles grew to 2 Mn units in FY2016 from 1.5 million in FY2011, registering a 12% growth in FY2016

Pakistan’s two motorcycle associations - PAMA and APMA - contributed 41% and 59%, respectively, to production in 2016

For PAMA, Honda accounts for 95% of motorcycle sales while DS Motors, United and Omega have ~48% of APMA’s share

Local tax and tariff structure and high raw material costs render Pakistani motorcycles uncompetitive internationally

Low cost of bikes, wide availability of spares and easy servicing of bikes even in remote locations makes them popular in Pakistan

The Punjab region comprises five major cities accounting for 51% of the total share of motorcycle sales

Honda’s standard 70cc and 125cc models enjoy good sales in Punjab and Interior Sindh

Honda’s market share dominated by 70cc segment; there has been a recent market shift towards 100cc and 125cc segments

Overall, Suzuki 2Wheeler sales have seen degrowth; Pakistan Suzuki concentrating more on 4Wheelers than 2Wheelers

Local manufacturer, United Auto Industries’ sales on the rise; 100cc & 125cc increased from 11 to 13% and 4 to 5%, respectively

Omega Industries’ 125cc footprint increasing slowly; major focus is on 70cc motorcycles which has 90% in Omega’s total motorcycle sales

Share of 100cc segment has increased from 8 to 13% for NJ Auto

For 100cc motorcycles, the average price difference between Chinese and Japanese motorcycle is around 30-40%

For 125cc motorcycles, the average price difference between Chinese and Japanese motorcycle is around 25-30%

No labs in Pakistan to check compliance with Euro II standards. Therefore, assemblers must get a certificate from the importer for Euro II compliance

Two regulations exist for vehicle safety & environmental protection: Motor Vehicle rules 1969 for safety & EPA’s Euro II emission requirements

Demand for 70cc to fall; growth to continue for 100 and 125cc segments; OEMs should target the 100 and 125cc segments

OEMs to focus on growing segments of 100 and 125cc; price positioning should be between Japanese and Chinese brands operating in the market

MFN status is an advantage; 100cc and 125cc segments to be targetted and localisation brought in over the longer term

Maximise opportunities from existing products and markets; systematically explore new products and markets including Inorganic Opportunites

Growth Consulting – Service Offerings

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