Motorcycles in China

INDUSTRY MARKET RESEARCH FOR BUSINESS LEADERS, STRATEGISTS, DECISION MAKERS NEW Industry forecasts for 2014 & 2019 Industry Studies ■ Custom Research ■ Focus Reports Motorcycles in China

Study # 2658 September 2010 $5300

Demand in China to grow 7.6% yearly through 2014 Gas Motorcycle Demand in China 51% (38 million units, 2009) Demand for motorcycles in China will rise 7.6 percent annually to 54.9 million units in 2014. Electric motorcycles are expected to surpass gas motorcycles to become the most important motorcycle type sold in China. These comparatively new products will account for over three- fourths of all new motorcycle demand in Electric 2014. Gas-powered internal combustion 49% engine (ICE) motorcycles will also record solid growth through 2014, helping to strengthen China’s position as far and away the world’s largest motorcycle market.

Electric motorcycles to register fastest growth Rural regions best market However, their dominance of the ICE The market for electric motorcycles in for gas (ICE) motorcycles market has been undermined in recent China is expected to grow 11.0 percent years due to the diversification of per annum through 2014 to 31.6 million Sales of traditional gas motorcycles will motorcycle offerings in China. Going units. Demand for these newer products increase 3.9 percent annually to 23.3 forward, trikes and sidecars will see will continue to expand at a rapid pace million units in 2014. Advances will be demand expand at the fastest rates of any through the forecast period, as increasing driven by increasing economic activity ICE motorcycle model types. numbers of urban dwellers turn to electric and rising personal income levels in the motorcycles for their transportation country’s rural and semi-rural regions, Study coverage needs. Improving vehicle durability and which are and will remain the most Details on these and other key findings battery power and longevity have allowed important market for these vehicles. are contained in a 259-page Freedonia electric motorcycles to meet an important Government rebates for purchases of ICE industry study, Motorcycles in China, need among urbanites seeking to upgrade motorcycles by rural residents as part of available for $5300. It presents historical from pedal bicycles but unable to afford the “Automobiles and Motorcycles to the demand data (1999, 2004, 2009) as well automobiles. Aided by central govern- Countryside” program will also stimulate as forecasts for 2014 and 2019 by type, ment subsidies, greater sales of electric new demand. However, restrictions and market and region of China. The study motorcycles in rural settings will also even outright bans on ICE motorcycles in also considers key market environment offer new opportunities. Gains for electric many Chinese cities will prevent sales factors, discusses competitive strategies, scooters and three-wheeled trikes will lag from expanding at a faster pace. Cruisers evaluates company market share data and those for electric mopeds and bicycles are the most popular model type among profiles 40 competitors in the Chinese due to new regulatory standards favoring Chinese consumers, representing 43 industry. lighter vehicles, mainly electric mopeds. percent of gas motorcycle sales in 2009. Copyright 2010 The Freedonia Group, Inc.

For complete details on any study visit www.freedoniagroup.com Contents/Tables/Charts Industry Study with Forecasts for 2014 & 2019 historical data (1999, 2004, 2009) plus forecasts for 2014 and 2019 Motorcycles in China

Introduction 4 Recreational & Sport Motorcycle Demand in China 64 Regional Demand for Motorcycles...... 141 5 Motorcycle Demand in Other Markets in China...... 66 Central-North...... 144 Executive Summary 6 Motorcycle Pricing Patterns in China...... 68 Overview...... 144 1 Summary Table...... 3 7 Motorcycle Demand in China by Engine Type...... 73 Motorcycle Demand...... 146 Cht Motorcycle Demand in China Northeast...... 148 Market EnvironmenT by Engine Type, 1999-2019...... 73 Overview...... 148 General...... 4 8 Chinese Motorcycle Foreign Trade...... 80 Motorcycle Demand...... 151 Economic Overview...... 6 9 World Motorcycle Demand...... 87 Central-East...... 153 Recent Economic Performance...... 7 Cht World Motorcycle Demand by Region, 2009...... 88 Overview...... 153 Economic Outlook...... 9 Motorcycle Demand...... 154 Demographic Overview...... 13 GAS MOTORCYCLES Central-South...... 157 Population...... 13 General...... 89 Overview...... 157 Urbanization...... 15 Gas Motorcycle Models...... 92 Motorcycle Demand...... 159 Households...... 16 Cruisers...... 94 Southwest...... 162 Currency Exchange Rates...... 17 Scooters...... 95 Overview...... 162 Consumer Income & Expenditure Trends...... 21 Underbones...... 96 Motorcycle Demand...... 163 Light Vehicle Market Trends...... 24 Trikes & Sidecars...... 97 Northwest...... 166 Light Vehicle Supply & Demand...... 26 Gas Motorcycle Engine Displacements...... 99 Overview...... 166 Light Vehicle Park...... 28 Light Motorcycles...... 101 Motorcycle Demand...... 168 Low-Speed Vehicle Market Trends...... 29 Medium Motorcycles...... 103 LIST OF TABLES & CHARTS: Low-Speed Vehicle Overview...... 30 Heavy Motorcycles...... 107 1 Population of China by Region...... 139 Low-Speed Vehicle Supply & Demand...... 32 LIST OF TABLES & CHARTS: 2 Gross Domestic Product of China by Region...... 141 Public Vehicle Transportation Systems...... 34 1 Gas Motorcycle Demand in China...... 92 3 Motorcycle Demand in China by Region...... 143 Policy & Regulatory Factors...... 36 2 Gas Motorcycle Demand in China by Model...... 93 Cht Motorcycle Demand in China by Region, 2009...... 144 Industrial Policy...... 36 Cht Gas Motorcycle Demand in China by Model, 2009..93 Cht Central-North Region of China...... 146 The Five-Year Plan...... 37 3 Gas Motorcycle Demand in China 4 Central-North Region of China: Other Industrial Policy...... 39 by Displacement...... 100 Motorcycle Demand...... 148 Motorcycle Emissions Standards...... 42 Cht Gas Motorcycle Demand in China Cht Northeast Region of China...... 150 Gas Motorcycle Bans...... 44 by Displacement, 2009...... 101 5 Northeast Region of China: Motorcycle Demand..152 Regulations for Electric Motorcycles...... 46 4 Light Motorcycle Demand in China...... 103 Cht Central-East Region of China...... 154 Motorcycle Safety...... 48 5 Medium Motorcycle Demand in China...... 107 6 Central-East Region of China: Counterfeiting...... 49 6 Heavy Motorcycle Demand in China...... 110 Motorcycle Demand...... 157 LIST OF TABLES & CHARTS: Cht Central-South Region of China...... 159 1 Gross Domestic Product of China...... 12 ELECTRIC MOTORCYCLES 7 Central-South Region of China: 2 Population of China...... 15 General...... 111 Motorcycle Demand...... 161 3 Households in China by Region...... 17 Electric Motorcycle Models...... 113 Cht Southwest Region of China...... 163 4 Chinese Currency Exchange Rates, 1999-2009...... 20 Mopeds...... 116 8 Southwest Region of China: Motorcycle Demand 166 Cht Chinese Currency Exchange Rate, 1999-2009...... 21 Electric Bicycles...... 120 Cht Northwest Region of China...... 168 5 Disposable Personal Income & Scooters & Other...... 124 9 Northwest Region of China: Motorcycle Demand.170 Consumer Expenditures in China...... 24 Electric Motorcycle Power Sources...... 128 6 Light Vehicle Indicators in China...... 28 Lead-Acid Batteries...... 130 INDUSTRY STRUCTURE 7 Low-Speed Vehicle Indicators in China...... 34 Lithium Polymer Batteries...... 131 General...... 171 8 Bus Park in China...... 36 Fuel Cells...... 132 Industry Composition...... 174 LIST OF TABLES & CHARTS: Market Share...... 177 OVERVIEW 1 Electric Motorcycle Demand in China...... 113 Gas Motorcycles...... 178 Supply & Demand...... 51 2 Electric Motorcycle Demand in China by Model.....115 Electric Motorcycles...... 181 Park...... 53 Cht Electric Motorcycle Demand in China Product Development & Manufacturing...... 185 Markets...... 54 by Model, 1999-2019...... 116 Marketing & Distribution...... 188 Transportation...... 56 3 Electric Moped Demand in China...... 119 Financial Issues & Requirements...... 190 Recreational & Sport...... 60 Cht Electric Moped Demand in China, 1999-2019...... 120 Cooperative Agreements...... 192 Other...... 64 4 Electric Bicycle Demand in China...... 123 Foreign Participation in the Chinese Market...... 196 Pricing Trends...... 67 Cht Electric Bicycle Demand in China, 1999-2019...... 124 Legal & Regulatory Issues...... 197 Gas Motorcycles...... 68 5 Electric Scooter & Other Electric Motorcycle Joint Ventures...... 199 Electric Motorcycles...... 70 Demand in China...... 127 Wholly Owned Foreign Enterprises...... 201 Technology Trends...... 71 Cht Electric Scooter & Other Electric Motorcycle Representative Offices...... 202 The Shift from 2-Stroke to 4-Stroke Engines...... 74 Demand in China, 1999-2019...... 128 LIST OF TABLES & CHARTS: Electric & Hybrid Engines...... 75 6 Electric Motorcycle Demand 1 Motorcycle Sales by Company, 2009...... 176 International Context...... 79 in China by Power Source...... 129 Cht Motorcycle Market Share in China Foreign Trade...... 79 Cht Electric Motorcycle Demand in China by Company, 2009...... 178 Gas Motorcycles...... 81 by Power Source, 1999-2019...... 130 Cht Gas Motorcycle Market Share in China Electric Motorcycles...... 84 by Company, 2009...... 179 World Outlook for Motorcycles...... 84 REGIONAL TRENDS Cht Electric Motorcycle Market Share in China LIST OF TABLES & CHARTS: General...... 134 by Company, 2009...... 182 1 Motorcycle Supply & Demand in China...... 53 Regional Demographic & Economic Trends...... 136 2 Selected Cooperative Agreements...... 194 2 Motorcycle Demand in China by Market...... 56 Population Patterns...... 137 3 Transportation Motorcycle Demand in China...... 60 Economic Outlook...... 139 Company Profiles...... 203-259 Industry Studies ■ Custom Research ■ Focus Reports

INDUSTRY MARKET RESEARCH: BUSINESS INTELLIGENCE FOR BUSINESS LEADERS, STRATEGISTS, DECISION MAKERS

gAS mOTORCYCLES TABLE V-4 ELECTRIC BICYCLE DEMAND IN CHINA Scooters (thousand units) Sales of scooters in China will increase 3.6SA percentMPLE annually P toA 6.6GE million units in 2014. Scooters will bear theExplanations brunt of competition fromto supportelectric motor -each Item 1999 2004 2009 2014 2019 cycles. Nevertheless, growing economic activity and rising income levels in China, especially in the rapidly urbanizingtable’s peripheries data of established and forecasts cities and Electric Motorcycle Demand 130 6300 18775 31600 42000 townships, will provide solid prospects for scooter sales through 2014. % electric bicycles 61.5 21.0 25.0 25.9 27.0 SAMPLE TABLE A scooter is a two-wheeled motorcycle characterized by a step-through Electric Bicycle Demand 80 1325 4695 8200 11350 design with the engine either attached to the rear axle or located under the seat. Lead-Acid Battery 80Historical 1325 4040 data 6560 for 8500 Lithium Polymer Battery -- -- 655 1640 2780 Scooters usually feature smaller engines than other types of motorcycles, al- Fuel Cell 1999,-- 2004-- --and 2009-- 70 though some modern models have twin cylinder engines. Most modern scooters are installed with air-cooled engines with automatic oil injection, although water ¥/electric bicycle 1940as well1260 as1350 Freedonia 1420 1480 Electric Bicycle Demand (mil ¥) 155 1670 6340 11650 16800 cooled technology has been recently adopted in some brands in the Chinese forecasts for 2014 market by OEMs such as Honda and Chunfeng.

and 2019 Scooters in China have a wide range of displacements from 50 cc through 200 cc. They are an attractive option for first-time motorcycle buyers because of their continuously variable transmission (CVT). Their step-through design also makes them more appealing to female riders.

Scooters in China were traditionally produced by manufacturers in Zhejiang and Guangdong, two of the three major motorcycle producing regions in China. However, Chongqing -- the third major region -- is now looking to increase its scooter output. To this end, the Chongqing government has introduced preferential policies, such as tax rebates, to support local scooter producers.

Besides encouragement from local governments, the above-average company profiles profits offered in the segment are another factor attracting motorcycle producers. Chongqing Lifan Industry Group, a Chongqing motorcycle company, built the Chongqing Yinxiang Motor Group Company Limited first scooter production line in Chongqing in 2004. In that same year, Zongshen No. 822, Konggang Avenue Industrial Group, another motorcycle company from Chongqing, and Piaggio, Konggang Economic Development Zone a top Italian motorcycle manufacturer that produces the well-known VESPA Yubei District, Chongqing 401120 scooter, together with the Foshan�� City Council founded Zongshen Piaggio China CHART VI-1 86-23-6718-3722 ��MOTORCYCLE�� DEMAND IN CHINA BY�� REGION,�� 2009 http://www.yinxianggroup.com 95 ��(38.0 million units)�� Copyright 2009 The Freedonia Group, Inc. Annual Sales: ¥1.9 billion [US$280 million] (estimated) Employment: 3,000C O(2009,MP as AreportedNY byPR company)OFILES

Presented for 40 com- �� Key Products: underbone, sport, off-road, cruising, street, scooter and three- �� wheeled motorcycles;petitors and motorcycle in the engines Chinese �� motorcycle industry �� International Contact: Mr. Shang Xiaodong, General Manager ��

�� Chongqing Yinxiang Motor Group is a leading Chinese manufacturer of �� motorcycles, all-terrain vehicles, gasoline engines and related parts. The Com- ��

pany is privately held. �� SAMPLE CHART �� The Company produces underbone, sport, off-road, cruising, street, �� scooter and three-wheeled motorcycles that have engine displacements ranging Data illustrated �� from 35 to 600 cubic centimeters (cc). Among Chongqing Yinxiang Motor’s �� with ��the aid �� motorcycles are the 124-cc YX125-CF2 underbone, 124-cc YX125-B sport, �� of 61 tables�� 200-cc YX200GY off-road, 145-cc YX150-A cruising, 250-cc SGP250ST-9 �� street, 50-cc YX50QT-6 scooter and 198-cc YX200ZH three-wheeled models. �� and�� charts The Company has the capacity to manufacture 1.2 million motorcycles and 2.5 �� million motorcycle engines annually. ��

In 2009, the Company sold 259,925 motorcycles in China. Chongqing �� Yinxiang Motor has a production facility in Chongqing, China. The Company also operates through franchised sellers and retail outlets in China. Outside of �� China, Chongqing Yinxiang Motor has a production base in Laos. The Company exports its products to Southeast Asia, Western Europe, North America and Africa.

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